UnitedHealth 1Q17 Earnings Call Notes

Stephen Hemsley – CEO

Aren’t planning for any changes to insurance

“We have engaged with elected officials from both parties, and at the federal and state levels, to address improving quality, access, affordability, cost and satisfaction for all stakeholders. Affordability can be improved most in the immediate term through lower tax, and we hope Congress act soon to permanently repeal the health insurance tax, look forward further worsens consumers’ premiums, state budgets and senior benefits. We have though insight as to whether that will or will not occur, and accordingly, our plans continue to assume the taxable return in 2018, which will raise premiums and/or reduce benefits for commercial businesses, state and our nation’s senior population.”

We’d like to repeal the health insurance tax

“In our prepared remarks, we obviously focused on the health insurance tax. Because that, as Dan said, is going into the marketplace now for 2018. And that has an impact on affordability and the uptake of the participation in those markets. So we are strong advocate of repealing that and to taking that action as quickly as possible. Beyond that, we have engaged. We think pretty constructively around the notion of, and I think you can see this in our published materials on our Web site, that we see actually a marketplace that could be pretty constructive. But based upon more orientation to state based markets, more flexibility in the marketplace, really seeing Medicaid as the programs that have grown in effectiveness and to become broadly recognized as actually very efficient healthcare coverage for the populations to which they apply.”

Dan Schumacher

We support taxing us less

Sure. Good morning Dave. Obviously, from our perspective, we have been long supporters of the permanent repeal of the health insurers’ tax. At the end of the day, obviously, it just increases the cost of healthcare, makes it less affordable and compromises people’s ability to gain coverage. So we are certainly advocating along those lines. As we think about the tax itself, obviously, we’ve got to deal with it as it sits currently in loss, and so that’s what we’re doing. We’re planning accordingly. We’re incorporating and then pricing and also incorporating in our thinking as we plan our benefits in Medicare.

Miscellaneous Earnings Call Notes 10.21.16

Hasbro’s (HAS) CEO Brian Goldner on Q3 2016 Results

Strong POS trends

“So you’re right, Drew. We are in fact seeing really strong POS trends entering the fourth quarter, particularly in the US. We saw a little bit of softness in POS in the late summer, July, August period. And then in September given the shift in Star Wars as well as the impact from Jurassic, that impacted our US POS. Internationally, we’re seeing very strong POS, up double digits, in Europe, up in Latin America, up year to date in Asia-Pacific. And then in the quarter in Asia Pacific, particularly in Australia, recently we’ve seen some retail issues with a retailer where there was just less inventory taken, and a little bit less of a sell-through and therefore impacted that HAPM number, the Asia-Pacific number because of Australia. So overall we feel very good about the POS trends year to date, and the POS trends going into fourth quarter, with a little bit of a note in the third quarter due to some of those timing shifts and some of the brands that have come down significantly versus year ago.”


Kansas City Southern’s (KSU) CEO Patrick Ottensmeyer on Q3 2016

Brian Hancock

Mexican customers very aware of peso changes

Chris, this is Brian. I would tell you that for the customers in Mexico, as they look at the peso, that impacts them significantly. And many of them have asked us price in peso and we have done over the last 18 months. There is still a significant portion of our businesses that is priced in dollars because it’s more of a global basis. But we watch that as they do as well. And we’ve tried to do everything we can to make sure that each other understand where the peso is, how it’s impacting the business.”


UnitedHealth Group’s (UNH) CEO Stephen Hemsley on Q3 2016 Results

Medicaid has been ACA’s biggest success

“Medicaid has been a very significant success of the ACA and wherever that has played out, those markets have actually been more stable and better performing. And Medicare continues to be a core program of the country and that funding for both Medicare and Medicaid is something that we have been advocating consistency and stability of it. Kind of those themes are what we have stayed with. I think commenting beyond that, particularly as new administrations take hold and so forth, our posture is to be very constructive about making the marketplace work most effectively and serving the most number of individuals and making that system simpler and more usable for everybody. So I think beyond commenting on that level, I don’t think we are going to get into what’s going to happen going forward on either a state basis or federal.”


Regions Financial’s (RF) CEO Grayson Hall on Q3 2016 Results

Large customers accessing capital markets to pay down bank debt

“Regarding business lending, average loans are down modestly on a year-over-year basis. We continue to experience muted customer demand and heavy competition in the business segment, particularly in the middle market commercial and small business sectors. We are also seeing some large corporate customers’ accessing the capital markets and are using these proceeds to pay down bank debt”

Barbara Godin

Mortgage delinquencies getting back to all time lows

“Yes firstly they’re all within our risk appetite so we’re very comfortable with what’s happening in the consumer book. What we see is real estate continues to improve in particularly we see home equity was down significantly this quarter. Mortgage is really back to with all-time low tracking along the bottom. Some of the other portfolios that we see indirect is pretty stable.”


Burberry FY 2Q17 Carol Fairweather – Chief Financial Officer

Did see a slight improvement in US but still challenging

“In terms of the U.S., in terms of our plans to turnaround, clearly the U.S. market does remain very challenging. It’s an 80% domestic market for us and both domestic and tourist remain down. That said, we did see, and I said just now, we did see a slightly improvement in Q2, but we are still down low single digit.”

Did see improvement in China

“Okay, so in terms of Chinese trends, Luca, what we are seeing is we just seeing an improvement in our second quarter, both at home and when they were travelling. So China, as I said was up mid-single digit or up double digit excluding the rationalization or evolution of the portfolio. ”


Morgan Stanley’s (MS) CEO James Gorman on Q3 2016 Results

I don’t think I’ve ever seen transaction levels lower than this. It has to change

“I think as having watched this business over two or three decades, I don’t think I’ve seen transaction levels lower than this. And just supposed against that that the business had record revenues is a testament to the managed money side of it, the banking side of it, the deposit side of it, things that frankly 15 years ago really didn’t exist to a highly dependent transaction activity. And the world has changed, investors have changed but we’re sitting on $2.1 trillion of assets. And their behavior has changed whether the transaction stuff picks up; I don’t know post the election, post the Fed moving it remains to be seen. My guess is over time it does, I feel just intuitively, it feels like a low but can it go low, I guess it could go low but probably there is a bias to moving up rather than moving down of the next couple of years that said more and more money is going to fee based accounts.”


SUPERVALU’s (SVU) CEO Mark Gross on Q2 2017 Results

Eric Claus

22 states lowered SNAP benefits

“In addition to deflation, Save-A-Lot has been adversely impacted by the reduction of SNAP benefits in 22 states in which we operate, the factor that is compounded by the fact that our level of SNAP sales is meaningfully higher than other retailers. These states have either lowered the amounts paid to individuals or barred them completely from receiving benefits, a fact that has negatively impacted customer accounts and basket size among our customers using SNAP. ”


M&T Banks’ (MTB) on Q3 2016 Results

You’re certainly starting to hear more people worry about concentration limits in CRE

“Well, I think you’re certainly hearing more people worry about the concentration limits. And I think that’s certainly a concern. I read through some of the other comments from other calls and I recognize that’s a concern. We obviously pay attention to that as well. And when we look at where we stand today, we feel pretty good about the headroom that we have there. But I guess the important thing for us is that we try to do business, particularly in the commercial real estate space, with customers with whom we have a long history of doing business. The equity that’s in the deals is still very strong and as strong as it was pre- the last recession or stronger than that.”

Commercial bankers feeling good about the demand that’s out there

“I guess from speaking with our commercial bankers across the region before coming on the call, they are feeling good about the demand that’s out there. You know, as I mentioned before, our pipeline is very, very strong. It’s in line with what we’ve seen in prior quarters. I think there is a little bit of a pause and I expect there will be a pause this quarter, as we go through the election cycle and people digest what that means and with the change in administration.”


Tupperware Brands’ (TUP) CEO E.V. Goings on Q3 2016 Results

Tupperware’s global sales force is 3.1m people

“We are holding our sales force size at 3.1 million. There is really no change from the second quarter.”


Danaher’s (DHR) CEO Tom Joyce on Q3 2016 Results

We have not seen another leg down in industrials

“Yes. Well, first of all, I think we have seen – while not the beginnings of growth on the industrial side, I think we haven’t seen – we have not seen another leg down. In other words, we have seen some stability. ”


UnitedHealth 2Q16 Earnings Call Notes

UnitedHealth Group (UNH) Stephen J. Hemsley on Q2 2016 Results

Revenue grew 28% y/y, 132m insured

“For second quarter 2016, UnitedHealth Group revenues grew 28.2% year-over-year to $46.5 billion, with all domestic lines posting double-digit growth, as we grew to serve 132 million unique individuals. ”

David Scott Wichmann – President

Medical cost trends growing at 6% per year

“Commercial medical trend remains consistent with the original outlook of 6% plus or minus 50 basis points. Hospital inpatient admissions per person are lower year-over-year across all UnitedHealthcare businesses. Like most years, there are pockets of higher cost trends, including specialty pharmacy and the increasing use of ER and outpatient services this year. Overall, health care cost trends remain in line and controlled.”

UnitedHealth 4Q15 Earnings Call Notes

UnitedHealth Group’s (UNH) CEO Stephen Hemsley on Q4 2015 Results

2016 is off to a strong start

“2016 is off to a strong start considerably stronger than 2015. Our initial growth trends are very encouraging and our service performance for new January business is strong. Optum’s revenue backlog and pipelines have never been stronger. Medical cost in the fourth quarter trended slightly better than expected and we are confident, our benefit businesses have appropriately priced our products for 2016.”

Expect that exchange members will decline over the course of the year. Have withdrawn products

“Turning to exchanges, we expect to start the year at around 700,000 or fewer public exchange members and expect these numbers will steadily decline over the course of the year. We are not pursuing membership growth and have taken a comprehensive set of actions to contain membership and sharpen performance over the balance of 2016. We have withdrawn platinum products, increased prices, eliminated marketing and commissions, intensified clinical engagement and medical management with this membership group and reduced operating cost as appropriate.”

Miscellaneous Company Notes 10.15.15

PrivateBancorp’s (PVTB) CEO Larry Richman on Q3 2015 Results

We see our clients remaining appropriately cautious

“Certainly our clients are mindful of geopolitical and other macroeconomic events and we see them remaining appropriately cautious. We are seeing our clients performing well and seeking new ways to build their businesses and this provides opportunities for us. The banking environment remains competitive in pricing and structure. It is important that we remain selective and disciplined. ”

Pressure points not manifesting in credit deterioration

“it’s really tough right now, Steve, to see where there is the next pressure point. You can point to various issues that all of us read about on the first page of the paper week-to-week that props up, whether it be energy, leverage loans, state of Illinois, all kinds of things that are out there, but we are just not seeing any of that at this stage really manifest into any systemic issues for us.”

LIBOR curves are not fun to look at

“I looked at the futures this morning for the 30-day LIBOR as they go out the end of 2016, the end of 2017 and they are not fun to look at.”

Credit quality is business as usual

“So we are at a very good place. I am very pleased with what I am seeing. I think the movement here is largely business as usual.”


Del Frisco’s Restaurant Group’s (DFRG) CEO Mark Mednansky on Q3 2015 Results

Restaurants affected by slowdown in energy economies

“comparable sales decreased 1.4% during the quarter, driven by lower guest count. The slowdown was partially related to the ongoing energy related issues affecting Texas and to a lesser extent Colorado, which together comprise a third of the brand’s comparable restaurant feed. ”

Lower cost of sales not enough to offset higher labor, operating and occupancy

“Lower cost of sales due to favorable prime beef costs and solid controls, was not offset enough for the higher labor, operating and occupancy expenses. ”

People want things a little quicker today

“today’s dining guests, unless they’re celebrating an occasion, or they want to linger a business meeting to have more time to discuss business, people want things a little quicker today and that’s one of the reasons we built the Grille brand…New cooking technology in the new stores has helped. We are starting to move some of that into the core group”


Colfax’s (CFX) CEO Matt Trerotola on Q3 2015 Results

Need to presume that markets would recover in 2017 at the earliest

‘ we’re seeing tough trends in the market and we think we need to presume that 2017 would be the earliest market base recovery. We’re going to be working hard also on our relative performance in those markets and trying to make sure that we perform as strongly as possible against that market backdrop.”

We’ve seen some more challenging trends on the oil and gas front

” recently we’ve seen some more challenging trends that are on the oil and gas front. And so we’re trying to — that’s one of the number of things that have taken some of the proactive cost actions to make sure they we’re prepared for whatever might be coming in the future. But I can’t say more than that in terms of where things might go in that sector.”

Oil and Gas and Marine are two of the highest users of welding

“the highest users have welding having some significant cyclical downturn, the oil and gas and marine being two of the key ones there. And so that combination of factors on the external and the currency challenges really stacks up to be a significant portion of our challenges this year.”


First Republic Bank’s (FRC) CEO Jim Herbert on Q3 2015 Results

Big banks are getting more aggressive in mortgage lending

“Yes, Erika, they are getting more aggressive. They are cutting both pricing and to a modest extent, standards. Their loan-to-value advanced ratios up to $2 million or $3 million have climbed into the 80% range. We are not following them. And that’s the cause for us losing some business. But as you can see, the volume has held up pretty well in the quarter, we’re happy with them. So we’ll compete on price, but we will not follow a change in terms or conditions.”


KeyCorp’s (KEY) CEO Beth Mooney on Q3 2015 Results

We’ve called rates wrong

“In the past and we’ve called this wrong, we continue to expect that interest rates would be going up, say 12 months down the road and we haven’t seen that yet. And so we’ll continue to reassess and we have the flexibility to manage that overall rate risk position fairly quickly with the change in interest rate swap position.”

Achieved a lot of loan growth simply because we have more bankers than we did at this point last year

“On the Community Bank side, we have achieved a lot of loan growth simply because we have more bankers than we did at this point last year. We have made a significant investment in commercial bankers, putting more feet on the street and we’re starting to see dividends coming from those investments”

Capital markets deals got pushed out a bit

“clearly the disruption in the market in the last part of the third quarter caused some of our deals and probably everybody else’s deals to be pushed out a bit. So there’s no question.”


UnitedHealthcare Group’s (UNH) CEO Stephen Hemsley on Q3 2015 Results

Risk pool served by exchanges would require more medical services than originally expected, so raising prices

“Like others we observe market-wide data this past spring that suggested the risk pool served by public exchanges would require more medical services than original expectations. Rather than wait for our own experience with our new members to fully developed, we increased rates and repositioned certain products market by market for 2016, and we expect improved performance next year.”

Raising prices double digits

“Average increases across the country are in the double-digits, and we also took steps to eliminate some products and reposition other products.”


JS Earnings Call Notes BLK, USB, UNH, CSX, BAC

Jeremy S., an investment analyst here in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.

 

Blackrock (BLK) CEO Larry Fink says one of the strengths of the firm’s business model is that clients can switch asset allocation and funds internally rather than leave Blackrock & take their funds to a different asset manager

“A number of those outflows from institution clients, however, have been offset by inflows by the same clients into BlackRock’s active strategies. This is a very important component that we all should be focusing on, because as we discussed how we are building our unique business model, having the ability to have clients internally move assets around whether it’s from beta to active or active to beta, this allows us to continue to build deeper and more elongated relationships with our clients.”

Blackrock (BLK) CEO Larry Fink says a large majority of their fixed income investors are pension funds and insurance companies 

“70% of our fixed income investors are pension and insurance companies. They’re not influenced by market moves. They’re trying to match a liability, and that’s the problem with the narrative, they’re not the players who’re going to whip around the interest rates.”

Blackrock (BLK) President Robert Kapito downplayed his enthusiasm of “active” ETF’s

One of the benefits of the ETFs is the transparency, the diversification, and that enhances the trading and the liquidity of these. So, we’re not sure that this is an opportunity we’re going to pursue. We’re thinking about it, and we’ll just see how the market continues to evolve. So, we’re not ruling it out, but right now, we’re not looking at that, and we view that as something that will compete more directly with mutual funds than it will with the normal ETFs.”

 

 

 

U.S. Bank (USB) CEO Richard Davis, who has been notoriously patient on the yield curve rising, finally expects to see a stronger 2nd half for the U.S. economy and thus a potentially rising yield curve

I’m actually more optimistic on the revenue for the second half because things have turned the corner.”

While the compliance costs for his bank have kept increasing

“Expenses will come down as we watch our nickels and dimes, but I will tell you the cost of compliance has erased a lot of the benefits I would otherwise hope to have gotten a year-and-a-half ago when we started this as we’ve continued to add the compliance personnel, audit personnel, and not just in those areas but in the front line where we have that same compliance responsibility that’s gone up substantially.”

 

 

 

UnitedHealthcare Group (UNH) CEO David Wichmann said his firm is using games to incentivize his insurees to stay healthy and reduce costs

“We are bridging the direct link between consumer engagement and lower per member cost trend and with employers’ help further engaging consumers in their own health and wellness. This includes our product development efforts like Rally in cutting-edge areas like incentives, gamifications, missions and social networks. Engaging people on their own care informs them as real consumers and translates into better care, better care resource use and lower costs.”

 

 

 

CSX CEO Michael Ward said even though revenue fell, reducing expenses helped lead to a record quarter of profitability

“we have the resources in place to meet customer demand across the network, supporting improved service performance and operational efficiency. That efficiency coupled with lower fuel prices helped decrease expenses by 9% and delivered all-time records in operating income at $1 billion and an operating ratio of 66.8% for the quarter.”
And they’re seeing reduced labor expenses as well as productivity initiatives across their workforce 
“We expect labor inflation to be around $25 million in the third quarter, which is a reduction from the level seen in the first half as union wage inflation becomes less of a headwind. In addition, we expect labor and fringe expense to benefit from further network fluidity improvement and efficiency as we remain focused on increasing train length and aligning crew starts.”
 
CSX CEO Michael Ward said railroads continue to take market share from trucking
 
“Strong intermodal performance will continue as our strategic network investments support highway to rail conversions and growth with existing customers.”
 
 
 
 
Bank of America (BAC) CEO Brian Moynihan says the firm continues to focus on reducing expenses and rightsizing the business
 

“Revenue was up and expenses were down comparably against both periods.  On the expense side we told you that we achieved this new BAC cost savings back in the third quarter of last year. However we didn’t give up on our focus on expenses and you can see those in the results. It’s the lowest non-litigation expense base since 2008.  So we just continue to apply technology to continue to long-term reduce expenses. So the goal we have in some is to keep the expenses flat as revenue increases.”

Bank of America (BAC) CEO Brian Moynihan says the firm will close more banking branches as a result of customers placing an emphasis on mobile transactions 

60% of our sales are all digital now.  There are about 10,000 appointments scheduled in the mobile device a week at the branch, that allows us to have a more efficient branch structure, even though we may have less, we may have bigger branches because you have more sales going on in them.”

UnitedHealth 2Q15 Earnings Call Notes

$150B in revenue projected

“we now expect 2015 revenues to be $154 billion, earnings to be in the range of $6.25 to $6.35 per share and cash flows from operations to be $8.4 billion to $8.6 billion.”

Revenues grew 10%

“Second quarter revenues grew a strong 10% organically to $33.1 billion, while operating margins were steady at 6.1%”

Medical care ratio improved despite big growth in higher care ratio lines

“The UnitedHealth Group consolidated medical care ratio improved 20 basis points year-over-year and throughout the first half medical costs were well controlled. The year-over-year decrease in the care ratio occurred despite the growth of about 1.3 million people in Medicaid, Medicare Advantage and public exchanges, all higher care ratio businesses.”

Medical cost trends in lower range of 5.5-6.5%, care ratio at 80%

“The 2015 commercial medical cost trend outlook continues to be biased towards the lower portion of our 5.5% to 6.5% full-year forecast and we continue to expect a full year consolidated care ratio of 80.8%, plus or minus 50 basis points.”

Our process to control expense

“it starts first with a benefit design that rewards consumers for better choices and then we are aligning it with provider relationships that incentivize more appropriate use of health resources. And then we overlay our medical management on that. And that starts with our people and we have got people in UnitedHealthcare and Optum across facilities, across the country as well as in neighborhoods, as Dave mentioned and in people’s home and when we look at the combination of all those things, we have been able to drive a very consistent utilization trend across all our businesses within the UnitedHealthcare portfolio and again, well within our expectations.”

Not seeing anything unusual in terms of utilization

“So your comments about what you seeing and others around hospital use and so forth, specifically on that, we have not seen anything outside of normal seasonal variation. So it’s all in keeping with our expectation. And I think it’s important to remember, as we have talked before, we have got a lot of visibility on the hospital side, who is coming in, who is there, who is leaving, how we are interacting with them, facilitating their just discharge and so forth and this is really a strength of our company and we continue to drive absolute reductions in per capita hospital usage and we been talking about that for the last six years.”

JS Notes: PPG, BLK, UNH, AXP

We’re excited to announce that Jeremy S., an investment analyst here in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.

PPG CEO Chuck Bunch believes the European region’s economic numbers have bottomed due to monetary policy and increased consumer confidence 

“I would say that remember we should still see earnings growth improvement in Europe primarily related to our industrial coating segment. So we have not yet seen strong improvement on the construction side of or the performance coating side of the business. But we think there will be some modest growth there and we’re obviously working on these restructuring actions that should help us late in the year.” ($PPG)

PPG CEO Chuck Bunch said the company took advantage of low rates in Europe to issue bonds at attractive rates

“this quarter, we issued about $1.3 billion in long-term euro-denominated debt at an average interest rate of 1.1%.” ($PPG)

While the company experienced strong auto paint coatings demand for automobiles in China

“I think our strongest of markets in China were automotive OEM which is a domestic market in China, those sales have continued to grow slightly above the what their overall GDP growth has been stated as so high single digits for automotive growth. ” ($PPG)

 

 

Blackrock CEO Larry Fink on the increasing role big data is going to play in investing over the coming years

“I do believe you are going to see shifts … towards smart beta factor-based investing. And I am not suggesting fundamental is going away, it’s not.  I believe we are positioned at BlackRock to benefit from that re-looking at the scientific or model-based equity. We intend to be announcing some very substantial hires in this area. I talked about data management. We believe other sources of information like big data is going to be an important component to how one looks at investing and so we are investing in these areas.” ($BLK)

 

UnitedHealthcare CFO Dan Schumacher says the medical insurance business is going through a transition from medical care providers being reimbursed based on quantity of patients treated to results oriented & outcome based payments

“I think we’ve done well as an organization through our focused medical cost management initiatives and also I think we’re seeing benefits from greater consumer responsibility as well as, as we continue to drive greater concentrations as Dave mentioned in value based reimbursements.” ($UNH)

 

American Express CFO Jeff Campbell said the company saw significantly slower consumer spending during the quarter

“Our U.S. consumer and small segment growth also decelerated slightly to 7% in Q1. This performance was impacted by the more than 30% decline in gas prices year-over-year as well as slower retail sales growth, consistent with industry wide trends in the U.S.” ($AXP)

While Campbell added the company is seeing significant growth in Asia 

“We saw improved growth in the JAPA region which was again the fastest growing region in the quarter, up 16% on an FX adjusted basis. This solid performance continued to be powered by strong growth in China and Japan.” ($AXP)

In order to stay competitive with rival firms offerings, American Express costs are rising at a faster clip than their revenue

“Cost of card member services increased significantly year-over-year by 18%.  For the remainder of 2015, given the Q1 of last year also included elevated costs in cost of card member services, we would expect to see an even higher level of growth for this line item.” ($AXP)

American Express expects a weaker Q1 GDP number than most economists after analyzing their customers spending 

“When we look at our own experience and some of the external data around retail sales and we look at what’s happening to gas prices, when we look at some of the immediately somewhat anecdotal stories we hear in our corporate card business, it suggests to us that it was certainly not the most robust of quarters for economic growth.” ($AXP)

UnitedHealth 1Q15 Earnings Call Notes

Expecting double digit revenue and net income growth this year

“We are advancing our 2015 full year outlook, taking revenues to $143 billion, a $2 billion increase and a nearly 10% year-over-year growth pace. Net per share earnings advanced to a new tighter range of $6.15 to $6.30 per share and an 11% year-over-year gain at the upper end.”

Serving 1m more people

“The headline for UnitedHealthcare in the quarter is growth, growing organically to serve 1 million more people in the United States in the first quarter alone and 1.6 million more people year-over-year with notable strength this quarter in the seniors and commercial businesses.”

Medicare advantage rate increases did not keep pace with medical cost increases

“Two weeks ago CMS issued its final Medicare Advantage rate notice for 2016, while these rates will help provide some needed stability for seniors who continue to enroll in Medicare Advantage in record numbers, the rates simply did not keep up the pace of medical cost increases.”

Improving MLR is a driver of performance

“in terms of other profit contributors would be our performance on MLR and we expected to improve our MLR during this year as we said forth both in both the Investor Conference as well as on the fourth quarter call.

But we have clearly outperformed that this year as well. And I’d say that that’s due to the strength of the performance on several fronts mark clinical engagement strategies and our ability to manage medical cost”

The reason we bought Catamaran is that we needed scale

“the reason we bought and entered into this combination with Catamaran was because we needed to scale. We needed enhanced technology, we needed specialty and synchronization programs, we needed well grounded management team and as a result complementary business that same reasons that people want to do business with us, they have those same interest and that’s why we believe we really marry up really, really well with this new model.”

A lot of these clients are probably already clients

“overall we feel pretty good about this transaction but I think if you went back and you looked at what we do in OptumHealth, you would find that lot of these clients already clients of ours and they already work with us in various intervention and prevention and wellness programs.”

Unitedhealth 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Medicaid great, medicare good, commercial and international tough

“his past year, we experienced outstanding growth in Medicaid and better than expected performance across our Medicare portfolio, balanced off by challenges in the commercial and international markets as we entered the year.”

Optum hits some secular trends

“The secular trends toward more complex and expensive specialty medications play directly to Optum’s strength in synchronizing and integrating medical and pharmacy benefits, providing uniquely personalized service. Optum is advancing this approach with UnitedHealthcare commercial customers in 2015 and expects to see further market interest in its capabilities in 2016.”

Little erosion in small business market from exchanges

“’14 we were minor players in the exchange so we don’t have a lot of information. I will tell you that I think it’s well within that range that we have talked about over the last couple of years a few percent of that small group market eroding into the exchanges at least at this point. I think the growth in the exchanges both in ’14 and in ’15 are really driven by the uninsured and that expansion through the subsidy. So we have not seen a significant erosion of our small group business,”

Not seeing any increase in utilization

“with December behind us and the majority of January behind us as well, we’re not seeing any indication or evidence of an increase in utilization. So we feel very comfortable with our forward outlook, commercial cost trend for 2015 is 6% plus or minus 50 basis points.”

The stars are important, but not so much from a marketing point of view

“I’d like to make it clear that we believe stars matters and that we’re focused on improving our performance in stars and I think we have been very consistent on that theme. It’s not clear that, that has had really an impact with respect to how the product is marketed or acquired in markets, but we do believe that it is important — overtime obviously important from a financial point of view, important in terms of our relationship with CMS who basically established those performance guideline. “