The operator welcomes listeners to the UnitedHealth Group First Quarter 2024 Earnings Conference Call and reminds them that the call is being recorded. The call may contain forward-looking statements and references non-GAAP amounts, which can be found on the company's website. CEO Andrew Witty will discuss the impact of the Change Healthcare cyberattack and the performance of the company's businesses, noting that the majority of employees have remained focused on delivering for their customers.

The company's hard work and diversified businesses have allowed them to maintain their full year earnings outlook despite disruptions from a recent attack on the US health system. They quickly disconnected affected services and focused on restoration and support, utilizing the resources and philosophy that helped with previous healthcare initiatives. The company has provided over $6 billion in funding to care providers in need and is working to restore claims and payment services. Some care management activities have been suspended to mitigate workflow disruptions. The company is grateful for the colleagues working tirelessly to restore services and protect the health system. The CEO also mentions two other topics of interest, including care activity.

The author discusses the consistency of care patterns and the value of Medicare Advantage for seniors. They highlight the benefits of Medicare Advantage, such as driving better health outcomes and providing more comprehensive coverage at a lower cost. The author also mentions the growth of Medicare Advantage and their strategy to adapt to funding reductions. They also mention recent business developments, including winning major Medicaid contracts in three states.

The paragraph discusses UnitedHealth Group's performance in the first quarter, mentioning their disappointment in the outcome in Florida but their confidence in their offerings resonating in other states. They also mention continued growth in their commercial benefits and Optum businesses. The paragraph concludes with a mention of a recently retired leader and an overview of the upcoming topics to be discussed.

The Change Healthcare cyberattack had a significant impact on the company's financials, with an estimated total impact of $870 million or $0.74 per share in the quarter and $1.15 to $1.35 per share for the full year. This includes direct costs of $595 million for restoring the clearinghouse platform and other response efforts, as well as ongoing business disruption resulting in a loss of revenues. These impacts are not included in adjusted earnings per share and are expected to be between $350 million to $450 million for the year. The company will provide regular updates on their progress and outlook.

Change Healthcare has been working to restore its functionality and services after a cyberattack, and while much progress has been made, the goal is for even stronger performance next year. Care patterns have remained consistent with expectations, with elevated levels of outpatient care among seniors and a subsiding of winter seasonal activity. The medical care ratio for the first quarter included some temporary suspension of care management activities, but these have been reinstated and the majority of the impact will be reflected in the second quarter. The businesses are growing and performing well, allowing the company to maintain its adjusted earnings per share objectives despite the disruption from the cyberattack.

In the first quarter, UnitedHealthcare saw a growth in revenues and membership, particularly in their domestic commercial and Medicare Advantage plans. They are currently planning for 2025 and have a three-year plan in place. Their Medicaid business also saw success in key states, and Optum Health's revenues grew by 16% due to an increase in patients served and engagement with complex patients.

In the first quarter, Optum Rx saw a 12% increase in revenues, driven by new client starts, expansion within existing partnerships, and growth in pharmacy services. The impact of the cyberattack on Change Healthcare resulted in $500 million of the $870 million total impact being within Optum Insight. This includes direct response costs and business disruption effects, which are not excluded from adjusted earnings. The Optum Insight team promptly shut off services during the attack, but will work tirelessly to recover transaction volumes and demonstrate the value of Change Healthcare. The revenue backlog for Optum Insight increased to nearly $33 billion, driven by health system partnerships. The cyberattack also affected days claims payable and the medical cost payable balance.

The change in the article reflects a $3 billion increase in the IBNR component, offset by a $1.6 billion reduction in fully processed claims. Cash flows were impacted by funding acceleration and timing of public sector receipts. The company's focus on serving patients and the health system drives its growth and it expects to meet its full year earnings per share target. The company's strategy is focused on improving quality, value, simplification, and consumer responsiveness in the healthcare industry. It is well-positioned to do so through its value-based care offerings, commitment to improving for consumers, and multi-payer orientation at Optum.

The company remains committed to partnering with others in healthcare to make the system more modern and responsive. They have a strategic plan in place that gives them confidence in their ability to navigate changes and challenges and continue to grow. The recent final rate from CMS does not significantly change their plan, and they remain focused on long-term sustainability rather than short-term growth. They are disappointed that CMS did not reflect the actual medical trend seen in the market over the past year.

The speaker discusses how their company is well-prepared for the extra pressure in 2025 and highlights strong cost control, thoughtful bid strategy, and effective management of medical costs. They also mention the strong performance of Optum Health and their MA business. The speaker then answers a question about medical costs categorized as accommodations to support care providers.

The speaker is responding to a question about claims received by UnitedHealth Group (UHC) at the end of the quarter. They state that the majority of claims were received, but there may be some discrepancies due to corrections. Brian Thompson then provides more details about the adjustments made by UHC, including the suspension of inpatient level of care reviews and outpatient prior authorizations. These adjustments were easy to estimate and will have a greater impact in the following quarter.

The speaker confirms that they have brought back certain processes in the last few days. The next question is from A.J. Rice, who asks about the $800 million reserve and if it includes any insights from Optum Health or if it is just a precautionary measure. The speaker responds that there is nothing significant to note in terms of care dynamics and that the pressure seen at the end of Q4 and beginning of the year has subsided. The speaker then asks John to provide more information on the $800 million reserve, and John explains that it is an estimate of what they did not see.

The speaker is discussing the impact of claims receipts on the quarter and how they are trying to make an accurate estimation of the situation. They mention that there may have been some disruption in claims patterns and they need to be careful in their assessment. They also mention that they see a fairly normal flow of claims at UHC but will continue to be judicious in their approach. The next question is about the conservatism of $800 million and the impact on the MLR. The speaker clarifies that the $800 million is related to 2023 and not a miss in the current quarter. They also mention that there was some opacity in cost trend last year and are looking for more visibility.

The speaker responds to a question about the company's visibility for the rest of the year and their expectations for cost trend. They mention that there was uncertainty in the first quarter but they are not seeing the same issues as the rest of the industry. They also discuss the $800 million mentioned and how last year's cost trend was due to post-COVID factors and capacity coming on stream, but this year there has been more stability without a significant increase or decrease.

The speaker discusses the changes that have been made in their organization in response to the shift seen last year. They have implemented sensing mechanisms to detect early warning signals and have improved their visibility on factors such as COVID and re-determinations. They also mention feeling good about their business mix and the growth in their Commercial and Medicare sectors. Overall, they do not anticipate any major changes in their trend as of now.

In the paragraph, Andrew Witty, Brian, and John discuss their optimism for the rest of the year and how it aligns with their planned projections. John also mentions that they did not let any earnings or medical care ratio impact their development flow-through in the quarter, and they took a prudent approach in normalizing any potential impacts. When asked about the Q2 MCR, John says it will likely be in a similar range to Q1, with potential impacts from cyber effects. They will continue to be cautious in assessing claims receipts. In response to a question about business disruption costs, they mention that they have projected smaller costs than expected despite hearing about customers reducing their dependence on Change Healthcare during the quarter.

The speaker is responding to a question about the impact of the recent cyberattack on Change Healthcare's revenue. They credit their teams for quickly restoring functionality after the attack and mention the support of other companies. The speaker then hands over to the head of Optum Insight to provide more details on the progress and expectations for customer dynamics in the coming months. The focus is on restoring the business and improving functionality.

UnitedHealth Group is confident in their ability to bring back customers who were affected by a recent outage. They have a strong portfolio and differentiation in the market, and are working with affected customers to restore their functionality. The company has also provided financial support to some clients, which has been appreciated. This resilience and commitment to their customers is a key characteristic of UnitedHealth Group. The company will continue to work towards restoring baseline performance by 2025.

The speaker is responding to a question about the company's visibility into claims and the impact of the DOJ investigation. They mention that UHC is back to normal levels in terms of claim submission and they feel confident in their visibility. They also mention that they are preparing for bid submissions and are confident in their long-term EPS growth, but did not specifically mention it in their prepared remarks. They then move on to the next question.

During a company call, Andrew Witty, the CEO of the company, was asked about the company's dialogue with the Department of Justice (DOJ) and the timeline for the next steps in the process. Witty declined to comment on the matter, stating that it is not appropriate to do so and the company has never commented on these types of matters in the past. The next question was about the company's membership and commercial risk, which came in above initial guidance. Dan Kueter, who runs the E&I business, attributed the growth to the expansion of innovative products into 37 states and the success of individual and family exchange-based plans. He also mentioned that there was a delay in membership growth from re-determinations, but it is expected to pick up in 2024.

The speaker, Andrew Witty, is pleased with the growth and pricing of their company, as well as the consumers they are attracting. He also mentions being proud of the consumer experience their team is delivering. The next question is about the outlook for Optum Health, and Witty defers to Dr. Amar Desai, who talks about the continuous maturation of the business and their hiring trends. They are working with more providers in a deeper way and growing across a range of arrangements.

The speaker discusses the growth and partnership with physicians across the country, both through contracted affiliations and employment arrangements. They also mention strong growth with payer partners and an increase in risk partner growth. They have worked with payers to ensure appropriate funding levels and provide high quality care. The speaker then addresses a question about $3 billion in IBNR, stating that they cannot confirm the accuracy of certain statistics but offer insights on the topic.

The speaker discusses the increase in IBNR on the balance sheet, which is a combination of IBNR and medical claims payable. They also mention the measures taken to speed up claim processing and provide loans to providers. They state that UnitedHealthcare is at normalized levels, but they will be cautious due to potential issues with claims submission and payment flows. The $3 billion increase in IBNR is attributed to unprocessed claims.

During a recent earnings call, John Rex, CFO of a company, discussed the IBNR component of the company's $3 billion in reserves. When asked about capital deployment, Andrew Witty, the CEO, stated that they did not change their expectations for share repurchases, but they have a balanced approach to other opportunities such as M&A. Witty also mentioned a diverse pipeline of potential M&A opportunities and the company's strong strategy for navigating through the current dynamic market.

During a conference call, an operator introduces Whit Mayo from Leerink Partners who asks about the company's growth expectations for next year and potential changes in their broker agent strategies. CEO Andrew Witty responds by saying they are not able to share specific numbers yet, but Tim Noel, who runs the M&R business, can provide more information. Tim explains that they are working with CMS to improve the distribution environment in Medicare Advantage and that while some elements of the final notice align with their recommendations, it is still too early to comment on how it will impact their channel mix in 2025. Another analyst, Ann Hynes from Mizuho Securities, comments that the company's outlook on care patterns is more positive than what investors had feared.

During a discussion about projected growth rates, the speaker references the trend in outpatient care for seniors, specifically in categories such as orthopedic and cardiac care. They note that last year's growth rates were significantly higher due to supply and consumer constraints, but the number of units consumed per patient remains consistent. This trend is expected to continue, but the percentage growth may normalize.

The historical levels of trend factors have remained consistent with the company's traditional views. The quarter showed indications of stabilization in areas such as first fills and outpatient care, and the company has expanded in these areas. The company is also focused on engaging with individuals to help manage their costs. The unit costs are up year-over-year, driven by outpatient costs, Specialty Rx, and increased access in the behavioral space.

The company's elements are up as planned and were discussed at the investor conference. Optum's focus is on behavioral health and outpatient care, using their capacity and investments to improve care patterns. They are already engaged with 75% of complex patients and are focused on PCP and member engagement for affordability and chronic disease management. The company feels confident in controlling utilization despite reduced funding. The same approach applies to pharmacy.

The speaker is discussing the success of their company's specialty trend and the growth and strength of their Optum Rx side. They mention a 75% engagement rate with the most complex members in Optum Health, which is a significant improvement from the previous year. They also discuss the launch of Change 2.0 and the receptivity of payers to reconnection. It is unclear if Change retains its legacy data rights after a breach.

During the Q&A portion of the earnings call, an analyst asks for an update on Change Healthcare's recovery following the cyberattack. Andrew Witty, CEO of UnitedHealth Group, defers to Roger Connor, CEO of Optum Insight, who explains that they are confident in their ability to reconnect with payers and providers and are having positive conversations with them. He also mentions that Change Healthcare is only 15% of the projected revenue for the year and the rest of Optum Insight's business is performing well. The company's innovation agenda, including real-time settlement and value-based care, is still moving forward. Overall, the company remains positive about the future of Change Healthcare and Optum Insight.

The speaker discusses the recent acquisition of Change Healthcare by UnitedHealth Group and how it was a crucial move for the company and the country. They mention that the cyberattack that occurred would have been much more damaging if Change Healthcare was not owned by UnitedHealth Group. The speaker also highlights the benefits of bringing the two companies together, such as potential for innovation and faster resolution of issues. They reiterate their confidence in achieving their long-term growth objective and thank the audience for their time.

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