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pww.comUnitedhealth Group, Inc., Q3 2010 Earnings Call, Oct 19, 2010 - NYSE:UNH

NYSE:UNH

Tom Paul [Executives] 💬

During the Q3 2010 Earnings Call for UnitedHealth Group, Tom Paul provided updates and insights primarily regarding the Medicare market. Here is a detailed summary of his contributions:

  1. Special Election Period for Private Fee-For-Service:

    • Tom Paul commented on the special election period resulting from disruptions in the Private Fee-For-Service market.
    • He mentioned that UnitedHealth Group is seeing positive outcomes from its product introductions and distribution and marketing efforts.
    • This refers to the migration of individuals out of disrupted Private Fee-For-Service markets into network-based plans.

  2. Impact of Humana Wal-Mart Low-Cost Option:

    • Tom Paul addressed the question about the impact of the Humana Wal-Mart low-cost pricing strategy on the market dynamics.

    • He explained that UnitedHealth Group consolidated its saver plan and preferred plan, making the preferred plan more competitive with a $5 monthly premium drop.

    • He highlighted that UnitedHealthcare's preferred plan is the only national plan without a deductible in 2011, which he believes is an important feature for consumers.

    • He expects that despite the presence of a low-cost plan from Humana Wal-Mart, UnitedHealthcare will be able to retain and grow its preferred plan due to the lack of a deductible.

Stephen J. Hemsley [Non-Independent Non-Executive Chairman] 💬

Here is a detailed summary of the comments made by Stephen J. Hemsley during the UnitedHealth Group Third Quarter 2010 Earnings Conference Call:

Opening Remarks

  • Hemsley thanked everyone for joining the call and reviewed the company's performance in the third quarter.
  • He highlighted the company's focus on fundamental execution, innovation, and momentum across various business areas.
  • He mentioned the company's well-rounded performance, based on the breadth of advances and new activities.
  • He stated that the company believes these advancements are sustainable and differentiate them in the marketplace.

Third Quarter Highlights

  • Reported third quarter revenues of $23.7 billion and earnings of $1.14 per share.
  • Cash flow from operations for the quarter was $2.9 billion, bringing year-to-date cash flows to $4.8 billion.
  • Expected full-year 2010 revenue to be nearly $94 billion, an increase from previous forecasts.
  • Four businesses experienced year-over-year revenue growth above 10%.
  • Health Benefits business reported third quarter revenues of $22 billion, an 8.8% increase year-over-year.
  • Health Benefits earnings from operations advanced to $1.8 billion.
  • The company is unifying the branding of its Health Benefits businesses under the UnitedHealthcare brand.
  • The company is serving 1 million more people than a year ago, including growth in commercial risk and Medicaid offerings.
  • Medicare Advantage program is leading the market with 270,000 new members this year.
  • Medicaid business continues to grow strongly, increasing by 335,000 people this year.
  • Commercial benefits business grew with an increase of 95,000 people, despite continued pressure in the employment market.
  • Health Services business groups' revenues increased by 14.1% year-over-year to $6.2 billion.
  • Health Services businesses continue to perform ahead of the original 2010 forecast.
  • Medical costs and quality performance remained strong, with clinical and care engagement work producing positive results.
  • Pharmaceutical management programs continue to outperform market norms.

Outlook

  • Hemsley mentioned that the company expects some level of year-over-year reduction in operating and net earnings per share in 2011 due to external factors and uncertainties.
  • The company anticipates building a clear path to net earnings per share growth in 2012.
  • He expressed optimism about the future and the company's commitment to making health reform a reality.

Strategic Initiatives

  • Hemsley discussed the company's acquisitions and their alignment with the themes of improving the overall health system, using information, enabling technology, and care management.
  • He mentioned the company's focus on connectivity, compliance, and clinical outcomes.
  • Hemsley noted that the acquisitions were not significant to the quarter and that more details would be provided at the Investor Day.

Question-and-Answer Session

  • Hemsley responded to questions regarding acquisitions, market-by-market solutions, commercial cost trends, pricing strategies, and regulatory impacts.

  • He emphasized the company's focus on affordability, consumer engagement, and cost management in the commercial marketplace.

  • He discussed the company's expectations for increased utilization in 2011 and the impact of regulatory changes.

  • Hemsley mentioned the company's disciplined approach to pricing and its ability to manage markets with minimum MLR requirements.

  • He addressed the company's approach to commission reductions and the impact of regulatory uncertainties on the 2011 outlook.

  • Hemsley highlighted the company's positive momentum in the national accounts market and its strong service and value proposition.

  • He noted the company's commitment to providing a more detailed outlook at the upcoming Investor Day.

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