Q2 2023 UnitedHealth Group Inc Earnings Call
Good morning, and walk on the Unitedhealth Group second quarter 2023 earnings Conference call. A question and answer session will follow Unitedhealth group's prepared remarks.
As a reminder, this call is being recorded.
Here is some important introductory information. This call contains forward looking statements under 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 the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission included including the cautionary statements included in our current M periodically filings.
This 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 Investor 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 14th 2023, which may be accessed from the Investor Relations page of the company's website.
I will now turn the conference over to the Chief Executive Officer of Unitedhealth Group Andrew witty.
Thank you and good morning, and thank you all for joining us.
It's got a number of weeks ago during the quarter, we saw a somewhat higher than usual range of movement in certain areas of care activity.
As you would expect this inevitably impacted some elements of our business.
But we overcame these dynamics with strengths in other areas.
Our second quarter performance reflects the capabilities agility and dedication of our people as they responded to the changes.
As a team we're confident in our ability to robustly grow in this fluid health care environment.
Indeed.
As I hope you saw in our release today revenue growth in the quarter was strong and well balanced across our enterprise increasing by more than $12 billion to nearly $93 billion.
Let me provide a few highlights about growth.
First the number of patients served by Optum health under fully accountable value based care arrangements grew by more than 900000 over this time last year.
Among the new patients we welcomed a significant number have complex needs.
These people have serious health challenges limited economic resources, and often living communities, where it can be difficult to access high quality care.
Our ability to support their needs is distinctive and a direct result of the investments we have made to provide coordinated and comprehensive medical pharmacy and behavioral care.
<unk> capabilities that will help the patients we serve live healthier lives and drive growth far into the future.
Ophthalmology and Optum insight revenue grew double digits on expanded capabilities and products that are generating new sales opportunities.
United Health Care's growth was strong and diversified as well.
They were serving nearly $1 6 million more people in our commercial and public sector program offerings than we did last year.
This durable growth driven by our colleagues relentless focus on quality and execution enabled us to achieve second quarter adjusted earnings per share of $6 14 sentence and to strengthen our full year outlook to between $24 70 to $25 per share.
We know there is great interest in understanding the recent care activity I just mentioned.
So I'll give you an overview of how we're seeing cap patents progress and how we're responding.
I do want to underscore the most critical 0.1st.
Making high quality care more affordable and accessible is at the core of our mission.
Having more people obtaining the cat they need is a positive trend for individuals and health system and society.
As we discussed several weeks ago during the second quarter, we observed increased care patterns, notably in outpatient surgeries for seniors and especially with certain orthopedic procedures, which may have been postponed Jo.
John will provide some additional detail on this later.
As we look to 2024, we have developed a compelling Medicare advantage offerings.
Our teams were of course thoughtful both in our response to the CMS rate notice and incorporating these care activity trends into our June benefit filings.
Even in this challenging funding environment, we continue to prioritize the stability and affordability all members have come to rely on from United Health care.
We're confident that next year, we will once again grow at a pace exceeding that of the broader market.
While a much lesser impact than senior outpatient care. We also see an increased care activity in behavioral.
Over the past few years behavioral care patents have been accelerating as people increasingly feel comfortable seeking services.
Just since last year the percentage of people, who are accessing behavioral care has increased by double digits.
From our perspective, it's an encouraging sign that more people are seeking help yet the ongoing shortage of qualified care providers as courts caused significant access challenges.
To address the issue Optum health has expanded its network by tens of thousands of care professionals this year and we.
We are developing our benefit offerings, assuming demand for behavioral care services will continue to rise.
Optum health value based care models are continuing to deliver especially strong and measurable results for people.
Today, serving more than 4 million patients in dozens of payers.
Optum health and the patients and payers. It serves share a common desire to seek improved health outcomes and experiences while ultimately lowering the cost of care.
And we're pleased to see more evidence supporting the efficacy of value based care.
Last month researchers at Yale Medicine, working in collaboration with Optum published a peer reviewed study about in home visits an important element in our value based care approach.
Study found patients who received our in home preventative wellness assessments compared with those who haven't made fewer emergency department visits and spend fewer nights in hospitals across four common conditions depression hypertension coronary artery disease and type two diabetes.
They also experienced reduced wait times for follow up primary care.
Yeah, All medicines research follows another peer reviewed study published in Jama in December which found Medicare advantage patients in Optum is fully accountable care model showed significantly better health outcomes compared to people in Medicare fee for service.
Optum health patients fared better on each of eight key metrics, including hospital Readmissions and emergency Department visits.
We see these results as compelling validation of the value based care approach and signal more strongly its promise and potential as we expand these care models to many millions more patients in the years ahead.
I'll now turn it over to United Health Group, President and Chief operating Officer, Dirk Mcmahon to elaborate on how we're focusing on affordability transparency and simplicity for the people we serve duck.
Thanks, Andrew making high quality care more affordable and more accessible is what we do so it is really great to see people getting the care they need, especially as our teams are working to build more capacity in our benefit networks and care delivery resources to accommodate consumers' evolving needs.
Affordability is vital.
We're far too many people cost remains the most significant barrier to high quality care.
We are leaning in hard on behalf of consumers employers and health plans to lower out of pocket costs and drive greater affordability throughout the system.
As you heard from Andrew recently, we've seen an uptick in outpatient surgeries finding the most appropriate site of service is crucial because the cost of those procedures can differ dramatically depending upon where they are performed.
Overall evidence shows that comparable procedures performed in ambulatory surgery centers cost about half as much as traditional settings with comparable outcomes.
For consumers that translates into many hundreds of dollars in out of pocket cost savings for just a single procedure.
And the patient satisfaction levels at our centers are among the highest in health care with NPS approaching 90%.
Also high on our affordability agenda is continuing to lower the cost of prescription drugs.
Our customers, including employers unions health plans and governments count on us to help them access the most effective medicines at the lowest possible cost in.
In fact.
Pharmacy benefit managers like ours are the only link and the drug supply chain, whose main purpose is to improve affordability for everyone.
We go further by recommending benefit designs and providing tools to help consumers navigate their options and find the best value for their prescriptions.
A recently launched feature called price edge, which provides the lowest cost option for a patient's medication.
Already has delivered millions of dollars in consumer out of pocket savings.
Specialty drug costs continue to be a focus of every every customer after Marek works with our differentiated approach to specialty is designed to serve the unique needs of patients payers providers and pharma partners and has allowed us to greatly expand our access to limited distribution drugs.
We work to tailor our programs with individualized single point of contact care for a rare disease and clinical excellence programs for conditions, such as MFS autoimmune diseases and cancer.
Clients working with <unk> implement all our specialty medication management programs can save up to 20% on their specialty drug costs.
Closely related to specialty Biosimilars are another area, where we are helping drive affordability and consumer choice.
Earlier this year, we began offering <unk>, a biosimilar to humira at parity, ensuring patients and their doctors have more options to choose from when deciding on a course of care.
Recently after.
<unk> and United Healthcare announced the addition of two new Humira Biosimilars <unk> and <unk>.
Hi.
Hi, Ray most to our standard prescription Doug drug list also at parity. This increased competition for the innovator drug will result in double digit savings for our customers.
You might also recall that a year ago, we announced our initiative to offer lifesaving drugs at no cost to our customers. This benefit is available to everyone in United Healthcare's group fully insured commercial plans that has been adopted by more than 500 of our self funded customers, increasing adherence and saving people.
Millions of dollars.
Finally, another important customer innovation that is making the health system simpler is optum financials integrated card, which enables seamless access to benefits programs and rewards for more than 13 million consumers, who have been issued the card since we broadly rolled it out at the start of the year.
Adoption and satisfaction levels have been very strong.
It it much simpler for seniors to navigate the system and understand their benefits and creating a more satisfying consumer experience.
These and many other results are validating our strategic approach to health care.
I know from my many meetings with customers that these affordability transparency and simplicity initiatives are resonating. They are a key reason for our continued growth in a highly competitive environment and for our confidence in maintaining our momentum as we look ahead.
With that let me hand, it over to Chief Financial Officer, John Rex.
Thank you Derek adaptability and delivering greater value for the people. We serve continue as foundational elements of our enterprise. These.
These last few months are a good example, identifying evolving market trends moving quickly to help people get the care they need incorporating our broad and multifaceted insights into planning and importantly, delivering on our commitments to you our shareholders.
These traits underpin our confidence not only in achieving our goals for 'twenty three but also as we look toward 24 and beyond.
Before reviewing our business results, let me elaborate on the care patterns Andrew described earlier.
To illustrate in the second quarter outpatient care activity among seniors was a few hundred basis points above our expectations.
As we've highlighted specific orthopedic and cardiac procedures had increased its far above that level of variation.
And as we developed and filed our 2020 for Medicare advantage offerings, we assume that these levels of heightened care activity will persist throughout next year.
Overall care activity, among our Medicaid and commercial populations is consistent with our expectations.
As always we continue to intensely analyzed transit may indicate more severe disease progression, which could point to rising acuity for example in areas such as cancer cardiovascular disease.
We see no such evidence while continuing to monitor closely.
With that let's turn to our second quarter results Rev.
Revenue of $92 9 billion grew by nearly $12 6 billion or 16% over the prior year with double digit growth at both Optum and Unitedhealthcare.
Optum health revenues grew by 36% to $23 9 billion driven by an increase in the number of patients served a growing mix of patients with more complex needs and expanding scope of care services, we can offer.
Operating margins reflect the higher care activity patterns, we have discussed with seniors comprising a significant majority of value based patients served.
<unk> revenues grew by 15%, surpassing 28 billion driven by continued new customer wins and strong double digit growth across our specialty infusion and community pharmacies.
Trip growth at nearly 7% reflects continued demand for our affordable solutions that give customers choice and simplify the pharmacy experience such as Biosimilar access and digital pharmacy tools.
Partway into the 20 <unk> selling season. This momentum continues with strong client additions.
Optum insight revenues grew 42% to nearly $4 7 billion.
The revenue backlog reached over 31 billion, an increase of $8 billion over last year in part due to the addition of change healthcare.
The integration and investment activity as discussed on previous calls have gone well and are setting the stage for the next phase of growth for Optum insight.
Turning to Unitedhealthcare, our commercial business added nearly 500000 people in the first half and continues its growth.
With the 24 selling season indications tracking favorably.
Within our public sector programs, we continue to expect growth of over 900000 Medicare advantage members this year.
And our Medicaid performance remains strong as we continue to support states as they initiate redetermination.
Comprehensive outreach efforts to help individuals retain coverage are underway.
Though it is still early as most states began this work only recently.
Our capital capacities are strong adjusted cash flows from operations were at $10 4 billion or nearly two times net income in the second quarter and $15 6 billion or nearly one four times net income in the first half.
In the first six months of this year, we returned $8 3 billion to shareholders through dividends and share repurchases and in June our board of directors increased the dividend by 14%.
As Andrew mentioned based upon our growth outlook and the trends discussed.
Today, we were able to strengthen and narrow our full year 23 adjusted earnings outlook to a range of $24 70 $225 per share.
Within this we expect a relatively balanced pacing in the second half.
Now I'll turn it back to Andrew.
Thank you.
Overall Unitedhealth group looking to the second half of the year and into 2024 and beyond we are confident that we're capturing the current landscape and our planning decisions, which in turn gives us confidence in our ability to sustain the growth momentum shown in our first half and continued to demonstrate the adaptability performance in <unk>.
<unk> driven purpose of this enterprise, especially in evolving environments.
With that operator, let's open it up for questions one per caller. Please.
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.
May remove yourself from the queue by pressing star two on your Touchtone phone.
We ask you to limit yourself to one question.
Ask multiple questions will only be answering the first question. So we can respond to everyone in the queue. This morning.
We'll take our first question from a J rice with credit Suisse.
Thanks, Hi, everybody.
Maybe I appreciate the comments about what youre seeing in the care.
Demand maybe on the Optum health side you.
Guys, obviously topline continues to be very strong there, there's a little bit of margin degradation from first quarter to second quarter, how much of that relates to what you're describing.
Around senior utilization I know, you've got a cap data component and you've got a fee for service components, but I think last quarter. You also said that the growth in membership would be something that would pressure margin short term, but obviously would be a long term positive and then theres a lot of other things and Optum health are they helping or hurting.
Margin give us a little bit of flavor for what's happening underneath.
The aggregate number.
Hey, Jay Thanks, so much for the question.
First off let me, let me start off and Super pleased with the performance of Optum health overall, when you look at the growth of that business and particularly the expansion of the number of patients who are now looking after in value based arrangements now for $4 million.
Folks, but not just from UHC, but of course for many other payers as well really strong validation of the multiple that we've been building and you can continue to see us extending.
In terms of the margin compression during the Q really I'd say there are a couple of dynamics to that one is a trend.
Trend and very much echo in the senior trend comments, you've heard us make earlier in the quarter and I think as well well understood.
A second element of that which specifically effects Optum health is the behavioral growth and I mentioned that in my prepared.
Prepared comments a J around continued strong growth in behavioral that certainly has played its part within Q2 for Optum Health and then the third area is a kind of a good news story, but with short term implications. So that's really the growth of the membership that's come in this year as you know we've grown very strongly there.
Actually a little ahead of our expectations.
Also brought in a very significant number of complex patients as we invest in helping those folks monies that cab better that puts a little pressure on the margin in the short run, but thats really laying Super strong Foundation stones, not just for as we move through the year, but into 'twenty four 'twenty five 'twenty six so those three elements the senior trend piece the behavior.
Oil piece and then the effect of the strong growth is really what explains what goes on we're going to continue to lean into that growth very assertively AJ. Thanks, so much.
Alright.
We will go next to with.
With J P. Morgan.
Alright, Thank you very much good morning.
I want to understand when we think about the guide to the upper end for the full year MLR, how much of that is driven by the MAA outpacing trend versus behavioral.
Think about behavioral utilization is that being driven by a particular population or is it more broad based and how do I have to think about behavioral as a percentage of your cost.
So Lisa thanks, so very much so let me ask John to just context for you a little bit the balance between the senior and behavioral and then maybe ask Dr. Decker to just give you a little bit of commentary around the type of consultation.
But we're dealing with in terms of the growth.
Lisa Good morning, it's John So in terms of your question. The majority of the guide to the upper end of our full year is driven by what we've described in terms of activity to care activity, we are seeing amongst seniors.
Outpatient so thats a core there.
In terms of the behavioral what we've noticed in behavioral is an increase in the number of people accessing care on Andrew had this in his comments, but a very very significant increase even just since a year ago in terms of the number of people that are looking to access care. It's a great thing we are planning on that.
<unk>, we don't see why that trend.
Those down so we're designing our benefits for that to continue and as you recall I know Lisa behavioral resides within Optum health and so that's a kind of an impact that we that we'd see in that component and why maybe some other commentary yeah, absolutely. Thank you Lisa so.
You asked about the types of consultations and care being provided was in behavioral and we're seeing across the board increase in utilization, but what's.
What's encouraging from a public health perspective is is it isn't.
Strictly young people, it's across the board, we're seeing 30, 40, 50 year olds accessing behavioral health care for needed care for conditions like anxiety depression substance use disorder.
Our commitment is to make sure that they have access to that care. So as you heard from Andrew earlier, we've expanded our behavioral health care network and we also a couple of years ago, very thoughtfully launched a behavioral care provider services and we now have ambulatory services available in 37 states and we have self paced.
Modules for things like anxiety, and depression, and we add a therapist as appropriate so you'll see us continuing to make sure. Our members have access as well as providing innovative scalable solutions for behavioral health care needs across the age spectrum. Thank you. Thank you. So much. So so at least I think you've got it that overall.
It's very much around the senior trend phenomena.
Within Optum health that the behavioral piece plays it's Paul we see that very much is an area, where we will continue to step up and make sure that we're delivering the care and the way that why just described to you next.
Next question please.
Okay.
Go next to Nathan Rich with Goldman Sachs.
Okay.
Hi, good morning, Thanks for the question John .
John You mentioned the balanced piecing of EPS in the back half of the year between <unk> and <unk> could you talk about your expectations for <unk>.
NCR specifically between the two quarters and how are you thinking about the trend of care activity as we head into the back half of the year, given what youre seeing with respect to demand as well as some of the supply.
Apply bottlenecks.
Care being delivered maybe being removed and do those factors differ significantly between Medicare and the commercial or Medicare lines of business. Thank you.
Hey, good morning.
Thanks for the question, yes in terms of the balanced pacing the way I'd describe that as.
In MCR and how that feeds and we'd expect the MCR to be a little bit lower in the in the <unk> than we saw in the <unk> some of that seasonality as you would fully expect so within the context of balance expect earnings to be a little bit higher marginally and <unk> and <unk> because of that typical factor.
And there and thinking of an MCR somewhere in the zone that between kind of what we saw in the in the <unk> and <unk>.
Seasonality factor important and that is we expect the kind of general pacing of care activity to remain consistent and that's what we've actually been seeing here. So since we've talked about this.
As we've looked as we've looked at the level of care activity across the company. These elements, we talked about in terms of senior outpatient care are really remaining stable at the levels we talk to.
And our expectation is that continues in that level. So as you look out to the second half of this year, our expectation that continues at those levels that we've been seeing.
With the.
As I mentioned, a few hundred basis points above our expectations in the senior business that continues the only underlying factor is a little bit of seasonality that you would that you.
You would see occurring there alright, thanks, so much John and thanks, Mike next question.
We'll go next to Justin Lake with Wolfe Research.
Thanks, Good morning.
My question is on commercial trend that you mentioned, it's in line with expectations wanted to delve a little bit deeper I think you might have said previously that you had priced for commercial trend to be above normal this year.
So some conservatism so does that mean that it's running above normal but in line with your pricing at this point if it's above normal can you tell us how Q2 emerged.
Versus Q4, Q1, meaning that the uptick versus in <unk> versus <unk> and then just lastly, any insight on the commercial components is outpacing a pressure here as well thanks.
Justin Thanks, so much for the question I mean, so so really not much to see here in all honesty first off.
Well, we're we came into the year, we as you alluded to we price for some anticipation of unit cost inflation.
We've seen that some of that come through within that everything is tracking very much within our expectations. So we set the year anticipating a little bit of price cost growth. If you will but beyond that really nothing to note and we feel good about where we sit here.
Thanks, So much next question.
We'll go next to Josh Raskin with Nephron research.
Hi, Thanks, good morning.
I think any of the increased utilization youre seeing on the MA side was self inflicted in the sense that now you've really augmented benefits dramatically in the last year really last two years, perhaps that's encourage driven catalyze sort of an over utilization of trends relative to historical patterns and expectations and then how did you address the utilization.
Trends in your benefit designs for 'twenty four right now.
There are sensitivity at that saying something on a public call, but maybe just broad changes that you'd expected.
Hi, Josh. Thanks, so much for the question I'm going to ask Tim to give you a little bit more commentary, but.
I think bottom line I don't really think the benefits are.
Driving this I think this is.
When you look at the concentration of what we're seeing in terms of the outpatients. The orthopedics in particular those sorts of areas. It looks very much more like <unk>.
Kind of deferment of cash Super interesting when you look at it.
Maybe what's changed a little bit within that we've seen a shift in the fraction of people who once they have been essentially recommended for surgery actually go through and complete the procedure.
Arguably what might drive that change as well more supply so actually it's more possible to go get it done, but two maybe a little less reticent from an individual to go into a facility in a post COVID-19 environment versus a COVID-19 environment that feels like the thing that shifted maybe ask Tim to just add a little bit to that as well Tim.
Yeah. Thanks, Josh.
Consistent with Andrew said, when we look.
At potential drivers.
From acuity to benefits added.
Mix of membership everything is really tracking very normally and in line with what we would expect.
So nothing to call out there, but certainly something that we look at them closely and carefully each and every year and this year being no different with respect to your question regarding benefits. So I think one thing to keep in mind is that the.
More important driver to our benefit decisions this year, where the changes to the risk model certainly you've been talking a lot about care patterns, but that has far less of an impact on the benefits filed and is really one of many assumptions that we make inside of our beds.
But we feel very confident in our ability to provide stability to the benefits that seniors value most things like zero co pays for primary care visits.
Ill co pays for tier one drugs, keeping zero monthly plan premiums, where we had them in the past and keeping level out of pocket maximums very important things for benefits for stability and we are able to preserve those so we're really happy about that.
On balance combined with the great momentum, we see in our value proposition and the great partnerships, we have and confidence from the broker community. We feel really good about the benefits be filed and also as we talked about in opening remarks really confident in seeing that momentum pull through into some great growth results next year Tim.
Thanks, So much Josh thanks, very much for the question next question.
We'll go next to Lance Wilkes with Bernstein.
Yes, a question on the commercial side of the business.
Could you talk a little bit about <unk>.
Membership in the fee based business being down and also maybe related to that in your outlook going forward in Medicaid Redetermination or are you seeing any trends with respect to recapture of those sorts of members or anything.
Anything thats driving the opportunity for either growth in membership, where maybe youre seeing in the account attrition due to weakness in economy. Thanks.
Thanks, So much for the question before I hand, it to Dan key to who looks after our Eni business I just wanted to make a couple of kind of high level comments.
We're seeing overall, a very strong performance from our commercial business. This year and also setting up it feels like very well for the 24 season, we've seen fantastic overall.
<unk> growth as I mentioned in terms of membership.
And that's being led very much by a lot of the product innovation that the team have been putting together and into the marketplace and we see that continuing pretty assertively as we roll into 'twenty four.
With that kind of backdrop, maybe Don if you could be.
Respond to specific questions that'd be great.
Lance Thanks for the question growth is on track for the full year and what you see in Q2 really as represented by the contraction of one large customer in our fee based business.
Your question about attrition and Redetermination the outcome of those which will be some puts and takes will probably determine where within our range. We will fall, but the punchline is we're on track to hit our range for this year great question Lance. Thanks, Dan. Thanks, So much lines for the question just to be Super clear as well.
Client loss that John just referred to we knew about that about a year ago very much within our expectations and forecast plan. It was something we were anticipating and it makes no impact at all to our full year expectation, but thanks. So much for the question and next question. Please.
We will go next to Kevin Fischbeck with Bank of America.
Great. Thanks, I just wanted to follow up on the Optum.
The margin there was obviously pressured in the quarter and I just want to understand how the margin normalization, how should we think about that over the next couple of years. I mean, you can on the M&A side, you can reprice for things. It sounds like you saw it in time for your bid.
And costs have come in line.
With the way that you, perhaps maybe just confirm that piece first but then since within Optum health Youre also relying on other providers and how they price for 2024.
How are you thinking about the market.
If you are below target. This year is this something you can get back to next year or just a multiyear thing depending on how.
There is price sort of leverage within your control or is this.
<unk>.
Uh huh.
Longer term normalization.
Hi, Kevin Thanks, so much for the question.
So first off.
As I mentioned earlier, the pressure is really coming from those three sources. The senior trend phenomena that we've talked a lot about but very specific optum piece around behavioral and then the growth in the book and within that very much the complex care patients, which is I'm going to repeat again is an extremely positive element of.
All of our growth going forward thats going to be an extraordinarily important foundation stone for the future of the company.
We're going to continue to lean into that growth first and foremost we do expect to see margins continue to strengthen particularly as you roll through into 'twenty four youre absolutely right. We believe we've called this in our pricing for next year, but more importantly, the longer time, we have to look after folks and wrap around care we can.
We can deliver much better outcomes for them as we talked about earlier and we can also make the economic proposition better it really builds a much more sustainable capability to all of that will kick in as well as we roll through subsequent quarters and years. This is going to be a continuing building pressure I feel very good about that range, we've laid out for optum health over the.
Next several years and actually.
I think if I had the choice on a slightly suppressed margin in Q2 or the very significant growth that we've take it and I'll tell you the growth all day long and I will tell you about growth because its going to underpin years of growth going forward.
The question Kevin next question.
We'll go next to Gary Taylor with Cowen.
Hi, good morning.
Just wanted to talk about some of the or ask about some of the <unk>.
<unk> is an offset because it is a little counterintuitive.
To hear the commentary intra quarter about higher MLR and then seeing your largest profit segment Optum health with with lower margin. So.
This quarter, obviously investment income was far stronger than the street was looking for at least versus our model G&A.
With better, but I now moving into the back half.
Thank you believe there is more time potentially to pull some of those G&A lever. So could you just talk about.
Investment income G&A or or what other offsets there might be in the back half and how much of that is carrying forward into your 2004 thinking at this point.
Yes.
Very much appreciate the question guys, let me ask John to make some comments to that John .
Gary It's John So, yes, you're right. The investment income has frankly been growing strongly over the past number of quarters and continues to grow.
Some of that as the backdrop of the rising interest rate environment as you know very well.
Some of that is also a result of very active management.
By our treasury teams in terms of deploying deploying more and more cash balances into interest bearing accounts such as they've been working hard on that over the past few quarters and advancing the productivity of that cash that's after coming off a period of many years of zero interest rate environment.
So a lot of elements in that.
In any given quarter.
We can experience.
Some some gains from our.
In our investment portfolio, so that can be gained from <unk>.
Anything from our regular fixed income investments to anything from our diverse debenture holdings and so those.
Come in.
They come in at different points in time.
And perhaps sometimes they're a little bit less predictable but.
Kind of are typically in a similar zone frankly, not not outside I don't expect those kind of things I don't count on those kinds of things frankly every quarter. That's not a thing we look at but but they are there elements that we've seen over time and kind of the zone that kind of the zones that were experiencing even even now too.
Thanks, guys. Thanks, John maybe I'll ask Doug to also comment a little bit as you think about the G&A side of the equation going forward.
Maybe maybe reflect a little bit on the work youll lead in around technology and other interventions as we look to drive down our overall costs.
What I would say as much of the focus.
We've really been applying a lot of artificial intelligence machine learning and natural language processing long term. We think there is great hope for those and some of the short term things that we're working on in those areas like using generative AI to help more efficiently right medical Appeals letters things like optimizing our provider search and all of our digital properties with Nacho.
Language processing and AI.
Doing a lot of work improving our payment integrity models, using AI to detect waste fraud and abuse.
And then a lot in the G&A world to answer basic questions in our call centers like.
Leveraging our benefit botched to reduce the number of calls and the labor associated with that for simple questions like is X y or Z disease covered or have I met my deductible.
From a long range perspective hover.
Really optimistic about our significant datasets are our ability to take advantage of whatever new technology comes down the pike to improve health care I'm really excited about it. So thanks for the question yeah. Thanks, So much and I think overall and I think I tried to allude to the very beginning.
Obviously, when you see a movement in carrier activity like we saw in the quarter.
It's been great to see the range of levers that we have within the organization to respond and you've seen what we've been able to do in the very short run and as you would expect that we have more and more of those levers as you roll through into the medium and longer term outlooks as both gentlemen, Doug described both in the financial side of the company, but also critically in.
The core operating cost structure of the company, which we're going to continue to bear down on very very assertively consequence of all of that is the even with the backdrop of some of the fluidity we've seen.
We're able to continue to commit to the investment behind growth and the investment behind looking after patients as well as we possibly can and giving people a fantastic experience, which is what we've seen bills.
Super sustainable shareholder value. So that's very much the priority that we're focused on next.
Next question.
We'll go next to George Hill with Deutsche Bank.
Yes.
Good morning, guys and thanks for taking the question I guess, John I want to talk a little bit more about your expectations for the senior book in 'twenty for you guys kind of talked about that you expect the current elevated trend to continue and price for it when you think about the MA bids I guess kind of talk about like what drove like what drives the visibility there from what you see now and also like looking all the way up to 24%.
Should we think of the pricing is just kind of conservatism on UN aegis part or like I'm kind of interested in the data that drives visibility. Thank you.
Hey, Joe Thanks for the question I'm actually going to ask Tim know, who leads the Medicare business too.
Sponsor that too.
Thanks, so much for the question.
I'll start by reiterating one thing Thats, an important point the biggest I don't know shaping this year has been thinking was around the risk model changes the outpatient care patterns false fire smaller role there.
But that said, having the ability to incorporate the latest data anything we've learned recently into our Medicare advantage bids.
Is extremely important in each and every year.
Daschle, given how we see both key revenue and medical elements firm up inside of Q2 being able to incorporate the latest thinking there.
We have in our bed filing is really really important and because of that we design a bid process that is very nimble enable to accommodate changes.
This year out of our respect for developing trend we made the assumption that some of these early indications that we are seeing in the outpatient care pattern fleets have talked about would remain durable and as we sit here today as John has talked about these assumptions have validated and they have also stabilized and we feel confident that we have.
Made the appropriate accommodations inside of our 2024 beds for all of us.
Tim Thanks, so much.
So we have time for one last question. So let's take the last question. Thank you.
We'll take our last question from Scott Fidel with Stephens.
Hi, Thanks.
I was hoping maybe you could drill a little bit it just into the announcement of the <unk> acquisition.
And then some maybe some early thoughts around some of the integrations are synergies that you could generate from integrating <unk> and <unk>.
C G together thanks.
Okay.
Scott. Thanks, so much for the question well first of all we are obviously very pleased to have come to an agreement on the transaction with the medicine. So we appreciate that but as you would expect as we're now in the very early stages of that process. It wouldn't be appropriate to talk about anything specific in that regard.
If I just take it may be a level higher.
It's no secret that we are very strong believers in the value of home health and no secret that we believe that value.
Health capabilities when combined with other activities in terms of wrapping care around patients is a really important element of future value based care, particularly as you speak towards complex patients many of whom maybe struggled to get out of the home maybe.
Maybe maybe don't have quite the same kind of relationship with the clinic because you're my often expect so we do think that the general areas and important area as I said as far as the specifics of concern.
Now we will go through our regular kind of process.
You as appropriate, but probably not much more to say today.
Thanks, So much Scott for the question and thank you everybody for joining US. This morning, we very much appreciate your time and we hope you take away from this call our confidence in our ability to continue to perform and grow strongly while we pursue our mission and build the foundation for continued growth in 2024 and beyond.
And we very much looking.
Im very much looking forward to sharing more on our progress with you again in October . Thanks, So much for your time this morning.
Okay.
This does conclude today's conference we thank you for your participation.
Okay.
Okay.