UnitedHealth : Reports Second Quarter Results

UnitedHealth Group Reports Second Quarter 2016 Results N E W S R E L E A S E

Investors:‌‌	Brett Manderfeld	John S. Penshorn	Media:	Don Nathan	Tyler Mason
Vice President	Senior Vice President	Senior Vice President	Vice President
952-936-7216	952-936-7214	952-936-1885	424-333-6122

(For Immediate Release)

UNITEDHEALTH GROUP REPORTS SECOND QUARTER RESULTS

• Second Quarter Revenues of $46.5 Billion Grew 28% Year-Over-Year
• UnitedHealthcare Grew Revenues 14% Year-Over-Year, Adding 2.1 Million More People in the Past 12 Months
• Optum Grew Revenues 52% Year-Over-Year to $20.6 Billion
• Cash Flows from Operations were $1.7 Billion in the Quarter
• GAAP Net Earnings of $1.81 Per Share Grew 10% Year-Over-Year
• Adjusted Net Earnings of $1.96 Per Share Grew 13% Year-Over-Year

NEW YORK, NY (July 19, 2016) - UnitedHealth Group (NYSE: UNH) reported second quarter results reflecting well-balanced growth and disciplined execution across its core businesses.

"Our businesses were privileged again this quarter to have grown to serve more customers and consumers.

We continue to invest to differentiate our products and services to better serve our customers and fuel future growth," said Stephen J. Hemsley, chief executive officer of UnitedHealth Group.

The Company narrowed its outlook for 2016 GAAP net earnings to a range of $7.25 to $7.40 per share and adjusted net earnings to a range of $7.80 to $7.95 per share.

Quarterly Financial Performance
Three Months Ended
June 30,	June 30,	March 31,
2016	2015	2016
Revenues	$46.5 billion	$36.3 billion	$44.5 billion
Earnings From Operations	$3.2 billion	$2.9 billion	$3.0 billion
Net Margin	3.8%	4.4%	3.6%

• UnitedHealth Group second quarter 2016 revenues grew 28 percent or $10.2 billion year-over-year to

  $46.5 billion. Growth was broad-based, with all businesses driving sequential quarterly revenue increases.

  Year-over-year, UnitedHealthcare revenues grew 14 percent and Optum revenues grew 52 percent, with revenue growth by business ranging from 18 percent to 69 percent at Optum.

• Second quarter earnings from operations grew 11 percent year-over-year to $3.2 billion and adjusted net earnings grew 13 percent to $1.96 per share. Strengthened sequential margins at Optum lifted the consolidated net margin 20 basis points higher to 3.8 percent, with comparable business mix.

• Second quarter 2016 cash flows from operations of $1.7 billion increased 45 percent year-over-year and were

  1 times net earnings in the quarter, up from 0.7 times net earnings in second quarter 2015. Year-to-date 2016 cash flows from operations of $4 billion grew 17 percent year-over-year and were 1.2 times year-to-date net earnings.

• The consolidated medical care ratio increased 30 basis points to 82.0 percent in the second quarter, and included more than 50 basis points or approximately $200 million of additional full year losses from ACA-compliant individual products above previous projections and fully absorbed within second quarter results.

• First half 2016 medical reserves developed favorably year-to-date by $300 million, compared to $130 million in favorable development in the first six months of 2015. Within the 2016 result, reserves developed unfavorably by

  $100 million in the second quarter, of which $60 million related to specific items from prior years that do not impact on-going medical trends. The current year component of development was due entirely to higher medical costs in ACA-compliant individual products. Overall, medical cost trends remain well-controlled and consistent with expectations.

• The second quarter 2016 operating cost ratio of 14.6 percent decreased 120 basis points year-over-year, primarily due to changes in business mix. Effective operating cost management and long-standing seasonal spending patterns combined to improve the operating cost ratio 60 basis points on a sequential quarter basis.

• The second quarter tax rate of 40 percent reflected the first quarter 2016 adoption of a new accounting standard for stock-based compensation.

  UnitedHealth Group - Continued

• Second quarter 2016 days claims payable of 51 days increased 3 days year-over-year and were stable sequentially; days sales outstanding of 18 days increased 3 days year-over-year and 2 days sequentially, primarily due to higher government receivable balances.

• The Company's debt to total capital ratio was 47.8 percent at June 30, 2016, down from 48.7 percent at year end 2015. Second quarter 2016 annualized return on equity of 19.6 percent was consistent with second quarter 2015 performance.

• During second quarter 2016 the Company increased the annual dividend payment rate by 25 percent to

  $2.50 per share.

  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 Financial Performance
  Three Months Ended
  June 30,	June 30,	March 31,
  2016	2015	2016
  Revenues	$37.6 billion	$33.1 billion	$35.9 billion
  Earnings From Operations	$1.9 billion	$2.0 billion	$1.9 million
  Operating Margin	5.2%	6.1%	5.2%

• UnitedHealthcare grew over the past year to serve over 2.1 million more people in domestic medical benefits markets, including 320,000 more people in the second quarter. This broad-based growth trend is reflected in UnitedHealthcare's second quarter revenue growth of 14 percent or $4.5 billion year-over-year, to $37.6 billion.

• Second quarter 2016 earnings from operations for UnitedHealthcare of $1.9 billion decreased 4 percent year-over- year. UnitedHealthcare's second quarter operating margin of 5.2 percent was stable sequentially but decreased

90 basis points year-over-year, primarily due to $200 million in ACA-compliant individual product losses beyond projections, as well as overall reserve development.