Unitedhealth Group, Inc., Q1 2010 Earnings Call, Apr 20, 2010 - NYSE:UNH

NYSE:UNH

During the UnitedHealth Group's Q1 2010 Earnings Call, Stephen J. Hemsley, then President and CEO, provided the following statements and insights:

1. Opening Remarks:

   • Expressed appreciation for attendees.
   • Mentioned strong performance across all businesses in Q1 2010, extending the momentum built throughout 2009.
   • Noted unexpected revenue growth due to higher-than-anticipated product and service purchases.

2. Operational Highlights:

   • Effective management of medical care and operating expenses.
   • Strengthening of administrative infrastructure and systems, leading to improved performance quality, consistency, responsiveness, and operational efficiency.
   • Reported Q1 earnings per share of $1.03 and operating cash flows of $1.2 billion.

3. Full Year 2010 Outlook:

   • Updated earnings outlook to a range of $3.15 to $3.35 per share, based on stronger revenue growth, ongoing operating and medical cost management efforts, and improving operational integration.

4. Business Execution and Innovations:

   • Highlighted consistent execution on business fundamentals, which has been well received by customers.
   • Mentioned practical developments aimed at modernizing the health system, including:
     • Introduction of the Diabetes Prevention and Control Alliance in partnership with YMCA-USA and Walgreens.
     • Use of advanced analytics to identify individuals at risk of diabetes.
     • Partnership with Sesame Workshop around healthy eating and nutrition.
     • Development of the Quicken Health Expense Tracker in a joint venture with Intuit, which helps consumers understand and manage health expenditures.

5. Research and Modernization Efforts:

   • Noted the issuance of the first post-reform research report by the UnitedHealth Center for Health Reform & Modernization, suggesting potential savings of nearly $370 billion over 10 years for the Medicaid system.
   • Mentioned previous research reports identifying over $500 billion in savings for the Medicare program and over $330 billion through the use of modern technology in the broader health system.

6. Health Benefits Business Update:

   • Discussed the integration and simplification of commercial, Medicare, Medicaid, and military veterans businesses.
   • Noted significant growth in Medicare Advantage, Medicaid, and self-funded employer benefits.
   • Highlighted steady Medicaid growth and the effectiveness of member engagement and care management programs.
   • Mentioned a significant improvement in commercial membership performance, despite high unemployment levels.
   • Discussed the steady growth of consumer-directed high deductible plans and consumer value products.

7. Health Services Businesses Update:

   • Noted the growth and strong performance of Health Services businesses, including OptumHealth, Ingenix, and Prescription Solutions.
   • Mentioned the exceptional growth trend of Ingenix and the steady growth of Prescription Solutions.

8. Consolidated Results:

   • Discussed the drivers of the 5.4% year-over-year increase in first quarter revenues.
   • Mentioned the lower medical costs in 2009 and the factors contributing to the consolidated medical care ratio of 81.3%.
   • Highlighted the focus on clinical performance fundamentals and the opportunities for appropriate science-based medical cost containment.
   • Discussed the favorable consolidated operating cost ratio and the opportunities for further operating cost management.

9. Post-Reform Environment:

   • Emphasized the company's commitment to making the new healthcare reform law work successfully.
   • Discussed the immediate changes impacting underwriting practices and the company's readiness to incorporate these changes.
   • Mentioned the actuarial soundness and integrity as core to responsible benefit underwriting and pricing.
   • Discussed the Medicare Advantage rates for 2011 and the company's planning for 2011 benefit design.
   • Highlighted the company's focus on adjusting benefit levels, preserving valued benefits, adding earnings through targeted growth, diversifying into adjacent senior market products, and intensifying medical and operating cost management.

10. Uninsured Population:

    • Mentioned the company's unique positioning and intention to serve the uninsured population, leveraging its products, cost structure, technology, experience, and innovation.

11. Business Model and Adaptability:

    • Stated that the UnitedHealth Group business model is built for change, adaptability, and scale.
    • Highlighted the company's diverse experiences and enduring competencies in information, technology, and care management.

12. Closing Remarks:

    • Summarized the company's fundamental execution, results, and opportunities for growth under healthcare reform.

    • Thanked attendees for their interest and opened the call to questions.