UnitedHealth 1Q13 Earnings Call Notes

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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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“In all of these broad categories, Commercial, Medicare, Part D, Medicaid and International, we are trending to the high end or above our growth outlook for 2013.”

“The first quarter operating margin of 5.8% was well within the range of our expectations. ”

“We will be very selective in where we participate and do not believe the exchanges will be a significant factor for us, either plus or minus, in our 2014 commercial market outlook.”

“By far, the most impactful headwind is the Medicare Advantage rate picture for 2014. While the final guidance was improved from the negative 8% all-in starting point, it is still a significant challenge…the Medicare Advantage program [is] significantly underfunded, a more than 4% net reduction against the typical industry forward medical cost trend outlook of 3% or more for 2014…[this] will cause UnitedHealthcare to reduce benefits and pull back access in certain markets and will affect the growth prospects and earnings potential for our overall Medicare Advantage offerings across all our markets for 2014.”

“sequestration…has the potential to burden us in a range of $250 million to $300 million over the balance of 2013.”

“Medicare will likely experience market exits as well as in-market membership contraction as we reshape Medicare networks and benefits to respond to the continuing underfunding of this program”

“I think, really, Medicare is the principal headwind on ’14. The rest of it, I think, we were trying to make it clear that our businesses are very strong, and our growth is very strong, including Medicare.”

“our long-term view on Medicare is unchanged. We’re very strong in terms of the efficacy of the program.”

“We have a very long philosophy around commercial pricing, which is we price to our forward cost trend and really don’t play too many games around that.”

“we are out to optimize the performance of our business and the performance of our margins, no matter what the circumstances are, in the context of maintaining sustainable products and sustainable offerings in the marketplace.”

“like anything in health care, it’s a market-by-market proposition”

“our new growth tends to have a higher first year loss ratio, and that improves in the second year”

“the performance of the rest of the businesses is really quite strong…the Optum businesses not only exceeded expectations for the quarter, the momentum is growing there. And it wasn’t in isolated Optum businesses, it was across the entire expanse of that portfolio of businesses and offerings.”