- Revenues Grew 20% Year-Over-Year to
More Than $157 Billion
- Operating Earnings Reached $11
Billion
- Cash Flows From Operations Exceeded
$9.7 Billion
- Full Year Adjusted Net Earnings Were
$6.45 Per Share
UnitedHealth Group (NYSE:UNH) today reported fourth quarter and
full year 2015 results, once again highlighted by broad-based
growth and market share expansion. In 2015, UnitedHealthcare grew
to serve more people while effectively managing for better outcomes
at lower health care costs on behalf of its clients. Optum paired
strong organic growth with strategic investments to contribute
nearly 40 percent of UnitedHealth Group’s full year earnings from
operations in 2015.
“The people of UnitedHealth Group are focused sharply on
executing fully on 2016 commitments and delivering the highest
quality experience for those we are privileged to serve. These
efforts are reflected in continuing strong growth as we enter the
new year,” said Stephen J. Hemsley, chief executive officer of
UnitedHealth Group.
The Company affirmed its 2016 financial outlook, including
estimated revenues of more than $180 billion, rising net earnings
growth to a range of $7.60 to $7.80 in adjusted earnings per share,
and strong cash flows from operations in the range of $9.5 billion
to $10 billion.
Quarterly and Annual Financial Performance
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
December 31, December 31,
2015
2014
2015
2015
2014
Revenues $43.6 billion $33.4 billion $41.5 billion $157.1 billion
$130.5 billion Earnings From Operations $2.5 billion $2.8
billion $3.0 billion $11.0 billion $10.3 billion Net Margin
2.8% 4.5% 3.8% 3.7%
4.3%
- UnitedHealth Group’s full year 2015
revenues of $157.1 billion grew 20 percent or $26.6 billion
year-over-year. Revenue growth was broad-based and reflected
growing market demand for the Company’s product and service
offerings. UnitedHealthcare’s 2015 revenues grew 10 percent and
Optum’s revenues grew 42 percent, with strong double-digit
percentage revenue growth in each Optum segment.
- Full year 2015 earnings from operations
were $11 billion and adjusted net earnings were $6.45 per share,
including $1.40 per share in the fourth quarter. Full year and
fourth quarter after-tax margins declined year-over-year to 3.7
percent and 2.8 percent, respectively, due to the mix effect of
strong growth in pharmacy care services and losses on individual
exchange-compliant products and one state Medicaid contract.
Excluding these losses from 2015 adjusted results, adjusted net
earnings were $7.00 per share for the full year and $1.77 per share
in the fourth quarter.
- Full year 2015 cash flows from
operations grew 21 percent year-over-year and exceeded $9.7
billion, representing 166 percent of net earnings. Fourth quarter
cash flows were $3.5 billion, a strong 280 percent of net
earnings.
- The 2015 consolidated medical care
ratios of 81.7 percent for full year and 82.7 percent in the fourth
quarter were pressured by the individual exchange-compliant
products. Prior year reserves developed favorably by a total of
$320 million in 2015, compared to prior year reserve development of
$420 million in 2014. Reserves developed favorably by a total of
$250 million in the fourth quarter, compared to $100 million in the
fourth quarter of last year.
- The full year 2015 operating cost ratio
of 15.5 percent decreased 80 basis points year-over-year due to
shifts in business mix and improvements in productivity. The fourth
quarter 2015 operating cost ratio of 15.1 percent improved from
17.2 percent in the fourth quarter of 2014, again reflecting the
changing business mix.
- The full year 2015 tax rate of 42.6
percent and fourth quarter tax rate of 43.3 percent increased
year-over-year by 80 basis points and 110 basis points,
respectively, due to higher levels of nondeductible ACA fees.
- Fourth quarter 2015 days claims payable
of 50 days increased 3 days year-over-year and were stable
sequentially; the rising mix of government business drove a 2-day
year-over-year increase in days sales outstanding to 14 days.
- The Company’s financial position
remained strong at December 31, 2015, with a full year 2015
interest coverage ratio of 16 times and a debt to total capital
ratio of 49 percent. Return on equity of 18 percent rose 1
percentage point from 2014.
- UnitedHealth Group repurchased 10.7
million shares for $1.2 billion in 2015, including 600,000 shares
in the fourth quarter.
UnitedHealthcare provides health care benefits, serving
individuals and employers ranging from sole proprietorships to
large, multi-site and national and international organizations;
delivers health and well-being benefits to Medicare beneficiaries
and retirees; manages health care benefit programs on behalf of
state Medicaid and community programs; and serves the nation’s
military service members, retirees and their families through the
TRICARE program.
Quarterly and
Annual Financial Performance
Three Months Ended
Year Ended
December 31, December 31, September 30,
December 31, December 31,
2015
2014
2015
2015
2014
Revenues $32.8 billion $30.4 billion $32.8 billion $131.3 billion
$119.8 billion Earnings From Operations $949 million $1.7
billion $1.9 billion $6.8 billion $7.0 billion Operating
Margin 2.9% 5.7% 5.7% 5.1%
5.8%
UnitedHealthcare has grown to serve nearly 13.5 million more
people, a 40 percent increase, over the past five years. Growth has
been balanced across the commercial, government and international
markets, and reflects deliberate diversification and the strong
market competitiveness of UnitedHealthcare’s offerings.
- UnitedHealthcare’s full year 2015
revenues of $131.3 billion grew $11.5 billion or 10 percent
year-over-year. The number of people served across the U.S. medical
benefits markets grew organically by 1.75 million year-over-year,
with balanced growth across commercial, Medicare and Medicaid
offerings. In the fourth quarter of 2015, UnitedHealthcare grew to
serve a total of 315,000 more consumers.
- Full year 2015 earnings from operations
for UnitedHealthcare of $6.8 billion decreased $238 million from
2014, as operating margins declined to 5.1 percent. These decreases
were driven by $720 million in losses related to individual
exchange-compliant insurance business, including $245 million
recorded in the fourth quarter of 2015 for the advance recognition
of 2016 losses. A fourth quarter reserve of $95 million was also
established for expected future losses on a state Medicaid
contract. Excluding these losses, UnitedHealthcare full year 2015
earnings from operations grew 8 percent year-over-year to $7.6
billion. Reported fourth quarter 2015 earnings from operations of
$949 million decreased $777 million year-over-year due to
individual exchange-compliant product results, as well as
investments to improve Medicare Stars quality performance.
UnitedHealthcare Employer & Individual
- UnitedHealthcare Employer &
Individual grew to serve nearly 1 million more people
year-over-year at December 31, 2015, with fourth quarter 2015
growth of 200,000 people served.
- Full year revenues of $47.2 billion
grew $4.2 billion or 10 percent year-over year, with fourth quarter
revenues of $12.1 billion increasing $1.3 billion or 12
percent.
UnitedHealthcare Medicare & Retirement
- UnitedHealthcare grew Medicare &
Retirement revenues by $3.5 billion or 8 percent year-over-year to
$49.7 billion in 2015, including growth of 6 percent to $12.1
billion in the fourth quarter.
- UnitedHealthcare grew to serve 515,000
more people in senior medical benefit products in 2015, an increase
of 8 percent, including growth of 230,000 people in Medicare
Advantage and 285,000 through Medicare Supplement products.
Stand-alone Medicare Part D prescription drug plan participation
decreased by 105,000 people in 2015.
- UnitedHealthcare Medicare &
Retirement leads in serving the health and well-being needs of
seniors, serving nearly one in five Medicare beneficiaries.
UnitedHealthcare Community & State
- In 2015, UnitedHealthcare Community
& State revenues of $28.9 billion grew $5.3 billion or 23
percent year-over-year, due to continued strong membership growth
and an increasing mix of higher need members, such as those served
through long-term care programs. Fourth quarter revenues of $7.4
billion grew $892 million or 14 percent year-over-year.
- UnitedHealthcare grew its Medicaid
programs to serve 250,000 more people year-over-year, an increase
of 5 percent, and provided benefits and services to more than 5.3
million people through a spectrum of more than 100 distinct
programs in 24 states and the District of Columbia.
UnitedHealthcare Global
- UnitedHealthcare Global’s full year
revenues of $5.5 billion decreased 21 percent or $1.4 billion
year-over-year due to changes in currency exchange rates, as
UnitedHealthcare Global returned to profitability in 2015. Holding
exchange rates constant, revenues grew 10 percent year-over-year in
the fourth quarter and 11 percent on a full year basis. The
business grew to serve 80,000 more people in the fourth quarter,
following successful efforts to strengthen underwriting, pricing
and operations and refocus the business toward more profitable
market segments.
Optum is a health services business serving the broad health
care marketplace, including payers, care providers, employers,
governments, life sciences companies and consumers. Using advanced
data analytics and technology, Optum’s people help improve overall
health system performance: optimizing care quality, reducing costs
and improving the consumer experience and care provider
performance.
Quarterly and
Annual Financial Performance
Three Months Ended
Year Ended
December 31, December 31, September 30,
December 31, December 31,
2015
2014
2015
2015
2014
Total Revenues $21.9 billion $12.9 billion $19.3 billion $67.6
billion $47.7 billion Earnings From Operations $1.5 billion
$1.0 billion $1.1 billion $4.3 billion $3.3 billion
Operating Margin 6.9% 8.1% 5.9% 6.3% 6.9%
Optum’s growth reflects its differentiated capabilities and
full-service orientation for stakeholders in the health care
system, both domestically and abroad. Since 2011, Optum has
compounded growth in revenues at 23 percent and operating earnings
at 34 percent per year. Management expects sustained growth
momentum in 2016.
- In 2015, Optum revenues grew by just
under $20 billion or 42 percent to $67.6 billion, with fourth
quarter revenues increasing $9 billion or 70 percent to $21.9
billion. Optum’s full year earnings from operations grew nearly $1
billion or 30 percent year-over-year to $4.3 billion, and the full
year operating margin was 6.3 percent. The fourth quarter operating
margin of 6.9 percent included double-digit margins in both
OptumHealth and OptumInsight and a 3.8 percent margin in pharmacy
care services, reflecting strong OptumRx performance, the
acquisition of Catamaran and related integration and amortization
expenses.
- OptumHealth revenues of $13.9 billion grew $2.9
billion or 26 percent year-over-year due to growth in its health
care delivery businesses, as well as expansion in neighborhood care
centers and population health management services. In total,
OptumHealth served 78 million people at year end 2015, up from 63
million at the end of 2014.
- OptumInsight revenues grew 19 percent to $6.2
billion in 2015, including 22 percent in the fourth quarter, driven
by growth in care provider revenue management services and payer
services. OptumInsight’s revenue backlog grew 21 percent
year-over-year to exceed $10.4 billion at year end, compared to
$8.6 billion at December 31, 2014.
- In 2015, OptumRx grew revenues 51 percent year-over-year to
$48.3 billion and fourth quarter revenues nearly doubled, reaching
$16.7 billion, driven by both the acquisition of Catamaran and
strong organic growth. OptumRx fulfilled 36 percent more scripts in
2015, growing from 570 million last year to 778 million adjusted
scripts in 2015, including 258 million in the fourth quarter.
OptumRx expects to fulfill 1 billion adjusted scripts in 2016.
About UnitedHealth Group
UnitedHealth Group (NYSE:UNH) is a diversified health and
well-being company dedicated to helping people live healthier lives
and helping make the health system work better for everyone.
UnitedHealth Group offers a broad spectrum of products and services
through two distinct platforms: UnitedHealthcare, which provides
health care coverage and benefits services; and Optum, which
provides information and technology-enabled health services. For
more information, visit UnitedHealth Group at
www.unitedhealthgroup.com or follow @UnitedHealthGrp on
Twitter.
Earnings Conference Call
As previously announced, UnitedHealth Group will discuss the
Company’s results, strategy and future outlook on a conference call
with investors at 8:45 a.m. Eastern Time today. UnitedHealth Group
will host a live webcast of this conference call from the Investors
page of the Company’s website (www.unitedhealthgroup.com).
Following the call, a webcast replay will be available on the same
site through February 2, 2016. The conference call replay can also
be accessed by dialing 1-800-677-6124. This earnings release and
the Form 8-K dated January 19, 2016 can also be accessed from the
Investors page of the Company’s website.
Non-GAAP Financial
Measures
This news release presents information about the Company’s
adjusted net earnings per share and interest coverage ratio, which
are non-GAAP financial measures provided as a complement to the
results provided in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). A reconciliation
of each of the foregoing non-GAAP financial measures to the most
directly comparable GAAP financial measure is provided in the
accompanying tables found at the end of this release.
Forward-Looking
Statements
The statements, estimates, projections, guidance or outlook
contained in this document include “forward-looking” statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 (PSLRA). These statements are intended to take advantage of
the “safe harbor” provisions of the PSLRA. Generally the words
“believe,” “expect,” “intend,” “estimate,” “anticipate,”
“forecast,” “outlook,” “plan,” “project,” “should” and similar
expressions identify forward-looking statements, which generally
are not historical in nature. These statements may contain
information about financial prospects, economic conditions and
trends and involve risks and uncertainties. We caution that actual
results could differ materially from those that management expects,
depending on the outcome of certain factors.
Some factors that could cause actual results to differ
materially from results discussed or implied in the forward-looking
statements include: our ability to effectively estimate, price for
and manage our medical costs, including the impact of any new
coverage requirements; new laws or regulations, or changes in
existing laws or regulations, or their enforcement or application,
including increases in medical, administrative, technology or other
costs or decreases in enrollment resulting from U.S., Brazilian and
other jurisdictions’ regulations affecting the health care
industry; assessments for insolvent payers under state guaranty
fund laws; our ability to achieve improvement in CMS Star ratings
and other quality scores that impact revenue; reductions in revenue
or delays to cash flows received under Medicare, Medicaid and
TRICARE programs, including sequestration and the effects of a
prolonged U.S. government shutdown or debt ceiling constraints;
changes in Medicare, including changes in payment methodology, the
CMS Star ratings program or the application of risk adjustment data
validation audits; our participation in federal and state health
insurance exchanges which entail uncertainties associated with mix
and volume of business; cyber-attacks or other privacy or data
security incidents; failure to comply with privacy and data
security regulations; regulatory and other risks and uncertainties
of the pharmacy benefits management industry; competitive
pressures, which could affect our ability to maintain or increase
our market share; challenges to our public sector contract awards;
our ability to execute contracts on competitive terms with
physicians, hospitals and other service providers; failure to
achieve targeted operating cost productivity improvements,
including savings resulting from technology enhancement and
administrative modernization; increases in costs and other
liabilities associated with increased litigation, government
investigations, audits or reviews; failure to manage successfully
our strategic alliances or complete or receive anticipated benefits
of acquisitions and other strategic transactions, including our
acquisition of Catamaran; fluctuations in foreign currency exchange
rates on our reported shareholders’ equity and results of
operations; downgrades in our credit ratings; adverse economic
conditions, including decreases in enrollment resulting from
increases in the unemployment rate and commercial attrition; the
performance of our investment portfolio; impairment of the value of
our goodwill and intangible assets in connection with dispositions
or if estimated future results do not adequately support goodwill
and intangible assets recorded for our existing businesses or the
businesses that we acquire; increases in health care costs
resulting from large-scale medical emergencies; failure to maintain
effective and efficient information systems or if our technology
products do not operate as intended; and our ability to obtain
sufficient funds from our regulated subsidiaries or the debt or
capital markets to fund our obligations, to maintain our debt to
total capital ratio at targeted levels, to maintain our quarterly
dividend payment cycle or to continue repurchasing shares of our
common stock.
This list of important factors is not intended to be exhaustive.
We discuss certain of these matters more fully, as well as certain
risk factors that may affect our business operations, financial
condition and results of operations, in our filings with the
Securities and Exchange Commission, including our annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Any or all forward-looking statements we make may turn
out to be wrong, and can be affected by inaccurate assumptions we
might make or by known or unknown risks and uncertainties. By their
nature, forward-looking statements are not guarantees of future
performance or results and are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Actual
future results may vary materially from expectations expressed or
implied in this document or any of our prior communications. You
should not place undue reliance on forward-looking statements,
which speak only as of the date they are made. We do not undertake
to update or revise any forward-looking statements, except as
required by applicable securities laws.
UNITEDHEALTH GROUP Earnings Release Schedules and
Supplementary Information Year Ended December 31, 2015
- Condensed Consolidated Statements of Operations -
Condensed Consolidated Balance Sheets - Condensed Consolidated
Statements of Cash Flows - Supplemental Financial Information -
UnitedHealthcare Customer Profile - Operating Cost Reclassification
- Prior Period Financial Information - Reconciliation of Non-GAAP
Financial Measures
UNITEDHEALTH
GROUP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(a) (in millions, except per share data) (unaudited)
Three Months Ended
December 31,
Years Ended
December 31,
2015 2014 2015 2014 Revenues
Premiums $ 31,727 $ 29,375 $ 127,163 $ 115,302 Products 8,377 1,127
17,312 4,242 Services 3,315 2,765 11,922 10,151 Investment and
other income 180 166 710
779 Total revenues 43,599
33,433 157,107 130,474
Operating costs Medical costs 26,229 23,534 103,875 93,633
Operating costs 6,562 5,734 24,312 21,263 Cost of products sold
7,856 1,019 16,206 3,826 Depreciation and amortization 484
381 1,693 1,478
Total operating costs 41,131 30,668
146,086 120,200
Earnings from operations 2,468 2,765 11,021 10,274
Interest expense (260 ) (151 ) (790 )
(618 )
Earnings before income taxes 2,208 2,614
10,231 9,656 Provision for income taxes (956 )
(1,104 ) (4,363 ) (4,037 )
Net earnings
1,252 1,510 5,868 5,619 Earnings attributable to
noncontrolling interests (34 ) - (55 )
-
Net earnings attributable to
UnitedHealth Group common shareholders
$ 1,218 $ 1,510 $ 5,813 $ 5,619
Diluted earnings per share attributable
to UnitedHealth Group common shareholders
$ 1.26 $ 1.55 $ 6.01 $ 5.70
Adjusted earnings per share
attributable to UnitedHealth Group common shareholders (b)
$ 1.40 $ 1.64 $ 6.45 $ 6.04
Diluted weighted-average common shares outstanding 967
973 967 986
(a) See page 6 for information about the reclassification of
historical operating costs. (b) See page 7 for a reconciliation of
non-GAAP measures
UNITEDHEALTH GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS (in millions)
(unaudited)
December 31, December 31,
2015 2014 Assets Cash and short-term
investments $ 12,911 $ 9,236 Accounts receivable, net 6,523 4,252
Other current assets 12,205 10,068 Total
current assets 31,639 23,556 Long-term investments 18,792
18,827 Other long-term assets 60,952 43,999
Total assets $ 111,383 $ 86,382
Liabilities and
Equity Medical costs payable $ 14,330 $ 12,040 Commercial paper
and current maturities of long-term debt 6,634 1,399 Other current
liabilities 21,934 17,184 Total current
liabilities 42,898 30,623 Long-term debt, less current
maturities 25,460 16,007 Other long-term liabilities 7,564 5,910
Redeemable noncontrolling interests 1,736 1,388 Equity
33,725 32,454 Total liabilities and equity $ 111,383
$ 86,382
UNITEDHEALTH GROUP CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
Years Ended December 31,
2015 2014 Operating Activities Net earnings $
5,868 $ 5,619 Noncash items: Depreciation and amortization 1,693
1,478 Deferred income taxes and other (308 ) (415 ) Share-based
compensation 406 364 Net changes in operating assets and
liabilities 2,081 1,005 Cash flows from
operating activities 9,740 8,051
Investing Activities Purchases of investments, net of sales
and maturities (531 ) 799 Purchases of property, equipment and
capitalized software, net (1,556 ) (1,447 ) Cash paid for
acquisitions, net (16,164 ) (1,923 ) Other, net (144 )
37 Cash flows used for investing activities
(18,395 ) (2,534 )
Financing Activities Common
stock repurchases (1,200 ) (4,008 ) Dividends paid (1,786 ) (1,362
) Net change in commercial paper and long-term debt 14,607 391
Other, net 618 (314 ) Cash flows from (used
for) financing activities 12,239 (5,293 )
Effect of exchange rate changes on cash and cash equivalents
(156 ) (5 ) Increase in cash and cash equivalents 3,428 219
Cash and cash equivalents, beginning of period 7,495
7,276 Cash and cash equivalents, end of period $
10,923 $ 7,495
UNITEDHEALTH GROUP SUPPLEMENTAL FINANCIAL INFORMATION
(in millions, except percentages) (unaudited)
Three Months Ended
December 31,
Years Ended
December 31,
2015 2014 2015 2014 Revenues
UnitedHealthcare $ 32,830 $ 30,434 $ 131,343 $ 119,798 Optum 21,899
12,876 67,604 47,746 Eliminations (11,130 ) (9,877 )
(41,840 ) (37,070 ) Total consolidated
revenues $ 43,599 $ 33,433 $ 157,107 $ 130,474
Earnings from Operations UnitedHealthcare $
949 $ 1,726 $ 6,754 $ 6,992 Optum (a) 1,519
1,039 4,267 3,282 Total
consolidated earnings from operations $ 2,468 $ 2,765
$ 11,021 $ 10,274
Operating Margin
UnitedHealthcare 2.9 % 5.7 % 5.1 % 5.8 % Optum 6.9 % 8.1 % 6.3 %
6.9 % Consolidated operating margin 5.7 % 8.3 % 7.0 % 7.9 %
Revenues UnitedHealthcare Employer &
Individual $ 12,055 $ 10,721 $ 47,194 $ 43,017 UnitedHealthcare
Medicare & Retirement 12,128 11,494 49,735 46,258
UnitedHealthcare Community & State 7,409 6,517 28,911 23,586
UnitedHealthcare Global 1,238 1,702 5,503 6,937 OptumHealth
3,668 3,017 13,927 11,032 OptumInsight 1,812 1,487 6,196 5,227
OptumRx 16,657 8,507 48,272 31,976 Optum eliminations (238 ) (135 )
(791 ) (489 ) (a) Earnings from operations for Optum
for the three months and year ended December 31, 2015 included $390
and $1,240 for OptumHealth; $496 and $1,278 for OptumInsight; and
$633 and $1,749 for OptumRx, respectively. Earnings from operations
for Optum for the three months and year ended December 31, 2014
included $341 and $1,090 for OptumHealth; $367 and $1,002 for
OptumInsight; and $331 and $1,190 for OptumRx, respectively.
UNITEDHEALTH GROUP UNITEDHEALTHCARE
CUSTOMER PROFILE (in thousands)
People Served December 31, 2015 September
30, 2015 December 31, 2014 Commercial risk-based
8,285 8,180 7,505 Commercial fee-based, including TRICARE 21,445
21,350 21,245 - -
Total Commercial 29,730 29,530 28,750
Medicare Advantage 3,235 3,225 3,005 Medicaid 5,305 5,305
5,055 Medicare Supplement (Standardized) 4,035 4,010 3,750
Total Public and Senior 12,575 12,540 11,810
Total
UnitedHealthcare - Domestic Medical 42,305 42,070 40,560
International 4,090 4,010 4,425
Total UnitedHealthcare -
Medical 46,395 46,080 44,985
Supplemental
Data Medicare Part D stand-alone 5,060 5,075 5,165
Note: UnitedHealth Group served 129.0 million
individuals across all businesses at December 31, 2015, 126.7
million at September 30, 2015, and 88.5 million at December 31,
2014.
UNITEDHEALTH
GROUP OPERATING COST RECLASSIFICATION - PRIOR PERIOD
FINANCIAL INFORMATION (a) (in millions, except percentages)
(unaudited)
Three Months Ended March 31, 2015
June 30, 2015 September 30, 2015 Revenues
Premiums $ 31,674 $ 31,961 $ 31,801 Products 1,230 1,223 6,482
Services 2,706 2,865 3,036 Investment and other income 146
214 170 Total revenues
35,756 36,263 41,489
Operating costs Medical costs 25,790 26,127 25,729
Operating costs 5,834 5,738 6,178 Cost of products sold 1,114 1,124
6,112 Depreciation and amortization 378 379
452 Total operating costs 33,116
33,368 38,471
Medical care ratio 81.4 % 81.7 % 80.9 % Operating cost ratio 16.3 %
15.8 % 14.9 %
Three Months Ended
Years Ended December 31, March 31, 2014 June 30,
2014 September 30, 2014 December 31, 2014
2014 2013 Revenues Premiums $ 28,115 $ 28,840
$ 28,972 $ 29,375 $ 115,302 $ 109,557 Products 998 1,037 1,080
1,127 4,242 3,190 Services 2,404 2,447 2,535 2,765 10,151 8,997
Investment and other income 191 250
172 166 779 745
Total revenues 31,708 32,574
32,759 33,433 130,474
122,489
Operating costs Medical
costs 23,304 23,610 23,185 23,534 93,633 89,659 Operating costs
5,088 5,108 5,333 5,734 21,263 18,941 Cost of products sold 902 940
965 1,019 3,826 2,891 Depreciation and amortization 360
364 373 381
1,478 1,375 Total operating costs
29,654 30,022 29,856
30,668 120,200 112,866
Medical care ratio 82.9 % 81.9 % 80.0 % 80.1 % 81.2 %
81.8 % Operating cost ratio 16.0 % 15.7 % 16.3 % 17.2 % 16.3 % 15.5
% (a) During the fourth quarter of 2015, the Company
changed its presentation of certain pharmacy fulfillment costs
related to its OptumRx business to be consistent with the approach
used by its acquisition, Catamaran Corporation. When consolidated,
these costs are now included in medical costs and cost of products
sold, whereas they were previously included in operating costs.
This reclassification had no impact on total operating costs,
earnings from operations, net earnings, or earnings per share.
UNITEDHEALTH GROUP Reconciliation of
Non-GAAP Financial Measures - Adjusted Net Earnings and
Earnings per Share - Pro Forma Net Earnings and Earnings per
Share - Interest Coverage Ratio
Use of Non-GAAP Financial Measures
Adjusted and pro forma earnings per share
and EBITDA are non-GAAP financial measures and should not be
considered a substitute for or superior to financial measures
calculated in accordance with GAAP. Management believes that the
use of adjusted earnings per share provides investors and
management useful information about the earnings impact
acquisition-related intangible asset amortization. The use of pro
forma earnings per share provides investors and management useful
information about the impacts of individual exchange-compliant
insurance business, reserves related to the advance recognition of
losses on individual exchange-compliant products and a state
Medicaid contract as well as the earnings impact of
acquisition-related intangible asset amortization. Management also
believes that the use of EBITDA-based coverage metrics provide
investors and management with useful information about our debt
level relative to our ability to service debt. These non-GAAP
measures do not reflect all of the expenses associated with the
operations of our business as determined in accordance with GAAP.
As a result, one should not consider these measures in
isolation.
UNITEDHEALTH GROUP RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES ADJUSTED NET EARNINGS AND EARNINGS PER
SHARE (a) (in millions, except per share data) (unaudited)
Year Ended
Projected
Year Ended
Three Months Ended
December 31,
December 31,
March 31, 2015 June 30, 2015 September 30,
2015 December 31, 2015 2015 2016 GAAP net
earnings $ 1,413 $ 1,585 $ 1,597 $ 1,218 $ 5,813 $6,850 to $7,100
Intangible amortization, net of tax effects 86 86
117 134 423 500 Adjusted net earnings $
1,499 $ 1,671 $ 1,714 $ 1,352 $ 6,236 $7,350 to $7,600 GAAP
diluted earnings per share $ 1.46 $ 1.64 $ 1.65 $ 1.26 $ 6.01 $7.10
to $7.30 Intangible amortization, net of tax effects per share
0.09 0.09 0.12 0.14 0.44 ~$0.50
Adjusted diluted earnings per share $ 1.55 $ 1.73 $ 1.77 $ 1.40 $
6.45 $7.60 to $7.80
Years Ended
Three Months Ended December 31, March 31, 2014
June 30, 2014 September 30, 2014 December 31,
2014 2014 2013 GAAP net earnings $ 1,099 $ 1,408
$ 1,602 $ 1,510 $ 5,619 $ 5,625 Intangible amortization, net of tax
effects 85 85 85 86 341
337 Adjusted net earnings $ 1,184 $ 1,493 $ 1,687 $ 1,596 $ 5,960 $
5,962 GAAP diluted earnings per share $ 1.10 $ 1.42 $ 1.63 $
1.55 $ 5.70 $ 5.50 Intangible amortization, net of tax effects per
share 0.09 0.09 0.09 0.09 0.34
0.33 Adjusted diluted earnings per share $ 1.19 $ 1.51 $
1.72 $ 1.64 $ 6.04 $ 5.83 (a) GAAP and adjusted net earnings
and earnings per share are attributable to UnitedHealth Group
common shareholders.
UNITEDHEALTH GROUP RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES PRO FORMA NET EARNINGS AND EARNINGS PER SHARE
(a) (in millions, except per share data) (unaudited)
Three Months Ended Year Ended December
31, December 31, 2015 2015 GAAP net
earnings $ 1,218 $ 5,813 Intangible amortization, net of tax
effects 134 423 Adjusted net earnings 1,352 6,236
Individual exchange-compliant product losses and advance
recognition of 2016 losses, net of tax effects 364
530 Pro forma net earnings $ 1,716 $ 6,766 GAAP diluted
earnings per share $ 1.26 $ 6.01 Intangible amortization, net of
tax effects per share 0.14 0.44 Adjusted diluted
earnings per share 1.40 6.45 Individual exchange-compliant product
losses and advance recognition of 2016 losses, net of tax per share
0.37 0.55 Pro forma earnings per share $ 1.77 $ 7.00
(a) GAAP, adjusted and pro forma net earnings and
earnings per share are attributable to UnitedHealth Group common
shareholders.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES INTEREST
COVERAGE RATIO (in millions) (unaudited)
Year Ended
December 31, 2015 GAAP net earnings $ 5,868 Interest
expense 790 Provision for income taxes 4,363 Depreciation and
amortization 1,693 EBITDA (a) $ 12,714 Interest
expense $ 790 EBITDA to Interest Coverage Ratio 16 times (a)
Earnings before interest, taxes, depreciation and amortization
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UnitedHealth GroupInvestors:Brett Manderfeld, 952-936-7216Vice
PresidentJohn S. Penshorn, 952-936-7214Senior Vice
PresidentorMedia:Don Nathan, 952-936-1885Senior Vice PresidentTyler
Mason, 424-333-6122Vice President
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