UnitedHealth Group Reports First Quarter 2024 Results
-- Revenues of $99.8 Billion Grew Nearly $8 Billion Year Over Year
-- Earnings Reflect $0.74 per Share of Impacts from Change Healthcare
Cyberattack; $0.49 to Support Direct Response Efforts and $0.25 in
Business Disruption Impacts
-- Company has Provided Over $6 Billion in Advance Funding and
Interest-Free Loans to Support Care Providers in Need
-- First Quarter Net Loss of $1.53 Per Share is Due Primarily to Currency
Effects of Previously Reported Brazil Sale and the Cyberattack
-- Adjusted Earnings of $6.91 Per Share Include the $0.25 in Business
Disruption Impacts but Exclude Brazil Sale and Direct Response Costs
UnitedHealth Group (NYSE: UNH) reported first quarter 2024 results reflecting broad-based growth at Optum and UnitedHealthcare, medical care activity consistent with expectations and the impact of the recent cyberattack on Change Healthcare.
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UnitedHealth Group corporate headquarters (Photo: Business Wire)
“The core story at UnitedHealth Group remains our colleagues delivering improved experiences for the people we serve and driving balanced growth even while swiftly and effectively addressing the attack on Change Healthcare,” said Andrew Witty, chief executive officer of UnitedHealth Group.
The company continues to make significant progress in restoring the affected Change Healthcare services while providing financial support to impacted health care providers. To date, the company has provided over $6 billion in advance funding and interest-free loans to support care providers in need.
Total cyberattack impacts in the first quarter amounted to $0.74 per share and the company estimates full year 2024 impacts of $1.15 to $1.35 per share. In the first quarter, this included $0.49 per share to support direct response efforts such as the Change Healthcare clearinghouse platform restoration and increased medical care expenditures as the company suspended some care management activities to help care providers with their workflow processes. The company estimates direct response costs of $0.85 to $0.95 per share for full year 2024. Direct response costs are included in net earnings and excluded from adjusted earnings per share. Additionally, Change Healthcare business disruption impacts, reflecting lost revenue and the costs of maintaining full readiness of the affected Change Healthcare services, were $0.25 per share in the first quarter. The company currently estimates $0.30 to $0.40 per share business disruption impact for full year 2024. These business disruption impacts are included in both net earnings and adjusted earnings per share.
As reported previously, the company recorded an approximately $7 billion charge in the quarter due to the sale of its Brazil operations, the majority of which was noncash and due to the cumulative impact of foreign currency translation losses.
The company updated its full year 2024 net earnings outlook to $17.60 to $18.20 per share to reflect the Brazil sale and the estimated direct response costs of the cyberattack. The company maintained its adjusted net earnings outlook of $27.50 to $28.00 per share. This adjusted earnings per share outlook excludes the impacts of the direct response costs and Brazil sale, while including the estimated $0.30 to $0.40 per share of business disruption impacts for the affected Change Healthcare services.
Quarterly Financial Performance
Three Months Ended
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March 31,
March 31, 2024 March 31, December 31,
2024 (Adjusted) 2023 2023
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Revenues $99.8 billion $99.8 billion $91.9 billion $94.4 billion
Earnings from
Operations $ 7.9 billion $ 8.5 billion $ 8.1 billion $ 7.7 billion
Net Margin (1.4%) 6.1% 6.1% 5.8%
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-- UnitedHealth Group's first quarter 2024 revenues grew nearly $8 billion
year over year to $99.8 billion. First quarter earnings from operations
were $7.9 billion, including $872 million in unfavorable cyberattack
effects. Adjusted earnings from operations of $8.5 billion include the
Change Healthcare business disruption impacts and exclude the cyberattack
direct response costs. Growth was led by a strong expansion in the number
of people served at Optum and UnitedHealthcare.
-- The company did not reflect any favorable earnings impacting medical
reserve development in the quarter. Out of prudence, due to the potential
for the cyberattack to affect claims receipt timing, the company
reflected an additional $800 million of claims reserves.
-- Days claims payable of 47.1 compared to 47.9 in fourth quarter 2023 and
47.8 in first quarter 2023. Within this, the acceleration of payments to
care providers and the Brazil sale reduced reported days claims payable
by three days. The company's medical costs payable balance increased $1.6
billion from year-end 2023 to $34 billion. The change was due to a $3
billion increase in the incurred but not yet reported (IBNR) component of
this balance in part to prudently accommodate the related ongoing claims
receipt assessment, partially offset by a reduction in the fully
processed claims component due to accelerated care provider claims
payments.
-- Overall care patterns in the first quarter were consistent with the
company's expectations. The first quarter 2024 medical care ratio at
84.3% included 40 basis points of impact due to accommodations to support
care providers. The increase from the prior year 82.2% was due to the
previously noted revenue effects of the Medicare funding reductions,
considerations driven by the Change Healthcare cyberattack, including
accommodations to support care providers, medical reserve and development
effects, and business mix.
-- The first quarter 2024 operating cost ratio of 14.1% included
approximately 30 basis points of impact due to costs incurred to support
the company's direct response efforts. The result compared to 14.8% in
2023, reflecting strong operating cost management, partially offset by
continued growth of the services businesses and investments to support
growth.
-- Cash flows from operations from the first quarter 2024 were $1.1
billion and were affected by approximately $3 billion due to the
company's cyberattack response actions, including funding acceleration to
care providers, and were additionally impacted due to the timing of
public sector cash receipts. The company returned $4.8 billion to
shareholders in the first quarter through dividends and share
repurchases.
UnitedHealthcare provides health care benefits globally, serving individuals and employers, and Medicare and Medicaid beneficiaries. UnitedHealthcare is dedicated to improving the value customers and consumers receive by improving health and wellness, enhancing the quality of care received, simplifying the health care experience and reducing the total cost of care.
Quarterly Financial Performance
Three Months Ended
-----------------------------------------------------------
March 31,
March 31, 2024 March 31, December 31,
2024 (Adjusted) 2023 2023
------------- -------------- ------------- -------------
Revenues $75.4 billion $75.4 billion $70.5 billion $70.8 billion
Earnings from
Operations $ 4.4 billion $ 4.6 billion $ 4.3 billion $ 3.1 billion
Operating
Margin 5.8% 6.1% 6.2% 4.4%
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-- UnitedHealthcare first quarter revenues of $75.4 billion increased
nearly $5 billion over the prior year reflecting growth in the number of
people served domestically. Operating earnings were $4.4 billion and
adjusted operating earnings were $4.6 billion.
-- UnitedHealthcare total domestic consumers served grew by nearly 2
million in the first quarter 2024, led by commercial and senior, offset
by expected member attrition in Medicaid due to ongoing eligibility
redeterminations. Growth across the UnitedHealthcare portfolio reflects
strong customer response to the company's innovative and affordable
benefit offerings.
-- The number of consumers served with domestic commercial offerings grew
in the first quarter 2024 to 29.4 million. This growth reflects
recognition among the employer and individual markets of
UnitedHealthcare's diverse and innovative product portfolio that drives
affordability and consumer ease.
-- The total number of people served by the company's offerings for
seniors and people with complex needs grew to 9.4 million.
UnitedHealthcare offerings feature product designs tailored to meet the
specific needs of people with limited economic resources and who are
often underserved. Unique offerings, such as integrated card and
simplified transportation offerings, led to a significant increase in
member engagement and greater consumer satisfaction.
-- Total people served by the company's state-based community offerings