UnitedHealth : Reports Third Quarter Results

UNITEDHEALTH GROUP REPORTS THIRD QUARTER RESULTS

• Third Quarter Revenues of $46.3 Billion Grew 12% Year-Over-Year
• Third Quarter Earnings from Operations Grew 19% Year-Over-Year
• Cash Flows from Operations were $7.2 Billion in the Third Quarter; Adjusted Cash Flows from Operations were $3.4 Billion, Up 22% Year-Over-Year
• Third Quarter Net Earnings were $2.03 Per Share;

NEW YORK, NY (October 18, 2016) - UnitedHealth Group (NYSE: UNH) reported third quarter results reflecting well-balanced growth and steady execution across its diverse businesses.

"Our growth indicators are positive as we conclude 2016, and we expect to be well positioned in 2017 to better serve consumers and deliver more value to the health system overall," said Stephen J. Hemsley, chief executive officer of UnitedHealth Group.

The Company increased its outlook for 2016 GAAP net earnings to approximately $7.45 per share and adjusted net earnings to approximately $8.00 per share, from its previous range of $7.25 to $7.40 in GAAP net earnings per share and $7.80 to $7.95 in adjusted net earnings per share.

• UnitedHealth Group businesses achieved broad-based growth in the third quarter of 2016, with consolidated revenues increasing 12 percent or $4.8 billion year-over-year to $46.3 billion. Year-to-date, UnitedHealthcare revenues grew 12 percent year-over-year, with double-digit percentage growth across all domestic businesses on strong, diversified enrollment growth. Optum revenues grew 34 percent year-to-date, with year-over-year revenue growth by business at Optum ranging from 20 percent to 41 percent.

• UnitedHealth Group's third quarter earnings from operations grew 19 percent year-over-year to $3.6 billion and adjusted net earnings grew 23 percent to $2.17 per share. Year-over-year operating margin improvement of

  40 basis points and a lower effective tax rate combined to lift the consolidated net margin by 50 basis points to

  4.3 percent in the quarter.

• Third quarter 2016 cash flows from operations were $7.2 billion. After adjusting to reflect cash received from CMS in the proper period, third quarter cash flows from operations of $3.4 billion grew 22 percent year-over-year and were 1.7 times net earnings in the quarter. Year-to-date 2016 adjusted cash flows from operations of

  $7.4 billion grew 19 percent year-over-year and were 1.4 times year-to-date net earnings.

• The consolidated medical care ratio decreased 60 basis points year-over-year to 80.3 percent in the third quarter. Year-to-date, the medical care ratio of 81.3 percent decreased 10 basis points over the prior year period.

• Third quarter 2016 favorable reserve development of $120 million included $230 million of favorable development from the first two quarters of 2016. Medical cost trends remained within expectations.

• The third quarter 2016 operating cost ratio of 15.2 percent increased 30 basis points year-over-year due to increased levels of investment in the business to support future growth.

• The third quarter 2016 tax rate of 40.3 percent decreased year-over-year, in line with expectations.

• Third quarter 2016 days claims payable of 52 days increased 2 days year-over-year and 1 day sequentially;

  days sales outstanding of 15 days was stable year-over-year and decreased 3 days sequentially due to government receivable collections.

  UnitedHealth Group - Continued

• The Company's debt to total capital ratio was 46.9 percent at September 30, 2016, down from 48.9 percent at September 30, 2015. Third quarter 2016 annualized return on equity of 21.3 percent improved from 19.3 percent during third quarter 2015.

• Shareholder dividend payments grew 25 percent year-over-year to $595 million in third quarter 2016. Year-to- date the Company has repurchased 8.8 million shares for $1.1 billion, including $137 million in the third 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 Financial Performance
  Three Months Ended
  September 30,	September 30,	June 30,
  2016	2015	2016
  Revenues	$37.2 billion	$32.8 billion	$37.6 billion
  Earnings From Operations	$2.1 billion	$1.9 billion	$1.9 billion
  Operating Margin	5.7%	5.7%	5.2%

• Over the past year UnitedHealthcare has grown to serve over 2 million more consumers in domestic medical benefits markets, including approximately 200,000 more people in the third quarter. This broad-based growth is reflected in UnitedHealthcare's third quarter revenue growth of 13 percent, or $4.4 billion year-over-year, to $37.2 billion.

• Third quarter 2016 earnings from operations for UnitedHealthcare of $2.1 billion increased 13 percent year-over- year. UnitedHealthcare's third quarter operating margin of 5.7 percent remained stable year-over-year.