UnitedHealth Group 10-Q 2021-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Form 10-Q

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2021

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission File Number: 1-10864

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UnitedHealth Group Incorporated

(Exact name of registrant as specified in its charter)

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Delaware									41-1321939
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
UnitedHealth Group Center									55343
9900 Bren Road East
Minnetonka,			Minnesota
(Address of principal executive offices)									(Zip Code)

(952) 936-1300

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, $.01 par value						UNH						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act

Large accelerated filer			☒						Accelerated filer			☐						Non-accelerated filer			☐
Smaller reporting company			☐															Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2021, there were 941,851,250 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.

UNITEDHEALTH GROUP

Table of Contents

												Page
Part I. Financial Information
Item 1.						Financial Statements (unaudited)						1
						Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020						1
						Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020						2
						Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020						3
						Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2021 and 2020						4
						Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020						6
						Notes to the Condensed Consolidated Financial Statements						7
						1.			Basis of Presentation			7
						2.			Investments			8
						3.			Fair Value			10
						4.			Medical Costs Payable			11
						5.			Short-Term Borrowings and Long-Term Debt			11
						6.			Dividends			12
						7.			Commitments and Contingencies			12
						8.			Segment Financial Information			13
Item 2.						Management’s Discussion and Analysis of Financial Condition and Results of Operations						15
Item 3.						Quantitative and Qualitative Disclosures About Market Risk						23
Item 4.						Controls and Procedures						24
Part II. Other Information
Item 1.						Legal Proceedings						24
Item 1A.						Risk Factors						24
Item 2.						Unregistered Sales of Equity Securities and Use of Proceeds						24
Item 6.						Exhibits						25
Signatures												26

PART I

UnitedHealth Group

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions, except per share data)						September 30, 2021						December 31, 2020
Assets
Current assets:
Cash and cash equivalents						$	21,085					$	16,921
Short-term investments						2,786						2,860
Accounts receivable, net						14,152						12,870
Other current receivables, net						14,080						12,534
Assets under management						4,304						4,076
Prepaid expenses and other current assets						5,203						4,457
Total current assets						61,610						53,718
Long-term investments						44,777						41,242
Property, equipment and capitalized software, net						8,730						8,626
Goodwill						75,435						71,337
Other intangible assets, net						10,436						10,856
Other assets						12,057						11,510
Total assets						$	213,045					$	197,289
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable						$	25,918					$	21,872
Accounts payable and accrued liabilities						24,292						22,495
Short-term borrowings and current maturities of long-term debt						3,620						4,819
Unearned revenues						2,556						2,842
Other current liabilities						23,189						20,392
Total current liabilities						79,575						72,420
Long-term debt, less current maturities						43,345						38,648
Deferred income taxes						3,649						3,367
Other liabilities						11,844						12,315
Total liabilities						138,413						126,750
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests						1,373						2,211
Equity:
Preferred stock, $0.001 par value - 10 shares authorized; no shares issued or outstanding						—						—
Common stock, $0.01 par value - 3,000 shares authorized; 942 and 946 issued and outstanding						10						10
Additional paid-in capital						—						—
Retained earnings						75,124						69,295
Accumulated other comprehensive loss						(4,856)						(3,814)
Nonredeemable noncontrolling interests						2,981						2,837
Total equity						73,259						68,328
Total liabilities, redeemable noncontrolling interests and equity						$	213,045					$	197,289

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Operations

(Unaudited)

						Three Months Ended September 30,												Nine Months Ended September 30,
(in millions, except per share data)						2021						2020						2021						2020
Revenues:
Premiums						$	56,967					$	50,863					$	168,686					$	150,897
Products						8,703						8,777						25,476						25,455
Services						6,164						5,124						18,181						14,265
Investment and other income						503						351						1,511						1,057
Total revenues						72,337						65,115						213,854						191,674
Operating costs:
Medical costs						47,302						41,636						138,752						117,314
Operating costs						10,725						10,174						31,307						30,190
Cost of products sold						7,802						7,935						23,034						23,123
Depreciation and amortization						796						719						2,332						2,159
Total operating costs						66,625						60,464						195,425						172,786
Earnings from operations						5,712						4,651						18,429						18,888
Interest expense						(422)						(395)						(1,229)						(1,262)
Earnings before income taxes						5,290						4,256						17,200						17,626
Provision for income taxes						(1,099)						(1,000)						(3,659)						(4,209)
Net earnings						4,191						3,256						13,541						13,417
Earnings attributable to noncontrolling interests						(105)						(84)						(327)						(226)
Net earnings attributable to UnitedHealth Group common shareholders						$	4,086					$	3,172					$	13,214					$	13,191
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic						$	4.33					$	3.34					$	14.00					$	13.90
Diluted						$	4.28					$	3.30					$	13.82					$	13.73
Basic weighted-average number of common shares outstanding						943						950						944						949
Dilutive effect of common share equivalents						12						12						12						12
Diluted weighted-average number of common shares outstanding						955						962						956						961
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents						1						6						2						9

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

**Condensed Consolidated State

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The following discussion should be read together with the accompanying Condensed Consolidated Financial Statements and Notes and with our 2020 10-K, including the Consolidated Financial Statements and Notes in Part II, Item 8, “Financial Statements” in that report. Unless the context indicates otherwise, references to the terms “UnitedHealth Group,” “we,” “our” or “us” used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to UnitedHealth Group Incorporated and its consolidated subsidiaries.

Readers are cautioned that the statements, estimates, projections or outlook contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, including discussions regarding financial prospects, economic conditions, trends and uncertainties contained in this Item 2, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed or implied in the forward-looking statements. A description of some of the risks and uncertainties is set forth in Part I, Item 1A, “Risk Factors” in our 2020 10-K and in the discussion below.

EXECUTIVE OVERVIEW

General

UnitedHealth Group is a diversified health care company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two complementary businesses — Optum and UnitedHealthcare — are driven by this unified mission and vision to improve health care access, affordability, experiences and outcomes for the individuals and organizations we are privileged to serve.

We have four reportable segments across our two business platforms, Optum and UnitedHealthcare:

• OptumHealth;

• OptumInsight;

• OptumRx; and

• UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State and UnitedHealthcare Global.

Further information on our business is presented in Part I, Item 1, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 10-K and additional information on our segments can be found in this Item 2 and in Note 8 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

COVID-19 Trends and Uncertainties

The COVID-19 pandemic continues to evolve and the ultimate impact on our business, results of operations, financial condition and cash flows remains uncertain. In the quarter ended September 30, 2021, overall care activity continued to increase, including a mix of temporary deferral of care activity and COVID-19 related care costs. The temporary deferral of care was more than offset by COVID-19 related care and testing costs, rebate requirements, and general economic impacts. In future periods, care patterns may moderately exceed normal baselines as previously deferred care is obtained and acuity temporarily rises due to missed regular care. From time to time, health system capacity may be subject to possible increased volatility due to the pandemic. Specific trends and uncertainties related to our two business platforms are as follows:

Optum. COVID-19 related care costs continued to impact our OptumHealth risk-based care delivery businesses, which were partially offset by the continued temporary deferral of care. The temporary deferral of care reduced fee-for-service care delivery volume, as well as OptumInsight and OptumRx volume-based business activity, although we expect the impact to continue decreasing as care returns to, and potentially exceeds, normal levels. We believe COVID-19 will continue to influence customer and consumer behavior, both during and after the pandemic, which could impact how and where care is delivered and the manner in which consumers wish to receive their prescription drugs or infusion services. As a result of the dynamic situation and broad-reaching impact to the health system, the ultimate impact of COVID-19 on our Optum businesses is uncertain.

UnitedHealthcare. In 2021, we have continued expanded benefit coverage in areas such as COVID-19 related care and testing, telemedicine, and pharmacy; continuing to assist our customers, care providers, members and communities in addressing the COVID-19 crisis. UnitedHealthcare’s results of operations were negatively impacted by COVID-19 related care and testing, rebate requirements and other revenue impacts, as well as broader economic impacts, partially offset by the continued deferral of care. The increase in people served through Medicaid was attributable in part to continuing action by states to ease redetermination requirements due to the COVID-19 public health emergency.

Disrupted care patterns, as a result of the pandemic, have and may continue to temporarily affect the ability to obtain complete member health status information, impacting revenue in businesses utilizing risk adjustment methodologies. The ultimate overall impact is uncertain and dependent on the future pacing and intensity of the pandemic, the duration of policies and initiatives to address COVID-19, and general economic uncertainty.

Business Trends

Our businesses participate in the United States, South American and certain other international health markets. Overall spending on health care is impacted by inflation; utilization; medical technology and pharmaceutical advancement; regulatory requirements; demographic trends in the population; and national interest in health and well-being. The rate of market growth may be affected by a variety of factors, including macro-economic conditions, such as the impacts of COVID-19, and regulatory changes, which could impact our results of operations, including our continued efforts to control health care costs.

Pricing Trends. To price our health care benefit products, we start with our view of expected future costs, including any potential impacts from COVID-19. We frequently evaluate and adjust our approach in each of the local markets we serve, considering all relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio (MLR) thresholds and similar revenue adjustments. We will continue seeking to balance growth and profitability across all these dimensions.

The commercial risk market remains highly competitive in both the small group and large group segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs amid reform changes.

Government programs in the community and senior sector tend to receive lower rates of increase than the commercial market due to governmental budget pressures and lower cost trends.

Medical Cost Trends. Our medical cost trends primarily relate to changes in unit costs, health system utilization and prescription drug costs. COVID-19 related care costs as well as the deferral of care have also impacted medical cost trends in the current year and may continue in future years. Future medical cost trends may be impacted by increased consumer demand for care, potentially even higher acuity care, due to the temporary deferral of care since the onset of the pandemic. We endeavor to mitigate those increases by engaging physicians and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve high quality, affordable care. The continued uncertain impact of COVID-19 may impact our ability to estimate medical costs payable, which has resulted in, and could result in, increased variability to medical cost reserve development.

Regulatory Trends and Uncertainties

Following is a summary of management’s view of regulatory trends and uncertainties. For additional information regarding regulatory trends and uncertainties, see Part I, Item 1 “Business - Government Regulation,” Part 1, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 10-K.

Medicare Advantage Rates. Final 2022 Medicare Advantage rates resulted in an increase in industry base rates of approximately 4.1%, short of the industry forward medical cost trend. We continue to manage costs through improving and expanding our coordinated care models, value-based care arrangements and various consumer engagement tools.

Affordable Care Act (ACA) Tax. The Health Insurance Tax was permanently repealed by Congress, effective January 1, 2021. The permanent repeal of the tax impacts year-over-year comparability of our financial statements, including revenues, operating costs, medical care ratio (MCR), operating cost ratio, effective tax rate and cash flows from operations.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select third quarter 2021 year-over-year operating comparisons to third quarter 2020.

• Consolidated revenues grew 11%, UnitedHealthcare revenues grew 11% and Optum revenues grew 14%.

• UnitedHealthcare served 2.0 million more people domestically, driven by growth in community and senior programs.

• Earnings from operations increased at both UnitedHealthcare and Optum.

• Diluted earnings per common share were $4.28.

• Cash flows from operations for the nine months ended September 30, 2021 were $19.1 billion.

• Return on equity was 23.5%.

RESULTS SUMMARY

The following table summarizes our consolidated results of operations and other financial information:

(in millions, except percentages and per share data)						Three Months Ended September 30,												Increase/(Decrease)												Nine Months Ended September 30,												Increase/(Decrease)
			2021						2020						2021 vs. 2020												2021						2020						2021 vs. 2020
Revenues:
Premiums						$	56,967					$	50,863					$	6,104					12		%				$	168,686					$	150,897					$	17,789					12		%
Products						8,703						8,777						(74)						(1)						25,476						25,455						21						—
Services						6,164						5,124						1,040						20						18,181						14,265						3,916						27
Investment and other income						503						351						152						43						1,511						1,057						454						43
Total revenues						72,337						65,115						7,222						11						213,854						191,674						22,180						12
Operating costs:
Medical costs						47,302						41,636						5,666						14						138,752						117,314						21,438						18
Operating costs						10,725						10,174						551						5						31,307						30,190						1,117						4
Cost of products sold						7,802						7,935						(133)						(2)						23,034						23,123						(89)						—
Depreciation and amortization						796						719						77						11						2,332						2,159						173						8
Total operating costs						66,625						60,464						6,161						10						195,425						172,786						22,639						13
Earnings from operations						5,712						4,651						1,061						23						18,429						18,888						(459)						(2)
Interest expense						(422)						(395)						(27)						7						(1,229)						(1,262)						33						(3)
Earnings before income taxes						5,290						4,256						1,034						24						17,200						17,626						(426)						(2)
Provision for income taxes						(1,099)						(1,000)						(99)						10						(3,659)						(4,209)						550						(13)
Net earnings						4,191						3,256						935						29						13,541						13,417						124						1
Earnings attributable to noncontrolling interests						(105)						(84)						(21)						25						(327)						(226)						(101)						45
Net earnings attributable to UnitedHealth Group common shareholders						$	4,086					$	3,172					$	914					29		%				$	13,214					$	13,191					$	23					—		%
Diluted earnings per share attributable to UnitedHealth Group common shareholders						$	4.28					$	3.30					$	0.98					30		%				$	13.82					$	13.73					$	0.09					1		%
Medical care ratio (a)						83.0		%				81.9		%				1.1		%										82.3		%				77.7		%				4.6		%
Operating cost ratio						14.8						15.6						(0.8)												14.6						15.8						(1.2)
Operating margin						7.9						7.1						0.8												8.6						9.9						(1.3)
Tax rate						20.8						23.5						(2.7)												21.3						23.9						(2.6)
Net earnings margin (b)						5.6						4.9						0.7												6.2						6.9						(0.7)
Return on equity (c)						23.5		%				19.7		%				3.8		%										26.0		%				28.9		%				(2.9)		%

(a)Medical care ratio is calculated as medical costs divided by premium revenue.

(b)Net earnings margin attributable to UnitedHealth Group shareholders.

(c)Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.

2021 RESULTS OF OPERATIONS COMPARED TO 2020 RESULTS OF OPERATIONS

Consolidated Financial Results

Revenue

The increases in revenue were primarily driven by the increase in the number of individuals served through Medicare Advantage, Medicaid and commercial offerings; pricing trends; and organic and acquisition growth across the Optum business, primarily due to expansion in care delivery and managed services.

Medical Costs and MCR

Medical costs increased as a result of growth in people served through Medicare Advantage, Medicaid and commercial offerings, as well as increased COVID-19 related care costs and medical cost trends, partially offset by higher temporary care deferrals. The MCR increased due to the permanent repeal of the Health Insurance Tax and increased COVID-19 related care costs, partially offset by increased deferral of care. For the nine months ended September 30, 2021, medical costs and the MCR were also impacted by increased prior year favorable reserve development.

Operating Cost Ratio

The operating cost ratio decreased primarily due to the permanent repeal of the Health Insurance Tax and operating efficiency gains, partially offset by business mix. For the nine months ended September 30, 2021, the operating cost ratio also decreased due to COVID-19 impacts on revenue and operating costs in the prior year.

Income Tax Rate

Our effective tax rate decreased primarily due to the permanent repeal of the nondeductible Health Insurance Tax.

Reportable Segments

See Note 8 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information on our segments. We utilize various metrics to evaluate and manage our reportable segments, including individuals served by UnitedHealthcare by major market segment and funding arrangement, people served by OptumHealth and adjusted scripts for OptumRx. These metrics are the main drivers of revenue, earnings and cash flows at each business. The metrics also allow management and investors to evaluate and understand business mix, customer penetration and pricing trends when comparing the metrics to revenue by segment.

The following table presents a summary of the reportable segment financial information:

						Three Months Ended September 30,												Increase/(Decrease)												Nine Months Ended September 30,												Increase/(Decrease)
(in millions, except percentages)						2021						2020						2021 vs. 2020												2021						2020						2021 vs. 2020
Revenues
UnitedHealthcare						$	55,927					$	50,373					$	5,554					11		%				$	166,515					$	150,548					$	15,967					11		%
OptumHealth						13,812						10,499						3,313						32						39,515						28,830						10,685						37
OptumInsight						3,139						2,767						372						13						8,948						7,893						1,055						13
OptumRx						23,337						22,081						1,256						6						67,465						65,009						2,456						4
Optum eliminations						(503)						(424)						(79)						19						(1,456)						(1,275)						(181)						14
Optum						39,785						34,923						4,862						14						114,472						100,457						14,015						14
Eliminations						(23,375)						(20,181)						(3,194)						16						(67,133)						(59,331)						(7,802)						13
Consolidated revenues						$	72,337					$	65,115					$	7,222					11		%				$	213,854					$	191,674					$	22,180					12		%
Earnings from operations
UnitedHealthcare						$	2,651					$	2,068					$	583					28		%				$	9,854					$	11,963					$	(2,109)					(18)		%
OptumHealth						1,143						835						308						37						3,233						2,388						845						35
OptumInsight						906						785						121						15						2,447						1,882						565						30
OptumRx						1,012						963						49						5						2,895						2,655						240						9
Optum						3,061						2,583						478						19						8,575						6,925						1,650						24
Consolidated earnings from operations						$	5,712					$	4,651					$	1,061					23		%				$	18,429					$	18,888					$	(459)					(2)		%
Operating margin
UnitedHealthcare						4.7		%				4.1		%				0.6		%										5.9		%				7.9		%				(2.0)		%
OptumHealth						8.3						8.0						0.3												8.2						8.3						(0.1)
OptumInsight						28.9						28.4						0.5												27.3						23.8						3.5
OptumRx						4.3						4.4						(0.1)												4.3						4.1						0.2
Optum						7.7						7.4						0.3												7.5						6.9						0.6
Consolidated operating margin						7.9		%				7.1		%				0.8		%										8.6		%				9.9		%				(1.3)		%

UnitedHealthcare

The following table summarizes UnitedHealthcare revenues by business:

						Three Months Ended September 30,												Increase/(Decrease)												Nine Months Ended September 30,												Increase/(Decrease)
(in millions, except percentages)						2021						2020						2021 vs. 2020												2021						2020						2021 vs. 2020
UnitedHealthcare Employer & Individual						$	15,094					$	14,081					$	1,013					7		%				$	44,668					$	41,324					$	3,344					8		%
UnitedHealthcare Medicare & Retirement						24,931						22,606						2,325						10						75,709						68,613						7,096						10
UnitedHealthcare Community & State						13,763						11,820						1,943						16						39,846						34,796						5,050						15
UnitedHealthcare Global						2,139						1,866						273						15						6,292						5,815						477						8
Total UnitedHealthcare revenues						$	55,927					$	50,373					$	5,554					11		%				$	166,515					$	150,548					$	15,967					11		%

The following table summarizes the number of individuals served by our UnitedHealthcare businesses, by major market segment and funding arrangement:

						September 30,												Increase/(Decrease)
(in thousands, except percentages)						2021						2020						2021 vs. 2020
Commercial:
Risk-based						7,960						7,950						10						—		%
Fee-based						18,595						18,400						195						1
Total commercial						26,555						26,350						205						1
Medicare Advantage						6,455						5,670						785						14
Medicaid						7,510						6,435						1,075						17
Medicare Supplement (Standardized)						4,405						4,450						(45)						(1)
Total community and senior						18,370						16,555						1,815						11
Total UnitedHealthcare - domestic medical						44,925						42,905						2,020						5
Global						5,490						5,285						205						4
Total UnitedHealthcare - medical						50,415						48,190						2,225						5		%
Supplemental Data:
Medicare Part D stand-alone						3,725						4,075						(350)						(9)		%

Commercial business increased primarily due to acquisitions in risk-based and fee-based offerings. Medicare Advantage increased due to growth in people served through individual and group Medicare Advantage plans. The increase in people served through Medicaid was primarily driven by states continuing to ease redetermination requirements due to COVID-19, new state-based awards and growth in people served through Dual Special Needs Plans.

UnitedHealthcare’s revenue increased due to growth in the number of individuals served through Medicare Advantage and Medicaid, including a greater mix of people with higher acuity needs, and an increase in the number of individuals served through commercial benefits, partially offset by the permanent repeal of the Health Insurance Tax and the impacts of COVID-19 on risk adjusted business. Earnings from operations for the three months ended September 30, 2021 increased primarily due to the higher temporary deferral of care and growth in people served across our domestic businesses, partially offset by COVID-19 related care costs and other economic factors. For the nine months ended September 30, 2021, earnings from operations decreased due to COVID-19 related care costs and the impacts of COVID-19 on risk adjusted business, partially offset by higher temporary deferral of care and growth in people served across our domestic businesses.

Optum

Total revenues and earnings from operations increased due to growth across the Optum businesses. The results by segment were as follows:

OptumHealth

Revenue at OptumHealth increased primarily due to organic growth and acquisitions in care delivery and the impact of COVID-19 at our fee-based businesses as consumers resumed elective care. Earnings from operations increased due to organic growth and acquisitions and cost management initiatives. COVID-19 related care costs and temporary care deferrals affected earnings from operations at our risk-based and fee-based businesses in offsetting manners. OptumHealth served approximately 99 million people as of September 30, 2021 compared to 98 million people as of September 30, 2020.

OptumInsight

Revenue and earnings from operations at OptumInsight increased due to growth in technology and managed services and increased activity levels in our volume-based services as a result of care activity normalizing for payer and care provider clients. Earnings from operations also increased due to productivity gains and cost management initiatives.

OptumRx

Revenue and earnings from operations at OptumRx increased due to higher script volumes from growth in people served, increased utilization and organic growth in pharmacy care services. Revenue for the nine months ended September 30, 2021 also increased due to acquisitions. Earnings from operations also increased as a result of continued supply chain management initiatives. OptumRx fulfilled 344 million and 325 million adjusted scripts in the third quarters of 2021 and 2020, respectively. In addition to the factors contributing to revenue growth, adjusted scripts also increased due to the dispensing of COVID-19 vaccines.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES

Liquidity

Summary of our Major Sources and Uses of Cash and Cash Equivalents

						Nine Months Ended September 30,												Increase/(Decrease)
(in millions)						2021						2020						2021 vs. 2020
Sources of cash:
Cash provided by operating activities						$	19,125					$	16,073					$	3,052
Issuances of short-term borrowings and long-term debt, net of repayments						3,733						2,941						792
Proceeds from common stock issuances						1,077						1,206						(129)
Customer funds administered						1,402						249						1,153
Total sources of cash						25,337						20,469
Uses of cash:
Common stock repurchases						(3,950)						(2,541)						(1,409)
Cash paid for acquisitions, net of cash assumed						(4,727)						(4,326)						(401)
Purchases of investments, net of sales and maturities						(3,702)						(1,386)						(2,316)
Purchases of property, equipment and capitalized software						(1,759)						(1,477)						(282)
Cash dividends paid						(3,915)						(3,400)						(515)
Purchases of redeemable noncontrolling interests						(1,338)						—						(1,338)
Other						(1,737)						(614)						(1,123)
Total uses of cash						(21,128)						(13,744)
Effect of exchange rate changes on cash and cash equivalents						(45)						(160)						115
Net increase in cash and cash equivalents						$	4,164					$	6,565					$	(2,401)

2021 Cash Flows Compared to 2020 Cash Flows

Increased cash flows provided by operating activities were primarily driven by changes in working capital accounts. Other significant changes in sources or uses of cash year-over-year included increased net purchases of investments, increased share repurchases and purchases of redeemable noncontrolling interests, partially offset by increased customer funds administered.

Financial Condition

As of September 30, 2021, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of $66.8 billion included approximately $21.1 billion of cash and cash equivalents (of which $3.7 billion was available for general corporate use), $42.8 billion of debt securities and $2.9 billion of investments in equity securities. Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. Our available-for-sale debt securities portfolio had a weighted-average duration of 3.8 years and a weighted-average credit rating of “Double A” as of September 30, 2021. When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.

Capital Resources and Uses of Liquidity

In addition to cash flows from operations and cash and cash equivalent balances available for general corporate use, our capital resources and uses of liquidity are as follows:

Cash Requirements. A summary of our cash requirements as of December 31, 2020 was disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 10-K. During the nine months ended September 30, 2021, there were no material changes to this previously disclosed information outside the ordinary course of business. We believe our capital resources are sufficient to meet future, short-term and long-term, liquidity needs. We continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and acquisitions.

Short-Term Borrowings. Our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program, which facilitates the private placement of unsecured debt through independent broker-dealers, and are available for general corporate purposes. For more information on our commercial paper and bank credit facilities, see Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements” in our 2020 10-K.

Our revolving bank credit facilities contain various covenants, including covenants requiring us to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than 60%. As of September 30, 2021, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately 38%.

Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, such as, to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. For more information on our long-term debt, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements” in our 2020 10-K.

Credit Ratings. Our credit ratings as of September 30, 2021 were as follows:

			Moody’s												S&P Global												Fitch												A.M. Best
			Ratings						Outlook						Ratings						Outlook						Ratings						Outlook						Ratings						Outlook
Senior unsecured debt			A3						Stable						A+						Stable						A						Stable						A-						Positive
Commercial paper			P-2						n/a						A-1						n/a						F1						n/a						AMB-1						n/a

The availability of financing in the form of debt or equity is influenced by many factors, including our profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions, regulatory requirements and economic and market conditions. A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.

Share Repurchase Program. During the nine months ended September 30, 2021, we repurchased approximately 10 million shares at an average price of $376.93 per share. As of September 30, 2021, we had Board authorization to purchase up to 48 million shares of our common stock.

Dividends. In June 2021, the Company’s Board of Directors increased our quarterly cash dividend to shareholders to an annual rate of $5.80 compared to $5.00 per share. For more information on our dividend, see Note 6 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Pending Acquisitions. We have entered into agreements to purchase companies in the health care sector, most notably Change Healthcare (NASDAQ: CHNG), subject to regulatory approvals and other customary closing conditions. The total anticipated capital required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $9 billion.

For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our 2020 10-K.

RECENTLY ISSUED ACCOUNTING STANDARDS

There are no recently issued accounting standards that are expected to have a material impact on our Condensed Consolidated Financial Statements.

CRITICAL ACCOUNTING ESTIMATES

In preparing our Condensed Consolidated Financial Statements, we are required to make judgments, assumptions and estimates, which we believe are reasonable and prudent based on the available facts and circumstances. These judgments, assumptions and estimates affect certain of our revenues and expenses and their related balance sheet accounts and disclosure of our contingent liabilities. We base our assumptions and estimates primarily on historical experience and consider known and projected trends. On an ongoing basis, we re-evaluate our selection of assumptions and the method of calculating our estimates. Actual results, however, may materially differ from our calculated estimates, and this difference would be reported in our current operations.

Our critical accounting estimates include medical costs payable and goodwill. For a detailed description of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our 2020 10-K. For a detailed discussion of our significant accounting policies, see Note 2 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in our 2020 10-K.

FORWARD-LOOKING STATEMENTS

The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements which are intended to take advantage of the “safe harbor” provisions of the federal securities law. The words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. Actual results could differ materially from those that management expects, depending on the outcome of certain factors including: risks associated with public health crises, large-scale medical emergencies and pandemics, such as the COVID-19 pandemic; our ability to effectively estimate, price for and manage medical costs; new or changes in existing health care laws or regulations, or their enforcement or application; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; reductions in revenue or delays to cash flows received under government programs; changes in Medicare, the CMS star ratings program or the application of risk adjustment data validation audits; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; cyberattacks, other privacy/data security incidents, or our failure to comply with related regulations; risks and uncertainties associated with the pharmacy benefits management industry; competitive pressures; changes in or challenges to our public sector contract awards; our ability to contract on competitive terms with physicians, hospitals and other service providers; failure to attract, develop, retain, and manage the succession of key employees and executives; the impact of potential changes in tax laws and regulations (including any increase in the U.S. income tax rate applicable to corporations); failure to achieve targeted operating cost productivity improvements; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of strategic transactions; fluctuations in foreign currency exchange rates; downgrades in our credit ratings; our investment portfolio performance; impairment of our goodwill and intangible assets; and our ability to obtain sufficient funds from our regulated subsidiaries or from external financings to fund our obligations, maintain our debt to total capital ratio at targeted levels, maintain our quarterly dividend payment cycle, or continue repurchasing shares of our common stock. This above list is not exhaustive. We discuss these matters, and certain risks that may affect our business operations, financial condition and results of operations more fully in our filings with the SEC, including our reports on Forms 10-K, 10-Q and 8-K. By their nature, forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual results may vary materially from expectations expressed or implied in this document or any of our prior communications. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

We manage exposure to market interest rates by diversifying investments across different fixed-income market sectors and debt across maturities, as well as by matching a portion of our floating-rate assets and liabilities, either directly or through the use of interest rate swap contracts. Unrealized gains and losses on investments in available-for-sale debt securities are reported in comprehensive income.

The following table summarizes the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of September 30, 2021 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):

						September 30, 2021
Increase (Decrease) in Market Interest Rate						Investment Income Per Annum						Interest Expense Per Annum						Fair Value of Financial Assets						Fair Value of Financial Liabilities
2 %						$	496					$	171					$	(3,245)					$	(8,646)
1						248						85						(1,639)						(4,711)
(1)						(85)						(7)						1,310						5,525
(2)						(85)						(7)						1,723						11,273

Note: Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of September 30, 2021, the assumed hypothetical change in interest rates does not reflect the full 100 and 200 basis point reduction in interest income or interest expense, as the rates are assumed not to fall below zero. As of September 30, 2021 some of our investments had interest rates below 1% so the assumed hypothetical change in the fair value of investments does not reflect the full 100 and 200 basis point reduction.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this quarterly report on Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

A description of our legal proceedings is included in and incorporated by reference to Note 7 of Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our 2020 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2020 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

There have been no material changes to the risk factors as disclosed in our 2020 10-K.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

In November 1997, our Board of Directors adopted a share repurchase program, which the Board evaluates periodically. There is no established expiration date for the program. During the third quarter 2021, we repurchased approximately 2 million shares at an average price of $414.23 per share. As of September 30, 2021, we had Board authorization to purchase up to 48 million shares of our common stock.

The following exhibits are filed or incorporated by reference herein in response to Item 601 of Regulation S-K. The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-10864.

3.1						Certificate of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A/A filed on July 1, 2015)
3.2						Amended and Restated Bylaws of UnitedHealth Group Incorporated, effective February 23, 2021 (incorporated by reference to Exhibit 3.2 to UnitedHealth Group Incorporated’s Current Report on Form 8-K filed on February 26, 2021)
4.1						Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
4.2						Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
4.3						Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
4.4						Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
31.1						Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101).

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*						Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITEDHEALTH GROUP INCORPORATED

/s/ ANDREW P. WITTY						Chief Executive Officer (principal executive officer)			Dated:			November 3, 2021
Andrew P. Witty
/s/ JOHN F. REX						Executive Vice President and Chief Financial Officer (principal financial officer)			Dated:			November 3, 2021
John F. Rex
/s/ THOMAS E. ROOS						Senior Vice President and Chief Accounting Officer (principal accounting officer)			Dated:			November 3, 2021
Thomas E. Roos