The operator welcomes listeners to the UnitedHealth Group's Second Quarter 2024 Earnings Conference Call and reminds them that the call is being recorded. The call will contain forward-looking statements and reference non-GAAP amounts, with a reconciliation available on the company's website. The Chief Executive Officer, Andrew Witty, discusses the company's strong second quarter results and commitment to high-quality care. The company's revenues grew by $14 billion in the first half of the year, with double-digit growth at Optum. Despite facing business disruption impacts from a cyberattack, the company is affirming its full year adjusted earnings outlook.

UnitedHealth Group's success is a result of their focus on adding value for patients, consumers, and customers through their key priorities. They are well positioned for growth and have been chosen by sophisticated buyers in the US. Their goal is to reduce fragmentation and improve coordination in the healthcare system, leading to better outcomes and a more sustainable system. Medicare Advantage has been proven to provide cost savings for taxpayers and additional value for seniors through services like dental, vision, and hearing. The home visits offered to seniors also demonstrate the value of Medicare Advantage.

Last year, our medical professionals made over 2.5 million home visits, resulting in the identification of 300,000 seniors with emergent health needs and connecting 500,000 seniors to essential resources. They also closed 3 million gaps in care and saw a 75% follow-up rate within 90 days. These home visits have led to better health outcomes for Medicare Advantage patients with chronic conditions and have saved taxpayers money. Optum Rx's efforts to provide low-cost drugs and comprehensive pharmacy services have been recognized by clients. The company also continues to innovate with new products and services and invest in new technologies to improve efficiency. Surest, in particular, has seen significant growth.

UnitedHealth Group's growing AI portfolio is expected to generate billions of dollars in efficiencies over the next few years, which will drive the company's growth. John Rex, the President and CFO, provided updates on the company's unique items in the quarter, including the impact of the cyber attack on Change Healthcare. The company has provided over $9 billion in loans and advance payments to help providers affected by the attack. The cyber impacts in the quarter totaled $0.92 per share and are estimated to be $1.90 to $2.05 per share for the full year. The direct costs incurred in restoring the clearinghouse platform and other response efforts are estimated to be $1.30 to $1.35 per share for the full year.

The estimated increase in earnings per share is due to care provider financial support and costs for consumer notifications. The ongoing business disruption has also impacted earnings, with a larger impact expected for the full year. The company has classified its remaining South American businesses as held for sale following the sale of its Brazil operations. The second quarter includes a total of $1.3 billion in South American impacts, primarily due to foreign currency translation losses and a regulatory action in Chile.

In the second quarter, the company recorded a $220 million reduction in premium revenue due to industry premium increases, which will be reflected in future consumer premium credits. The medical care ratio was also impacted by the cyberattack and other factors, resulting in a total of 65 basis points of non-repeating impacts. The company expects the medical care ratio, excluding cyber and South American effects, to be within the range offered in November. For their 2025 Medicare Advantage planning, the company has taken into account current care patterns and mix, as well as funding cuts and the Inflation Reduction Act's impact on Medicare Part D offerings.

In this paragraph, the speaker discusses the expected decrease in the Medicaid timing mismatch and the performance of UnitedHealthcare and Optum. They note growth in revenues and membership, as well as a focus on balanced and durable performance. They also mention progress in value-based care and strong customer response to Optum Rx. Additionally, they mention strong performance at Optum Insight and an increase in revenue backlog.

The company has established additional medical reserves in response to a cyberattack, but the second quarter results do not reflect any favorable earnings. Days claims payable have decreased and cash flows from operations were strong. The company prioritized supporting care providers over share repurchase during the quarter. The company expects to achieve its full year repurchase objective and reaffirms its adjusted EPS range. The CEO emphasizes the company's ability to adapt to constant change.

The speaker discusses UnitedHealth Group's ability to adapt to changes and challenges, and their commitment to meeting growth targets. They mention a few factors that may impact their MLR, including timing issues, coding intensity, and member mix. These factors are all expected to have a similar impact and may affect the rest of the year.

The paragraph discusses the impact of pricing and member mix on Medicaid and how it will affect the company over the course of the year. The company is addressing coding up shifts and benefit design impacts, and they have incorporated these factors into their 2025 planning and bids. The reduction in funding for MA at the beginning of the year has been navigated well, but there are some areas of pressure.

The speaker addresses a question about the company's SG&A expenses, which were better than expected. He mentions that the company is seeing cost savings and efficiencies through the use of AI technology, with hundreds of deployments currently in use. He gives a couple of examples of how AI is helping the company navigate complexity and find answers in complex datasets.

In the next year or so, there will be a significant deployment of technology to improve and change existing business processes. This will be a very exciting phase for OptumInsight. Some examples of technology-enabled efficiency and growth include onboarding a record number of clients at OptumRx with 9% less spending, and increasing the number of risk-based lives at OptumHealth by 40% without increasing headcount. These are just a few examples of how technology is already showing positive results at Optum.

The company is seeing a strong quarter in terms of cost management and expects this trend to continue in the future. The Optum business line is experiencing leverage due to the company's efforts to improve efficiency and streamline customer experiences. However, the company also plans to invest in modernizing and improving these experiences, which may impact cost management in the future. This is one of the company's three responses to the current market conditions.

The speaker discusses the company's focus on technological innovation and a consumer-centric approach. They also mention their bids for MA in 2025 and their approach to maintaining margins in the business. They decline to make any predictions about growth assumptions for the market.

The speaker discusses their pricing approach for 2025, stating that it is too early to provide specific details as bids are still being reviewed by CMS. However, they are confident in their pricing strategy and expect to see growth in their products. They then address a question about Medicaid pressure in the second half of the year, stating that they have visibility into the majority of their rates for 2024 and are working with state partners to influence key assumptions. They expect some temporary dislocation, but believe it will even out as they move through the remainder of 2024 and early 2025.

In this paragraph, the speaker is discussing the company's confidence in their current financial situation and addressing a question about their core MLR (medical loss ratio). They clarify that they expect the core MLR to be at the high end of the range and add 30 basis points of one-timers for the full year, resulting in a GAAP MLR of 84.8%. There is no expectation for further one-timers in the second half of the year. The speaker also mentions that they expect the core MLR for the third quarter to be slightly higher than 84%, but not significantly so. They also mention that any other elements that have been pulled out should not have a significant impact.

The speaker responds to a question about the expected impact of certain elements on the provider and coding intensity, stating that there shouldn't be any significant effects. They then address a question about OptumHealth margins and the performance of the business in the second quarter. The speaker expresses confidence in the business's ability to adapt to the changing funding environment and notes positive engagement with external payers. They also mention continued improvement and ask another speaker to provide more information on the second half of the year.

Kevin Fischbeck from Bank of America asked for clarification on the lack of favorable reserve development mentioned in the previous paragraph. He also had another question, but it is not mentioned in this paragraph.

The company saw no significant changes in development during the second quarter and has maintained its guidance despite the $0.60 to $0.70 of Change costs. The outperformance is attributed to strong growth in the commercial health benefits and OptumHealth businesses, as well as disciplined approach in overcoming headwinds in the M&R business. The company is also seeing strong operating efficiencies and plans to continue making investments. The potential for growth over the next three years is promising.

The speaker reiterates that the V-28 funding cut has had a significant impact on the company's Medicare Advantage and OptumHealth businesses, but the entire corporation is responding well and working to offset the pressure. They are confident in their ability to navigate this challenge and will continue to focus on every aspect of the business. The OptumInsight backlog was down $200 million due to the cyberattack, but the company is having conversations with providers and expects further declines this year. Roger Connor will provide more information on this.

The paragraph discusses the company's confidence in its performance for the next year, despite the impact of a cyber event. The focus is now on driving business recovery and bringing volume back into the system, both from current and new clients. The company's secure system is resonating with the market and contributing to momentum. The OptumInsight business is also performing well. The impact of Change on EPS is expected to be recovered by 2025.

Brian Thompson and John Rex discuss the increase in provider level of care coding patterns, which they believe was largely due to the level of care waivers implemented during a cyber disruption. They expect this impact to lessen as they reinforce utilization management protocols. They also mention their ambition to bring their business back to baseline expectations by 2025, but note that the pace of revenue recovery has been slower than anticipated. Andrew Witty adds that they may have been too optimistic about the pace of clients returning to the system after the disruption.

The speaker is confident in the company's current position and believes that the rebuilt platform will be beneficial. The questioner asks about potential offsets and how they may affect Optum Rx. The speaker, Heather, responds by highlighting the strong performance in the quarter and the investments made in Optum Rx. She also mentions the modular effect of the PBM business and how they serve the needs of their clients.

OptumHealth has seen growth in their business due to the development of new products and services that are differentiating them in the market. They have also seen cost efficiency in their business and growth in their diversified services such as integrated behavioral health and infusion services. Pricing in OptumHealth has improved, and they expect to see continued improvement in the future.

Andrew Witty, CEO of a healthcare company, responds to a question about their plans for 2025. He praises their strong relationships with over 100 plan partners and mentions discussions around benefit design, funding, and market planning. Amar Desai, another executive, adds that they are confident in their position for 2025 and are adding new plan partners and expanding into new geographies. He highlights the importance of quality care, a strong network, and clinical engagement in driving value for their partners. Witty thanks Desai for his input.

The speaker, likely the CEO of UnitedHealth Group, praises the work of Amar and his team in running a successful and special business that benefits patients and provides a positive work experience for employees. The speaker expresses confidence in the company's ability to adapt and serve customers, thanks the participants for their questions, and concludes the conference.

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