UnitedHealth(UNH) - 2024 Q3 - Quarterly Results

Q3 2024 Performance Overview Financial Highlights UnitedHealth Group reported strong Q3 2024 results with $100.8 billion in revenues and $8.7 billion in earnings, impacted by cyberattack Q3 2024 Consolidated Financial Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $100.8 billion | $92.4 billion | +$8.4 billion | | Earnings from Operations | $8.7 billion | $8.5 billion | +$0.2 billion | | Adjusted Earnings from Operations | $9.0 billion | $8.5 billion | +$0.5 billion | | Net Margin | 6.0% | 6.3% | -0.3 ppt | | Diluted EPS | $6.51 | $6.24 | +$0.27 | | Adjusted Diluted EPS | $7.15 | $6.56 | +$0.59 | - The Change Healthcare cyberattack had a significant impact, with Q3 earnings including $0.3 billion in unfavorable effects. Adjusted earnings of $7.15 per share exclude $0.28 in direct response costs but include $0.12 in business disruption impacts[1][4] Key Operational Ratios | Ratio | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Medical Care Ratio | 85.2% | N/A | 82.3% | | Operating Cost Ratio | 13.2% | 13.3% | 15.0% | | Days Claims Payable | 47.4 | 45.2 | 50.7 | - Cash flows from operations were strong at $14.0 billion, or 2.2 times net income. The company returned over $9.6 billion to shareholders through dividends and share repurchases in the first nine months of 2024, and the return on equity was 26.3% for the quarter[6] 2024 Outlook The company updated its full-year 2024 earnings outlook, absorbing increased cyberattack disruption impacts Full Year 2024 Earnings Per Share Outlook | Metric | Outlook Range | | :--- | :--- | | Net Earnings per Share | $15.50 to $15.75 | | Adjusted Net Earnings per Share | $27.50 to $27.75 | - The adjusted earnings outlook absorbs an estimated $0.75 per share of business disruption impacts from the Change Healthcare cyberattack, which is an increase of ~$0.10 per share from the previous quarter's estimate[2] Segment Performance UnitedHealthcare UnitedHealthcare's revenue grew $5 billion to $74.9 billion in Q3 2024, driven by increased domestic consumers UnitedHealthcare Q3 Financial Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $74.9 billion | $69.9 billion | +$5.0 billion | | Earnings from Operations | $4.2 billion | $4.6 billion | -$0.4 billion | | Operating Margin | 5.6% | 6.6% | -1.0 ppt | - The number of consumers served by domestic commercial offerings grew by 2.4 million year-to-date, reaching a total of 29.7 million[9] - The company serves 9.4 million seniors and people with complex needs. Its 2025 Medicare Advantage plans will reach 96% of eligible beneficiaries[9] - Total people served by state-based community offerings (Medicaid) grew to 7.5 million, stabilizing after the conclusion of state eligibility redeterminations[9] Optum Optum's revenues grew $7.2 billion to $63.9 billion in Q3 2024, with strong segment performance and $4.5 billion in operating earnings Optum Q3 Financial Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $63.9 billion | $56.7 billion | +$7.2 billion | | Earnings from Operations | $4.5 billion | $3.9 billion | +$0.6 billion | | Adjusted Earnings from Operations | $4.8 billion | $3.9 billion | +$0.9 billion | | Operating Margin | 7.0% | 6.9% | +0.1 ppt | Optum Health Optum Health's revenue increased $2.1 billion to $25.9 billion, driven by growth in value-based care and expanded services - Revenue grew due to an increase in patients under value-based care and the expansion of care types, including in-home and clinic services[13] Optum Insight Optum Insight's operating earnings were impacted by the cyberattack, recording ~$800 million, with adjusted earnings of $1 billion - Operating earnings were ~$800 million, while adjusted operating earnings were $1 billion. Both figures include a $135 million business disruption impact from the cyberattack, down from $335 million in Q2[13] - The revenue backlog grew by more than $1 billion over the last year, driven by new health system partnerships[13] Optum Rx Optum Rx delivered strong revenue growth of $5.4 billion to $34.2 billion, driven by new clients and expanded services - Revenue growth was attributed to new customers, expanded client relationships, and growth in specialty and community-based pharmacy services[14] - Adjusted scripts grew to nearly 410 million in Q3 2024, compared to 380 million in Q3 2023[14] Financial Statements Condensed Consolidated Statements of Operations Q3 2024 total revenues increased to $100.8 billion, with net earnings of $6.06 billion, impacted by a $8.33 billion subsidiary sale loss Q3 Statement of Operations Highlights (in millions) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $100,820 | $92,361 | | Earnings from Operations | $8,708 | $8,526 | | Net Earnings Attributable to UNH | $6,055 | $5,841 | | Diluted EPS | $6.51 | $6.24 | Nine Months Statement of Operations Highlights (in millions) | Metric | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | | Total Revenues | $299,471 | $277,195 | | Loss on sale of subsidiary | $(8,331) | $— | | Net Earnings Attributable to UNH | $8,862 | $16,926 | | Diluted EPS | $9.53 | $18.01 | Condensed Consolidated Balance Sheets As of September 30, 2024, total assets grew to $299.3 billion, with long-term debt rising to $74.1 billion and total equity increasing Balance Sheet Highlights (in millions) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $299,309 | $273,720 | | Cash and short-term investments | $37,134 | $29,628 | | Total Liabilities | $194,854 | $174,801 | | Long-term debt | $74,101 | $58,263 | | Total Equity | $99,881 | $94,421 | Condensed Consolidated Statements of Cash Flows Nine-month cash flows from operations were $21.8 billion, a decrease from prior year, with investing activities increasing to $19.4 billion Nine Months Cash Flow Highlights (in millions) | Metric | 9M 2024 | 9M 2023 | | :--- | :--- | :--- | | Cash flows from operating activities | $21,835 | $34,261 | | Cash flows used for investing activities | $(19,408) | $(14,387) | | Loans to care providers - cyberattack | $(8,904) | $— | | Cash flows from (used for) financing activities | $4,830 | $(4,373) | | Common share repurchases | $(4,028) | $(6,500) | | Dividends paid | $(5,601) | $(5,023) | | Net increase in cash | $6,973 | $15,550 | Supplemental Information Business Segment Financials (Revenue & Earnings) This section details Q3 2024 revenues and earnings by segment, with UnitedHealthcare at $74.9 billion and Optum at $63.9 billion Q3 2024 Revenues by Business (in millions) | Segment | Revenue | | :--- | :--- | | UnitedHealthcare | $74,853 | | Optum | $63,925 | | - Optum Health | $25,917 | | - Optum Insight | $4,931 | | - Optum Rx | $34,207 | Q3 2024 Earnings from Operations by Business (in millions) | Segment | Earnings from Operations | Adjusted Earnings from Operations | | :--- | :--- | :--- | | UnitedHealthcare | $4,212 | $4,212 | | Optum | $4,496 | $4,753 | | - Optum Health | $2,161 | $2,161 | | - Optum Insight | $791 | $1,048 | | - Optum Rx | $1,544 | $1,544 | - For Q3 2024, the total cyberattack impact on earnings from operations was $475 million, comprising $341 million in direct response costs and $134 million in business disruption impacts. These were primarily concentrated within the Optum Insight segment[37] People Served and Performance Metrics As of September 30, 2024, UnitedHealthcare served 50.7 million people globally, with Optum showing growth across its segments UnitedHealthcare People Served (in thousands) as of Sep 30, 2024 | Category | People Served | | :--- | :--- | | Total Commercial - Domestic | 29,730 | | Medicare Advantage | 7,810 | | Medicaid | 7,450 | | Total UnitedHealthcare - Medical | 50,665 | Optum Performance Metrics as of Sep 30, 2024 | Metric | Value | | :--- | :--- | | Optum Health Consumers Served | 104 million | | Optum Insight Contract Backlog | $32.8 billion | | Optum Rx Quarterly Adjusted Scripts | 407 million | Reconciliation of Non-GAAP Financial Measures Non-GAAP measures clarify performance, adjusting for amortization, South American operations, and cyberattack costs, increasing Q3 diluted EPS from $6.51 to $7.15 - Non-GAAP measures are adjusted for three main categories: Intangible Amortization, South American Impacts (related to the sale of operations), and Direct Response Costs from the cyberattack[43] Q3 2024 EPS Reconciliation (per share) | Description | Value | | :--- | :--- | | Diluted EPS (GAAP) | $6.51 | | Intangible amortization | $0.46 | | Tax effect of amortization | $(0.11) | | South American impacts | $0.01 | | Direct response costs - cyberattack | $0.37 | | Tax effect of response costs | $(0.09) | | Adjusted Diluted EPS (Non-GAAP) | $7.15 | - The total cyberattack impact per share in Q3 2024 was $0.40, which includes $0.12 per share from business disruption impacts (reduced revenue) and the direct response costs[47]