Q2 2022 UnitedHealth Group Inc Earnings Call
Good morning, and welcome to the Unitedhealth group's second quarter 2022 earnings Conference call. A question and answer session will follow Unitedhealth group's prepared remarks as a reminder, this call is being recorded.
There are some important introductory information. This call contains forward looking statements under the U S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of these risks and uncertainties can be found in the reports.
That we filed with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings.
Call will also reference non-GAAP amounts a reconciliation of the non-GAAP to GAAP amounts is available on the financial and earnings reports section of the company's investors relations page at Www Dot Unitedhealth group Dotcom.
Information presented on this call is contained in the earnings release, we issued this morning and in our form 8-K dated July 15th 2022, which may be accessed from the Investor Relations page of the Companys website I will now turn the conference over to the Chief Executive Officer of Unitedhealth Group Andrew witty.
Thank you. Thank you and good morning, everybody and thank you for joining us today.
Unitedhealth group enters the second half of the year with sustained momentum as we execute on our objective to serve more people more effectively with connected high quality care.
With that I want to thank all 360000 colleagues.
Their unwavering commitment to our mission and their hard work and support of the people. We serve that makes all of this possible.
As a result of the strong performance at both Optum and United Health Care, we are increasing our adjusted earnings per share outlook for the year to a range of $21 40 to $21 97 per share.
Comprehensive value based care as a central theme of our growth strategy, helping more patients and care providers transition from traditional fee for service to a value based orientation.
We aim to drive better and more consistent care outcomes at lower overall costs often for people who are amongst society's most vulnerable with multiple chronic conditions limited income and unmet social needs.
Optum health in ophthalmology.
Clinical platforms span a continuum of care seconds.
From virtual to post acute in clinic hope, enabling all care teams to meet patients unique needs by providing personalized connected cat.
Our approach helps patients stick with that prescribed care programs, allowing them to spend more time in the comfort of their own homes.
High consumer satisfaction with this comprehensive and consumer focused approach as evidenced for example by a net promoter score of 84 to $1 5 million people served by our dual special needs plans.
We again delivered growth across our health benefits offerings this quarter.
As you might expect right now our Medicare teams are finalizing offerings for this fall's open enrollment focused as always on delivering more value stability and predictability for seniors.
Throughout the year, we gather extensive consume a broker and market feedback to continually improve our products.
Our approach is grounded in providing deep customer engagement high touch service and access to the best care.
The benefits of this approach is striking.
People served by Medicare advantage spend about 40% less out of pocket and those participating in fee for service, which translate into savings of about $2000. Each year for seniors most of whom are on limited income.
And compared to traditional fee for service Medicare advantage plan to devote up to 30% more in resources to primary care and perform up to 50% more preventative screening and testing services for the seniors.
The response among seniors in our plans is positive.
Satisfaction ratings have risen by 450 basis points over the past five years nearly twice that of the industry.
Consumer satisfaction is best demonstrated by the almost $3 4 million additional seniors who have chosen our plans over the same period.
Meanwhile, in our domestic promotional health business benefits business over the past 12 months, we have grown to serve over 250000 more people as a result of innovation in and expansion of our products, including our digital first offerings.
The continued driving affordability in areas of greatest need we're announcing today, an important initiative from United Healthcare supported by Optum Rx.
Starting in 2023.
No copay zero dollar out of pocket for several critical medicines on our preferred drug list for United Healthcare group fully insured members.
Included are medicines, such as insulin <unk>.
<unk> for severe allergic reactions and albuterol for acute asthma attacks.
While this is an important step for vulnerable People's health, the larger and longer term cost containment of drugs depends upon manufacturers' restraining and lower than the list price of their products, which is the fundamental driver of costs.
We will continue to use our capabilities to do everything we can to lower out of pocket costs for consumers building on past actions, including point of sale discounts.
Stepping back and looking across each of our five growth areas, you'll see a common theme.
The deepening of our relationships with the consumers served by Optum and United Healthcare.
Throughout 2022, we've been rapidly expanding and accelerating investments in capabilities to reach and serve a broader base of consumers ever more effectively.
This includes further enhancing our digital experiences to help consumers find trusted health related information and drive greater engagement with our direct to consumer platforms.
Now I'd like to turn it over to Dirk Mcmahon, our president and Chief operating officer to share more about these efforts Doug. Thank you Andrew picking.
Picking up on Andrew's comments I want to provide you with a little more color on the progress we've been making on our growth strategies.
This progress is evidenced by is evidenced in our work to serve more people through value based arrangements and to deliver better care.
We are well along in our goals for the year.
This expansion has significant implications for clinical quality and consistency.
MMA patients in value based arrangements with Optum care physicians are more engaged in their care.
With adherence to wellness checks running five points higher than Medicare fee for service patients helped.
Helping to deliver a nearly 20% lower hospitalization rates.
Further optum care COPD patients served in our value based arrangements have 80% higher medication adherence rates than Medicare fee for service patients contributing to about 60% fewer respiratory complications enabling people to avoid emergency room visits.
Clinical results like these are a small part of the track record, we've built and delivering value based care at a substantial scale for years now and.
And what gives real urgency to our work to expand access to such care.
We also remain committed as an organization to improving access by driving down the cost of health care through applied technology.
For example, we are investing hundreds of millions of dollars to enhance the technology backbone of health care.
Areas, such as platform rationalization to reduce unnecessary complexities.
Greater end to end LG eligibility management for a more seamless customer experience and a common platform to facilitate a consistent clinical experience for our consumers and providers. These.
These investments will ultimately lead to an enhanced end to end service experience lower overall operating costs and greater value for people we serve.
A simpler experiences is at the center of our work on the integrated consumer card developed by our Optum financial services team.
We are seeing great consumer response within our initial pilot groups.
The simplicity of compiling combining all benefits even healthy food purchases onto a single widely accepted card has been a differentiator with consumers.
Just on this initial work we intend to introduce the card to all our individual Medicare advantage members in 2023.
Another key element of our work to improve experience is the optimization of consumer transactions.
No members need and expect timely information at their fingertips.
And I'm pleased to report they are responding well to our digital offerings for everything from understanding their coverage to completing a virtual visit.
Digital engagement has jumped 170% among Medicare members during the last couple of years.
Lastly.
In pharmacy services, we are very focused on improving quality of care and access for consumers by driving pharmacists led offerings.
We are on track to have nearly 700 community pharmacies by the end of the year and continue to increase the integrated community pharmacy footprint and our clinical locations.
With that now I'll turn it over to Chief Financial Officer, John Rex.
Thank you Derek as Andrew noted, we entered the second half of this year with strong growth momentum.
First half revenues of over $160 billion grew 13% compared to last year performance is well balanced with double digit growth that both optum and unitedhealthcare.
To begin let me touch briefly on the care patterns, we have observed so far this year.
Principally we are seeing what had been a balanced relationship between COVID-19 and non COVID-19 care activity over the past couple of years diverge modestly.
The latter not returning quite as rapidly with lower levels of Covid care.
We also continued to see some variation in underlying care patterns with certain areas remaining below historical levels for example, pediatrics and emergency department and others coming back more fully such as the levels at which seniors are obtaining important preventative care.
In recent weeks, we are seeing rising COVID-19 related hospital admissions, but with a lower average length of stay compared with earlier periods.
As always we watch closely for longer term health impacts on people do to care, which might have been deferred during earlier periods.
Thus far we are still not seeing patterns, which indicate shifting acuity.
There are of course, many reasonable theory about what is driving the current environment and they are all no doubt interesting, but here is what we are actually doing.
Consistent with our long standing practice of United Health Group. Our primary intent is to ensure people are getting the care they need and to help them in that process as much as we can.
We remain as always highly respectful of medical cost trends and how they can evolve rapidly.
And we will continue to position our offerings accordingly.
Moving now to the businesses.
Often health revenue grew by over $4 billion or 32% in the second quarter revenue per consumer increased 30% led by growth in patient served under value based arrangements.
Earnings from operations Rose, 24%, even as we accelerated investments in our care delivery practices to support value based expansions.
We also saw strong contributions from <unk> ambulatory surgery centers, which continue to advance the scope and complexity of procedures performed in these optimal settings, all while delivering a superior patient and surgeon experience and high quality clinical outcomes.
Our centers have nearly tripled the number of high acuity joint spine and cardiovascular procedures performed compared to just two years ago.
Care providers increasingly recognize the benefit see centers offer and consumers place high value on the care quality and experience with an NPS consistently in excess of 90%.
Optum insight revenue grew 11% year over year.
The revenue backlog with $23 6 billion growth of $2 3 billion compared to last year.
We continue to drive technological advancements applying artificial intelligence and machine learning more deeply and high value knowledge based services.
Including an expanding suite of information technology and data analytics offerings.
<unk> revenues grew 10% to nearly 25 billion, reflecting continued strong sales results and execution in the core pbms as well as our growth in our pharmacy care services.
These vital and expanding care offerings serve and improve the health of people, including in such areas as our high touch specialty services, where we tightly monitor and track the effectiveness of complex treatments.
Turning to United Healthcare revenue grew by a strong $6 6 billion or 12% with contributions from all our businesses.
And our offerings for seniors, we continue to expect to serve up to 800000 additional people within Medicare advantage. This year.
About three quarters will be in individual and group Medicare advantage and the remainder in dual special needs plans.
This puts us on track for our seventh consecutive year of share gaining growth and Medicare advantage.
People served by our Medicaid offerings grew by 180000 in the second quarter.
At this point, we anticipate the impact to Medicaid enrollment as a result of state redetermination activities will be experienced next year.
We continue to prepare our resources to help people find uninterrupted access to appropriate coverage as this transition occurs.
We added 80000, new people in domestic commercial plans during the quarter.
Within that fully insured commercial offerings grew by 60000 from the first quarter of this year with balanced growth across group and individual fully insured offerings.
Of note some 90% of the growth within our individual and family plans was among people who chose the plan featuring convenient and cost effective access to virtual visits.
Our capital capacity to remain strong second quarter cash flows from operations were $6 9 billion or one three times net income.
And we continue to expect full year cash flows of about 24 billion.
In the first half of this year, we returned nearly $8 billion to shareholders through dividends and share repurchase.
In June our board increased the dividend by 14%.
And we deployed more than $7 billion in capital to enhance our care delivery capacity and consumer strategies to improve outcomes and experiences for the people, we serve and for the benefit of the broader health system.
As noted earlier based on this growth outlook today, we increased our adjusted earnings outlook to a range of $21 40 to $21 90 per share.
Now I'll turn it back to Andrew.
Thanks, John before the Q&A, let me underscore a few key points.
First the strong momentum throughout our business. The people. We serve are continually seeking value high quality care app that cost and all colleagues across optum and unitedhealthcare are raising the bar everyday.
You see that manifested in our business performance and the strong growth in our core platforms double digit growth across the benefits businesses are growing revenue backlog in optum insight.
<unk> growth in our pharmacy services and expansion across Optum health.
We see tremendous opportunity ahead, and we remain confident in our ability to deliver our long term, 13% to 16% earnings per share growth objective and further advanced our mission to help people live healthier lives and to help make the health system work better for everyone.
With that operator, let's open it up for questions one per caller. Please.
Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your Touchtone phone you may remove yourself from the queue by pressing star two please we ask you limit yourself to one question. If you ask most of my questions. We will only be answering the first question. So we can respond to everyone in the.
Q this morning.
We will take our first question from a J rice with credit Suisse.
Thanks, Hi, everybody I wondered if maybe we could ask you to comment a little bit more on your discussions with the <unk>.
Employer groups as we go through the selling season on the.
Benefits business to open questions. It seems like to me, there's this sort of back and forth about the need to retain employees the tight labor market in many industries, but alternatively concerns about the recession and how is that coloring conversations and then also this issue of.
Pressure on some of the provider areas from their tight labor markets, how is that impacting discussions with them with employers about their benefit outlook for next year.
Hey, Jay Thanks, so much for the question.
So first off before I hand, this to Brian Thompson to give you a few thoughts.
We've been Super pleased with the progression, particularly across the benefits business as you've seen in the report this morning, but certainly within our Eni business. The commercial business had a very strong year end.
The team have worked extremely hard to understand the kind of pressures youll describing us as employers are obviously concerned about managing their own cost environment.
And how do we make sure that the benefits availability for their employees that are appropriate.
Really I would say take the just this opportunity just to emphasize how important the role of a company like United Healthcare is here because as we all know we're in a more inflationary environment the role of United Healthcare to help deliver affordability of affordable healthcare coverage to the employees of all of those companies that rely on a super important and maybe.
With that I'll hand, it to Brian to give you a little bit more sense of how things are playing out yes. Thanks for the question a J and I appreciate that leading Andrew most of these conversations have been around innovation and how do we continue to drive value based solutions in the form of product design that has really been the central theme throughout.
We've showed up to the market with some new ideas around virtual care you have heard about that with our partnership with Optum. Both in terms of product design as well as broader access beyond medical integrated with behavioral et cetera, and how we really enable the consumer high deductibles have often been a part of the equation for a long time, but bind really puts that can.
Sooner in the driver's seat, where they're able to choose what coverage they want with pre service guaranteed costs and that really resonates in the marketplace and most importantly for employers it not only provides great quality, but lower price points. So I would say the conversations have been less around staffing and employment levels and more around value and these examples of products that really resonated Brian . Thanks. So.
And a J. Thank you again next question please.
We will go next to Justin Lake with Wolfe Research.
Thanks, Good morning.
A question on cost trend one it'd be great. If you could just run us through what you were seeing by business segment and then two in terms of thinking into next year. One are you starting to price for some level of COVID-19 kind of being normal. So I know you've always guided above for normal plus COVID-19.
Are you starting to price deck, COVID-19 and pricing above normal for next year and to what our hospital unit costs looking like for next year.
The 4% to 5% that we typically take in terms of new contracts.
Justin Thanks, so much for the question before I ask John to maybe comment a little bit on the business cost evolution and then Bryan I think we will give you a little bit perspective, with what they're seeing in terms of hospital.
Conversation just a couple of step back observations may maybe I would I would offer here.
First off as we look across the overall business.
<unk> seen tremendous growth opportunities and tremendous potential for us to invest behind those and you see that picked up in.
Some of the.
The increase in investment levels that you see in the quarter. This time round I think thats, an incredibly positive sign of the full potential of the overall organization John will talk a little bit more to some of those in a second.
In terms of 2023, we're not going to gain so a ton of detail on how we are thinking about pricing, but as always we are very very respectful of the kind of underlying phenomena within the cost trends of the environment of course that includes a sense of where COVID-19 may or may not be in.
We've all learned to be deeply respectful of something like a pandemic and the uncertainty as it can present uneven in the last few months, we've seen you've seen that play out a little bit and of course respectful of things like inflationary trends in the environment and all of that plays into how we think about these things maybe just to give you a little bit more depth on the <unk>.
First part of your question I'll pass it to John and then maybe John you could pass it to Brian just to finish off on the second pump sure. Good morning, Justin just a few thoughts in particular, maybe we'll look at some of the observations really from the quarter from the first half and what we're seeing because of the influence is really what youre getting at and asking how how our thinking is developing so.
You heard in my prepared comments talked about that we typically see it very balanced relationship between Covid care and non Covid care.
Over the course of the last two years and that's what shifted a little bit here.
In recent months that the lower level of Covid care, and let's put that in the second quarter, probably about a third the number of inpatient admissions as compared to the first quarter.
Was not as quickly accompanied by a higher level of non COVID-19 utilization. So that was an important kind of underlying factor here that we saw in recent months I think the other important thing here is and as you look across a care broadly.
On longer really between integrals <unk> COVID-19 hospitalizations that any other point since the pandemic now so that further illuminate the core underlying non COVID-19 care patterns that we're seeing also.
So, helping our illuminate what's going on underneath all of that.
I think the other point that I wanted to speak.
Speak to you that we're seeing.
Very encouraged that we're seeing some pockets of care.
Moving towards.
More normal level.
The ones that we would say are kind of bellwethers for future care and important for example, super important for us.
Annual wellness visits among our Medicare patients they are back at pre pandemic baseline <unk>, that's very important for us.
Getting them the care they need first fill prescriptions are trending above baseline.
So we're seeing people get some care they need.
We're seeing important pickups in some preventative care such as Colonoscopy is also those now getting back to baseline. So all of that kind of influencing in terms of how we think about the future.
Got to make sure people are getting the care they need we've seen the greatest response really in our in our senior populations I think some of that is our ability to get into their homes.
To influence that care and to get them into that.
And certainly back to your kind of core fundamental in how we think about the future yeah enormously respectful of the outlook for future for future impacts from Covid hospitalization.
Here, we are sitting in a period, where we're seeing COVID-19 hospitalizations rise again.
<unk> kind of pausing since since January so super respectful in our outlook towards how that might progress throughout this year and next and that potential for that to continue to be somewhat variable and to accelerate again, Brian yes.
John I think you summarized that well I might just add on inflation, obviously as you well know adjust and we price to our forward view of costs that includes inflation. We're certainly respectful of what we're seeing in terms of labor cost with our provider partners and as you might expect obviously with long term agreements that will be more impact in 2023% in 2022, just as a function of time and.
We renew these contracts so certainly respectful that dynamic environment. Thanks.
Thank you Justin appreciate it our next question please.
We go next to Ricky Goldwasser with Morgan Stanley .
Yes, okay.
<unk>.
I will focus on I'll come Rx.
When we look at it with remarks, clearly you've seen very strong topline growth in membership growth.
But we haven't seen necessarily the flow through on the margin. So what's kind of like trends are you seeing just in terms of mix.
Impacted results and how should we think about the progression for rest of the year from Optum.
Ricky.
Ricky Thanks, so much for the question before asked to make a few comments on that I think one of the one of the overwhelming sentences that we see around Optum Rx is the really strong growth in the bringing on board a very significant new clients and of course that as you know brings with a kind of frontload an investment phenomenon as you gear up for support.
And that's one of the reasons why you see this lag between the revenue growth and the earnings growth or maybe to give you a little book bit more of a sense of all of that and other aspects.
Thanks.
As Andrew said really strong growth this year and you see that as a result of new client growth in the membership that we've brought in and.
<unk> as well as the United Healthcare bookings you are seeing that on the revenue you are seeing that in the script volume we see strong utilization and you also are seeing that in the earnings growth with respect to investments, which do impact margins in the quarter, but we will see a return on those through the year and our long term plan I point, you to actually four things.
<unk> those client investments that Andrew talked about number two we talked to you about the new businesses.
Referenced Gen Y that we continue to expand into new sites. So we can serve more individuals and underserved.
In underserved communities, but I'd, maybe point you to two additional ones that I think provide some great context.
We're investing for the year, that's number one with our existing clients and even being responsive to those prospective clients and our PVM, that's moving very urgently with innovation like Brian thing on the Unitedhealthcare side to develop products today that address specialty drug costs that are high and rising in addition to consumer affordability.
Building on the tools that we've already delivered significant value of our specialty tools and delivering over $1 billion of value over the last year and half years and we're not done we're working urgently to bring more services and products. So that is happening real time in the quarter and those investments will pay off and then the last one.
Pointing to are those RF pharmacy, it's our pharmacies are fast growing we're seeing that impacting in our topline growth and in our earnings but youll see us not just invest in our operations and we've talked about that before and in our digital experience, but I'm. Most excited about the fact that we're also integrating the service.
Putting a pharmacist first we have over 7000 pharmacists that work hard everyday not just to serve and think mezz, but to help our individuals' navigate educate and guide people through our best in class capabilities, and so really integrating those pharmacies with the pharmacist first in service of our smile.
One of the biggest investments in the quarter and Youre going to see a return on that through the rest of the year, but I think it's also going to pay off and the growth of those pharmacies and better service to individuals' Sydney Aetna, great. Thanks, Heather and Ricky. Thank you for the question next question. Please.
We'll go next to Matt Borsch with BMO capital markets.
Yes, if I could.
Asked a question about the I think it was about a month ago that the.
The U S Supreme Court.
Not to take up the case.
<unk> had gone through the district courts regarding the CMS rule on risk coding if I'm, referring to it in the right way can you just help us understand.
You can say about implications or at least maybe next steps in that process.
Matt Thanks, very much for the question I mean, I think not.
Not to be too disappointed too, but I don't think you'd be too surprised that we don't generally comment on ongoing legal processes and I think in this case thats certainly apply so no not really in a position to be able to give you too much information on that but certainly I appreciate the question.
Next question please.
We'll go next to Scott Fidel with Stephens.
Hi, Thanks, good morning.
I had a question just around the <unk> pending acquisition and clearly just recently CMS put out their home health proposal for 2023 and with a pretty disappointing.
Caught that they're proposing for next year just interested in how that rate cut may influence your thinking on the financial impact of the <unk> acquisition in 2023, and then also whether that influences. How you think about deploying that asset potentially in different ways.
And that does end up going through with a rate cut in the final.
Rates when they release dose thanks.
Hey, Scott. Thanks, so much for the question listen let me start off by saying, we really believe that enhancing and building high quality care provision in the home is going to be a key feature of the future.
And the more that that can be linked to other aspects of care. So for example physician clinic virtual the rest it's very much a central focus of our Optum health development and so.
The bringing together of LHC within the overall Optum organization is really important to us and we're very committed to that transaction. We believe it really is going to be a significant enhancement of the quality of care that can be delivered and we think we can really we can really it can really contribute towards improved value based delivery.
For patients.
As is always the case, making sure that the incentive system is appropriate to drive the right kind of care is really important so.
I hope very much over time that CMS and others continue to see the value of home care and in fact, the support is given signals all given to continue to increase the development of high quality care in the home environment.
So we'll see how that plays out obviously, we are committed to this agenda very much because we see as a strategic.
Strategically critical way of extending better care to folks in homes and you have to remember Scott. Some of these folks can get out of their homes.
Is really this isn't this isn't kind of elective for them that they need we need to find ways to get more help to them and as you know we.
We've got long history in this scenario is like how schools, which have delivered amazing.
Our health assessment and preventive direction to millions of people and this is another big step for us to extend so we're optimistic about this we hope very much that CMS and others will continue to send signals of support through the way in which they choose to invest in this arena and we'll see how that plays out during the rest of the year. Thanks. So much for the question next.
Question. Please.
We'll go next to Lisa Gill with J P. Morgan.
Hi, Thanks, very much good morning, Andrew I appreciate your comments on Optum Rx and what Youre doing for 2023, rather than no copay zero co pay but I'm wondering if you've ever had there could maybe.
Two things one the.
<unk> 2023, selling season, and then secondly, I know you and I have talked in the past about shift towards value based care within Rx are you seeing new programs for 2023 beyond what you talked about as we think about value based care.
Lisa Thanks, so much for the question I think I think UHC supported by Optum or exit during the completely the right thing here too.
<unk> zero co pay and zero out of pocket on some critical meds and you've got to think about these constant.
Consequences of folks who are unfortunately affected by the conditions that these meds address if they don't get the meds when they need them, they're going to end up in the emergency room or worse.
And that brings with it enormous.
Personal human consequences under of course cost.
So we believe this is a really appropriate place for us to lean into and to address that.
In terms of before I go to <unk>.
Let's talk about specifically Optum Rx selling season I just wanted to step back for a second I just want to let you know optum.
As in the middle of a record selling season across the board. If you look at the first six months of Optum. It would of course include an ophthalmology Rx, but also the other two businesses. We are in a record selling season. So this is a really significant period for us in terms of the.
The fit of the products and services that we're offering across the marketplace. One of the reasons why you've seen us step up our investment profile in the business is because we're seeing such a strong pickup in our services and maybe maybe with that heavy you could address specifically what youll see it in <unk> as you think about selling seasons into 'twenty three and maybe also just touch on the.
Value based care aspect that Lisa described.
As Andrew said strong selling season across Optum optum, our axes, enjoying that as well and the way I would think about that first of all it came off a really strong 22 season sitting where we are today two ways to think about it. The first thing is client retention, we're going to be in the high <unk> again this year with most of the book in right now with respect to new business activity.
Based on sales activity, including finalists and win rate right. Now. We're ahead of where we were at this time last year and I really think Thats. The result of the real time innovation, we're working again with our clients now to bring them services today, we're not waiting.
Waiting for.
Other market factors, there or the environment to make us innovate and drive down cost and Thats showing up.
We have the best client management team.
Respond to client management team in the industry and that's paying off for us. So I think we're going to be very busy again on 2023, that's going to require some investment, but we're going to be very busy with another 2000 22023 years.
Serving our clients with respect to value base, I guess I would think about it in two respects.
We're seeing better we're seeing definitely more interest and pressure from our clients and we're also seeing more engagement from our clients to engage in the elements of value based care and to incorporate pharmacy, including specialty pharmacy into those contracts.
The world for US to play is number one to ensure that our pharma partners are bringing the most affordable value based and clinically appropriate drug to drive those results, but the other thing is that we bring tools real time that integrate product with treatment protocols. We work very closely with Optum health and particularly with most it with many of our Optum care.
Prescribers and providers to experiment with this.
With these tools and services that will help prescribers make the right choices, our plans and plan sponsors to be able to have more predictability in their services and for us to be an important piece of that value based ship. So.
Youll continue to see us invest there and I think we will see even more.
The pbms being.
A bigger piece of driving value based care and integrating pharmacy Heather. Thanks, So much and Lisa I think you'll really right to <unk>.
<unk> resolved in this value based piece and as Heather just said.
Rather than it being an optimal rx kind of Standalone agenda. It is very much on optum agenda in terms of how we build value based care propositions and of course you've seen.
Very substantially within in the primary care kind of holistic approach that.
Optum health is leading on Youll continue to see us.
Prospects experiment and invest in areas like behavioral health and in areas like oncology and.
These are going to be important areas for us to solve right now I'd say those are early day opportunities, but as you think about where the burden of cost and complexity sits in the in the health care environment. Those are the kind of places where we need to make progress and we are unused should expect to hear much more from us on that over the next two or three years.
Lisa Thanks, So much next question.
We'll go next to Josh Raskin with Nephron research.
Thanks, Good morning.
If you look at the senior market over the next couple of years beyond the obvious primary care services that Youre building out are there other capabilities that you think you need to develop or acquire things that are now emerging in the market that you think are going to be even more important in the future.
Yes, Josh Great question really appreciate it.
We continue to see a very strong performance in our senior.
Book of business.
See that continued progression toward a 100000 folks joining us this year for the first time, that's really important continued market share growth and all of that is built on the stability of the service offering that we're giving and I think the experience that the senior taken but you're totally right to ask the question about when next and maybe Tim Noel you could speak to.
To that.
Okay.
Bill.
Tom.
Okay.
For Medicare advantage.
Wow.
Okay.
Okay.
Okay.
John .
Great.
Okay.
Thank you Mark.
Yeah.
Hi, Janet.
Super important.
Sure.
Okay.
Okay.
Derek talked about the <unk> card, which is something that makes our benefits easier to use more simple for our members to understand on that experience, but beyond that we will continue to bring forth consistent innovations that make the member experience easier for people.
Things like the digital experience more personalized member experience as well I think another theme for the senior population will continue to be an expand at home services, that's really important and I think we've historically thought of the center of care for seniors to be in the.
The office more and more though thats, becoming.
Something that needs to occur out of the home given mobility channels challenges for folks.
<unk> ability of this population, bringing care into the home is absolutely essential.
The delivery of high quality care so.
Those are the big themes for me looking forward is continued on advance the at home capabilities for seniors and continue to innovate make using benefits easier more understandable simple affordable.
Tim Thanks, so much and I think maybe there was a little glitch with tims, Mike at the beginning of his comments. So I hope I hope very much you were able to hear him.
Certainly hear the latter part of this call.
Commentary in and I think the.
The sense of urgency and that sort of thinking around innovation for all senior members and where that service can go over the next several years is really substantive and you should continue to see us be super active in that space, Josh I really appreciate the question next question. Please.
We'll go next to Kevin Fischbeck with Bank of America.
Great. Thanks.
Wondering if could talk a little bit about the capital position.
Growth in the quarter.
How do you think about the ability to continue to add doctors at this rate the competitive landscape and how should we think about where.
The margins in the catheter physician business compare to Optima health broadly and where that segment could go over time. Thanks.
Great questions, Kevin I'm going to ask John in a second to talk to the margin progression opportunity, but maybe first doctor deck head of Optum health might speak to the whole.
The whole dynamic around physician recruitment, yes, Kevin. Thanks for the question absolutely. We are seeing continued growth of our physicians and Optum health and Optum care. What we've found is that physicians are increasingly attracted to the value proposition that we offer there which is less clerical burden and more focus on doing that.
Work that they love, which is providing clinical care moving.
Moving physicians to value based care paradigms is especially appealing so youre seeing us.
Appeal to large groups like atria and Kelsey that have recently joined Optum health as well as doctors coming straight out of residency so were tracking nicely towards our growth agenda of adding 10000 physicians and advanced practitioners during the year and.
And look forward to following up with you at the Investor Conference to share those numbers.
Hi, Good morning, Kevin It's John here, so considering the growth in Optum health and the earnings progression that you should expect out of that the primary focus continues to be on expanding our capabilities for value based care that build out these investments as you know well in <unk>.
It looked at this for a while are made well in advance of any revenue impact that we get from bringing from bringing those physicians on.
As we look at our pipeline so when I talked pipeline there are two ways to think about it.
Potential future asset when I'm talking about it now with you here I'm talking about even our existing base of clinical care delivery capabilities, and where we have to build out that that capability in terms of future value based expansion.
Quite early stage in that which is why we hang in this 8% to 10% margin range for Optum health.
<unk> being here that there is a decade ahead of builds for us So and just when you look at our existing pipeline and what that can drive in terms of strong double digit top line growth for many years as we bring this on and the importance.
Particularly because of the value it brings to the patients we serve of continuing to invest in these value based capabilities. So as we build along this youll see as we as we tried to do that.
Tried to we look to deliver in this 8% to 10% margin range and expect that to continue just because these deep investments and still considering thats very early inning third inning in terms of the build that wed like to see looking ahead for care delivery John Thank you very much.
Kevin I appreciate the question next question please.
We'll go next to Whit Mayo with SBB Securities.
Hey, thanks.
I would've thought that investment income would have been a little higher this quarter were there any write downs on Optum ventures anything that would negatively impact that just wondering how you are marking some of those investments that you've made in recent years. Thanks.
Yes. Thanks, so much let me hand, it straight to Jon good morning.
Yes within the quarter, we actually took we realized some losses as we reposition the portfolio a bit here looking out to the future I'm try to get that all teed up for the environment. We're in right now and so when you look at that the quarterly progression, which I believe with that sort of you're focusing on I'd call. It some of the realized realized losses, we chose to take.
In this quarter. Thanks, John Thanks next question. Please we.
We'll go next to Gary Taylor with Cowen <unk> Company.
Okay.
Hi, Good morning, just wanted to follow up on the Kelsey Seybold and atria.
Commentary just a little bit you spent just under $6 billion on.
Acquisitions this quarter, which is about what you spent annually each of the last five years. So just wondering given the size of that if you could give us.
Any more color on kind of where those organizations are fee for service versus capitation.
They might impact outcome health margins.
In the second half and then just broadly on the environment or are the valuations that you are able to garner still.
Far below public company value based care valuations, even after they've corrected or is there anything there that.
Becomes more intriguing.
So I'll ask John to make a few comments on this in a second but I'm glad I'm glad you.
You saw that.
Substantial continued deployment of our capital to grow the business as you know a key part of our long term growth strategy is of course organic.
Complimented by bringing on board new businesses and teams who can supplement what we have.
There's nothing more powerful to that agenda, then building out the value based cafes now we believe in both with both atria and Kelsey seybold organizations.
Amazing teams people organizations, which have got real character history personality of the of themselves that we think is going to really add to the diversity of the company and bring it with a tremendous amount of skills in perspective, and as you know a number of them already in both cases, they have developed themselves.
<unk> saw some significant thinking around value based care. So the fit has really good of course, when you're bringing new organizations is typically a feather in process before they fully contribute in that I am sure that will be the case here as well.
But really we continue to be extremely active in and how we sensibly think about deploying capital and we remain very optimistic about our ability to do that but maybe go a little further on valuation perspective John .
As it relates to evaluation perspective.
Our pipeline and our conversations as we expand in care delivery. These are multiyear conversations that we have often by the time, we are able to partner with another carrier delivery organization, we've probably been in conversations with them for five years.
Super long pipelines at development processes relationship understanding the organization that has us understanding.
Their organization them understanding us. These go on for quite a long period of time, so with that with that perspective there.
There's probably a little bit a little bit less volatility than you might expect in terms of as we face when we think about valuations in this business and where he would have stepped into it maybe a number of years ago, where we are now.
And even if you look towards the public market since I would say those just don't manifest quite as quickly, but they also come out on the other side they weren't manifesting as quickly so I would call it a little less.
Impactful at this at this point and juncture, but the key point.
I think we focus on is these have been.
Multi year conversations and relationship builds for us as we move into these and typically not a six month process.
Absolutely.
Gary. Thank you so much for the question. We just have time for one last question. So final question. Please operator.
Thank you we will go to Nathan rich with Goldman Sachs.
Great. Good morning. Thanks for the question I wanted to ask on utilization in the current inflationary environment that consumers are facing.
Even the greater consumers of health care in todays market, how do you think consumers might change how they utilize the system.
Given that some of the pressures that they're facing and have you seen any signs of changes in behavior. So far.
Thanks, so much for the question.
Maybe going to go to Brian in a couple of minutes just to give you a little bit of what he see in and what is kind of reflected in his in his membership.
But listen obviously.
We all see the inflationary pressures around us and we all know that that has.
That really focuses people's minds on how they prioritize their spend and investment what it really means for US is we have to double down on getting a great deal for them, we have to use our capabilities to get the very best quality care available at the most affordable cost and.
Whether that's through the PVM, whether that's through the Unitedhealth care negotiations with the rest of the.
The medical environment, that's a really important role words stepping into play and we're going to continue to lean into that very much. Now then it speaks to really beingness jus around understanding.
Hi, within the consumer experience some things are more problematic than others.
I'll call out one of the things we're announcing today to eliminate those co pays for.
For people, who are in really vulnerable situations. This is the right time to do that to help those folks who are struggling and we know that we need those folks to make sure. They fill their prescriptions properly and if theres anything caused by the inflationary environment that might hold that back there's going to be really bad downsides to that.
We don't want that to happen. So we will lean into that I'd call out things like virtual call out things.
As you think about much more digital engagement coal out choice I mean make giving consumers more choice. The more pressure there is an environment, you've got to lean into it and Thats why as an organization.
We have over the last two years really double down on our commitment to consumer strategy across the board core capability of this company going forward will be consumer capability and that's an area, where you will see us continue to talk about investing build innovate and we hope really lead in terms of move in the consumer to the center of thinking in health care.
And maybe just to finish off Brian would love to get your perspective on what Youll see from Youll Youll very significant membership sure. Thanks for that Andrew maybe to put it into zones macro I think Andrew hit it right in that macro environment, it's really around virtual care and around emergency Department use we've seen obviously virtual care increase an emergency.
The apartment use go down as I think in the particular again back to that concept of consumer and choice. It's around product design bind to being our best example, when we can put that consumer in the driver's seat where they can choose site of service and optimize both our cost and quality. They do and when you couple that with a high performing network. Obviously, you get the benefit both of the unit cost as well.
As that consumer choice. So those are the greatest examples that I can see really emerging in this environment.
Thanks, so much and thank you very very much for that question.
We certainly appreciate your time and attention today and I Hope what you heard is a story of growth and focused execution.
As our strategy continues to generate momentum across our businesses and advance our mission on behalf of every person in every community. We are privileged to serve really grateful for your attention. This morning, and thank you. So much for your questions and we look forward to following up as usual with any further questions you might have offline. Thanks, so much and have a great day.
Okay.
That will conclude today's call. We appreciate your participation.
Okay.
Yeah.