The UnitedHealth Group held an earnings conference call to discuss their second quarter 2023 performance. The call was recorded and contained forward-looking statements. Non-GAAP amounts were also referenced and a reconciliation of those amounts was available on the company's website. The Chief Executive Officer, Andrew Witty, discussed how the company faced higher than usual movement in certain areas of care activity but were able to overcome it with strength in other areas.

In the second quarter, UnitedHealth Group saw strong revenue growth of more than $12 billion, with OptumHealth, OptumRx, and OptumInsight all seeing double-digit growth. UnitedHealthcare also saw strong growth, with 1.6 million more people being served than last year. The company is focused on making high quality care more affordable and accessible, which is beneficial for individuals, the health system, and society.

UnitedHealthcare is observing increased care activity in both senior outpatient care and behavioral care. They have developed Medicare Advantage offerings and are expanding their network of care professionals to address the shortage of qualified care providers. OptumHealth is delivering strong results for patients and payers with its value-based care models, which are focused on improving health outcomes and experiences while lowering the cost of care.

Yale Medicine recently published a study that found patients who received in-home preventative wellness assessments had fewer emergency department visits and hospital stays compared to those who didn't. A separate study also found that Medicare Advantage patients in Optum's fully accountable care model had better health outcomes. UnitedHealth Group is focusing on affordability, transparency, and simplicity for those they serve in order to lower out of pocket costs and increase access to high quality care.

Andrew discussed the recent increase in outpatient surgeries, which can be performed in traditional or ambulatory settings. OptumRx works to provide customers with the most cost-effective medications, with features such as Price Edge delivering millions of dollars in savings. OptumRx also offers tailored programs for rare diseases and clinical excellence programs for conditions such as MS, autoimmune diseases, and cancer.

OptumRx is helping to drive affordability and consumer choice through the offering of biosimilars, such as Amjevita, Cyltezo, and Hyrimoz, at parity with the innovator drug, Humira. Additionally, UnitedHealthcare's Group fully insured commercial plans offer lifesaving drugs at no cost, and Optum Financial's integrated card has been issued to 13 million consumers, making it easier for them to understand their benefits and creating a more satisfying consumer experience. These initiatives are resonating with customers, which is aiding OptumRx's growth in a competitive environment.

John Rex explains that the company has seen an increase in care activity among seniors and that their Medicaid and commercial populations are in line with their expectations. He also mentions that OptumHealth revenues have grown by 36%, driven by an increase in the number of patients served and the expanding scope of care services. Finally, he states that operating margins reflect the higher care activity patterns they have discussed.

OptumRx's revenues grew by 15%, surpassing $28 billion, due to new customer wins and strong double-digit growth across specialty, infusion, and community pharmacies. OptumInsight revenues grew 42% to nearly $4.7 billion and the revenue backlog reached over $31 billion. UnitedHealthcare's commercial business added nearly 500,000 people in the first-half and is expected to grow by over 900,000 Medicare Advantage members this year. Adjusted cash flows from operations were at $10.4 billion in the second quarter and $15.6 billion in the first-half. The board of directors increased the dividend by 14% and the full-year '23 adjusted earnings outlook was strengthened to a range of $24.70 to $25 per share.

Andrew Witty is pleased with the performance of OptumHealth, which has seen a slight margin degradation from first quarter to second quarter. He explains that this could be partially due to senior utilization, as well as the growth in membership, which could pressure margins in the short-term but be a long-term positive. He also mentions that there are many other factors that could be helping or hurting margins.

OptumHealth's margin compression during the quarter was due to three main factors: the senior trend, growth in behavioral services, and the growth of membership with complex patients. This growth puts pressure on the margin in the short run, but is laying the foundation for strong growth in the future. The guide to the upper end for the full-year MLR is driven by the MA outpatient trend and growth in behavioral services.

John Rex and Wyatt Decker discuss the utilization of behavioral healthcare, with John noting that the majority of the guide to the upper end of the full-year is driven by activity among seniors in outpatient care. Wyatt adds that they are seeing increasing utilization across the board, not just among young people, with people of all ages accessing care for conditions such as anxiety, depression, and substance use disorder. Andrew Witty emphasizes the importance of providing access to this care.

John Rex responds to a question from Nathan Rich about the balance pacing of earnings between 3Q and 4Q and the trend of care activity. He explains that the MCR is expected to be lower in 3Q than 2Q due to seasonality, and OptumHealth is continuing to provide innovative solutions for behavioral healthcare needs across the age spectrum.

Andrew Witty states that the commercial trend is in line with their expectations, and that there is not much to see in terms of any changes. He also mentions that there is a slight uptick in the senior business from the first and second quarters, and that the pricing is in line with their expectations. Lastly, he mentions that there is no pressure in the outpatient sector.

Andrew Witty does not believe that the increased utilization on the MA side is due to the augmented benefits of the last two years, but rather a deferment of care. He suggests this shift may be due to more supply of procedures and less hesitation from individuals to go into a facility in a post-COVID environment. Tim Noel is asked to provide more commentary on the utilization trends and their benefit designs for the upcoming year.

Tim Noel discussed the potential drivers of benefits, such as acuity and mix of membership, which are tracking normally. He noted that the more important driver to their benefit decisions this year were the changes to the risk model. He discussed the importance of providing stability to benefits that seniors value most, such as zero co-pays for primary care visits and Tier 1 drugs, and keeping monthly planned premiums and out of pocket maximums the same. Andrew Witty then moved on to the next question regarding the fee-based business, which saw a decrease in membership.

Andrew Witty and Dan Keto provide an update on the commercial business performance, noting strong growth in terms of membership. They also address a question about Medicaid redetermination, noting that the outcome of those processes will determine where within the range they will fall for the year. They also clarify that the client loss Dan previously mentioned was known about a year ago and is within their expectations and forecast plan.

Andrew Witty responds to a question about OptumHealth's margin normalization and explains that the pressure is due to senior trend phenomenon, Optum's piece around behavioral care, and growth in the book. He states that they expect margins to continue to strengthen in 2024 and that they have caught this in their pricing for next year. He emphasizes that the longer they have to look after patients and provide wraparound care, the better outcomes they can deliver and the more sustainable their capability will be.

Andrew Witty and John Rex discuss how OptumHealth has experienced significant growth in the second quarter, despite having a slightly suppressed margin. This growth is due to higher investment income, as well as G&A being better than expected. They attribute the increased investment income to the rising interest rate environment, as well as the active management of treasury teams in deploying cash balances into interest-bearing accounts.

Andrew Witty and Dirk McMahon discussed how artificial intelligence, machine learning, and natural language processing have been used to reduce costs in areas such as medical appeal letters, provider search, payment integrity models, and call centers. They have also implemented benefit bots to answer simple questions about coverage and deductibles.

UNH is optimistic about their ability to use new technology to improve health care. They have been able to respond quickly to the changes in care activity and will continue to invest in growth and looking after patients, while bearing down on their core operating cost structure. John discussed their expectations for the senior book in 2024, noting that they expect the current elevated trend to continue and are pricing for it in their MA bids.

Andrew Witty and Tim Noel discuss the risk model changes and the importance of incorporating the latest data into Medicare Advantage bids. They made assumptions about the outpatient care patterns that have since stabilized and have been incorporated into the 2024 bids. Lastly, they discuss the Amedisys acquisition and the strategy for ramping up exposure in the tough near-term reimbursement environment for home health.

Andrew Witty thanked Scott for his question regarding the potential synergies of integrating Amedisys into LHCG. He expressed his belief in the value of home health capabilities and their importance in providing value-based care for complex patients. He stated that they are in the early stages of the process and will update as they go through the process. He concluded by thanking everyone for joining the call and expressing his confidence in their ability to continue to perform and grow in the future.

This summary was generated with AI and may contain some inaccuracies.