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.”