Q1 2024 UnitedHealth Group Inc Earnings Call

Please standby.

Speaker Change: Good morning, and welcome to the Unitedhealth group first quarter 'twenty 'twenty four earnings conference call. A question and answer session will follow Unitedhealth group's prepared remarks as a reminder, this call is being recorded.

Here's some important introductory information. This call contains forward looking statements under U S Federal Securities laws.

Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.

Speaker Change: A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current M. P Arctic filings.

Speaker Change: 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.

Speaker Change: Information presented on this call is contained in the earnings release, we issued this morning and in our form 8-K dated April 16th 'twenty, 'twenty, four which may be accessed from the Investor Relations page of the company's website.

Speaker Change: I will now turn the conference over to the Chief Executive Officer of Unitedhealth Group Andrew witty.

Unknown Executive: Please stand by. Good morning, and welcome to the UnitedHealth Group first quarter 2024 earnings conference call. A question and answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here's some important introductory information.

Good morning, and thank you for joining us today, we have a lot to cover both.

Andrew Philip Witty: Both will discuss the status and impact to the change healthcare cyber attack.

Andrew Philip Witty: Then, we'll turn to the performance of our businesses, which continued to grow and perform well.

Unknown Executive: 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, including the cautionary statements included in our current and periodic 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.unitedhealthgroup.com.

Andrew Philip Witty: To underscore at the outset, but even as we have devoted significant attention to addressing the change health care attack the.

Andrew Philip Witty: The vast majority of the 400000 people of this enterprise have remained as usual intensely focused on delivering for all of those we serve.

Andrew Philip Witty: That dedication is reflected in our overall performance this quarter.

Andrew Philip Witty: Directly as a result of their hard and hard work on the broad performance of our diversified businesses.

Andrew Philip Witty: Able to reconfirm, our full year adjusted earnings outlook, even as we absorbed 30 to 40 per share in business disruption impacts related to change healthcare.

Andrew Philip Witty: Now turning to change healthcare this.

Unknown Executive: Information presented on this call is contained in the earnings release we issued this morning and in our Form 8K dated April 16, 2024, 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. Good morning, and thank you for joining us today.

Andrew Philip Witty: This was an unprecedented attack by malicious actor on the U S health system.

Andrew Philip Witty: We promptly disconnected the affected services and turned our focus to two main areas restoration and support.

Andrew Philip Witty: The attack disrupted the ability of care providers to false claims to be paid for that work, we move quickly to fill this gap.

Andrew Philip Witty: We have a lot to cover. First, we'll discuss the status and impact of the Change Healthcare cyberattack. Then we'll turn to the performance of our businesses, which continue to grow and perform well. But it's important to underscore at the outset that even as we have devoted significant attention to addressing the Change Healthcare Attack, the vast majority of the 400,000 people of this enterprise have remained, as usual, intensely focused on delivering for all those we serve.

Andrew Philip Witty: Fortunately, we were able to bring to bear the substantial resources of United Health Group to drive the recovery and begin to mitigate the impact.

Andrew Philip Witty: That dedication is reflected in our overall performance this quarter. Directly as a result of their hard work and the broad performance of our diversified businesses, we're able to reconfirm our full-year adjusted earnings outlook, even as we absorb $0.30 to $0.40 per share in business disruption impacts related to changed healthcare. Now turning to Change Healthcare, this was an unprecedented attack by a malicious actor on the U.S. health care system. We promptly disconnected the affected services and turned our focus to two main areas, restoration and support. The attack disrupted the ability of care providers to file claims and be paid for their work.

Andrew Philip Witty: <unk>, we just Standalone should change health care would not have had access to on its own.

These are the resources and the philosophy the underpinned our remediation of health care adult golf back in 2013, and our distribution of CMS Covid emergency relief funds to care providers in 2020.

Andrew Philip Witty: Here, we assisted care providers in financial need provide you know it was $6 billion in funding all at no cost to them.

Andrew Philip Witty: We rapidly deployed resources to develop alternative solutions and move promptly to restore claims and payment services.

Andrew Philip Witty: We've made substantial progress and we will not rest until care providers connectivity needs are met.

Andrew Philip Witty: And to health care providers mitigate workflow disruptions and help ensure the uninterrupted delivery of care for a period of time, we suspended some care management activities.

Andrew Philip Witty: I'm immensely grateful for our colleagues, who continue to work tirelessly day and night to restore services free up funds for providers and protect the broader health system.

Andrew Philip Witty: We moved quickly to fill this gap, and fortunately, we were able to bring to bear the substantial resources of UnitedHealth Group to drive the recovery and begin to mitigate the impact. Resources which a standalone change healthcare would not have had access to on its own. These are the resources and the philosophy that underpinned our remediation of healthcare.gov back in 2013, and our distribution of CMS COVID emergency relief funds to care providers in 2020. Here, we assisted care providers in financial need, providing over $6 billion in funding, all at no cost to them. We rapidly deployed resources to develop alternative solutions and move promptly to restore claims and payment services.

Speaker Change: Let me touch on two more items, we know are of interest to you.

Speaker Change: First is care activity.

Speaker Change: The Central point is the overall cat patents are consistent with what we anticipated last year heading into 2024 and within the outlook. We shared with you in November.

Speaker Change: The second item is the <unk>.

Speaker Change: Essential value of Medicare advances to seniors.

Speaker Change: Here, what we see some of the Colfax regarding Medicare advantage.

Speaker Change: It drives better health outcomes provides a higher value significantly more comprehensive benefit for people all at a lower cost of beneficiaries and taxpayers.

Speaker Change: <unk> is more popular with him valuable to seniors than traditional Medicare.

Speaker Change: Medicare advantage consumer spend on average, 45% less on premiums and out of pocket costs and those in traditional Medicare.

Andrew Philip Witty: We've made substantial progress, and we will not rest until care providers' connectivity needs are met. And to help care providers mitigate workflow disruptions and help ensure the uninterrupted delivery of care, for a period of time, we suspended some care management activities. I'm immensely grateful for our colleagues who continue to work tirelessly day and night to restore services, free up funds for providers, and protect the broader health system. Let me touch on two more items we know are of interest.

Speaker Change: Translates into nearly $2400 in savings annually and.

Speaker Change: And several times more for the country's most underserved a medically challenged populations.

Speaker Change: That's one of the many reasons why more than half of seniors choose Medicare advantage today versus 30% 10 years ago.

Speaker Change: While we believe these offerings will continue to grow strongly for years to come.

Speaker Change: 2025 is the second year of the significant three year phased funding reductions to Medicare advantage introduced by CMS last year.

Andrew Philip Witty: First, care activity. The central point is that overall care patterns are consistent with what we anticipated last year, heading into 2024, and within the outlook we shared with you in November. The second item is the essential value of Medicare Advantage to seniors.

Speaker Change: Here in early 2024 were at the beginning of our thoughtful responsible three year plan, we developed last year to adapt to those changes.

Speaker Change: Our strategy continues to focus on providing as much stability as possible in the reduced funding environment.

Andrew Philip Witty: Here are some of the core facts regarding Medicare Advantage. It drives better health outcomes, provides higher value, and a significantly more comprehensive benefit for people, all at a lower cost to beneficiaries and taxpayers, and is more popular with and valuable to seniors than traditional Medicare. Medicare Advantage consumers spend, on average, 45% less on premiums and out-of-pocket costs than those in traditional Medicare.

Speaker Change: Improving outcomes and experiences for the consumers, we're privileged to serve and.

Speaker Change: And delivering the performance you expect from us.

Speaker Change: We believe our long term perspective, and the deliberate multi year approach. We began last year is serving us well, putting us into a position of sustainable competitive strength.

Speaker Change: Among a handful of notable business developments to share Unitedhealthcare was honored to secure major Medicaid wins in Virginia, Texas and Michigan.

Andrew Philip Witty: That translates into nearly $2,400 in savings annually, and several times more for the country's most underserved and medically challenged population. That's one of the many reasons why more than half of seniors choose Medicare Advantage today versus 30% 10 years ago, and why we believe these offerings will continue to grow strongly for years to come. 2025 is the second year of the significant three-year phased funding reductions to Medicare Advantage introduced by CMS last year.

Speaker Change: While we were disappointed in the outcome of Florida will be seeking to better understand the process and considerations there.

Speaker Change: There was a substantial pipeline of Medicaid Rfps, and we're confident that our offerings will resonate in other states as well.

Speaker Change: United Healthcare commercial benefits continued the momentum from last year growing to serve 2 million more people in the first quarter the largest increase in years.

Andrew Philip Witty: Here in early 2024, we're at the beginning of our thoughtful, responsible three-year plan we developed last year to adapt to those changes. Our strategy continues to focus on providing as much stability as possible in the reduced funding environment. Improving outcomes and experiences for the consumers we're privileged to serve and delivering the performance you expect from us. We believe our long-term perspective and the deliberate multi-year approach we began last year are serving us well, putting us into a position of sustainable, competitive strength.

Speaker Change: This growth was across UHC commercial customer segments from individuals up through the largest of employers.

Speaker Change: This is further evidence of our innovative and consumer centric products have established a footing for sustained growth.

Speaker Change: We also see continued momentum of our op Tomorrow X coming off last year's record selling season with a.

Speaker Change: A recent win in Hawaii, and the renewal of our contract with the department of veteran Affairs.

Speaker Change: We're grateful for the opportunity to support them.

Speaker Change: And Optum health is tracking well to achieve its objective of growing to serve another 750000 patients in value based arrangements. This year in partnership with many payors.

Andrew Philip Witty: Among a handful of notable business developments to share, UnitedHealthcare was honored to secure major Medicaid wins in Virginia, Texas, and Michigan. While we are disappointed in the outcome in Florida, we will be seeking to better understand the process and considerations there.

Speaker Change: Before I turn it over to John <unk>, our President and Chief Financial Officer, I want to acknowledge Dirk Mcmahon recently retired after more than 20 years of service I'd like to thank him for his leadership and partnership.

Andrew Philip Witty: There is a substantial pipeline of Medicaid RFPs, and we're confident that our offerings will resonate in other states as well. UnitedHealthcare's commercial benefits continued their momentum from last year, growing to serve 2 million more people in the first quarter, the largest increase in years. This growth was across UHC's commercial customer segments, from individuals up through the largest of employers.

Speaker Change: <unk> has left an indelible indelible mark on this company through the example set in many of our leaders he has mentored John.

John: Thank you Andrew This morning, I'll first provide color on some of the unique items in the quarter directly related to the change healthcare cyber attack followed by care activity trends.

Speaker Change: Business update and finally thoughts on the remainder of 'twenty four.

Speaker Change: But first let me start at the most fundamental level.

Andrew Philip Witty: This is further evidence of how our innovative and consumer-centric products have established the footing for sustained growth. We also see continued momentum at OptumRx, coming off last year's record-selling season with a recent win in Hawaii and the renewal of our contract with the Department of Veteran Affairs. We're grateful for the opportunity to support.

Speaker Change: Unitedhealth group businesses continued to grow and perform well during the quarter and we are encouraged by the momentum and the many opportunities to serve we're seeing across the enterprise.

Speaker Change: On the change healthcare cyber attack as Andrew noted our guiding focus throughout has been to make sure patient care is delivered and care providers access to funding is secured as we work to bring back services fully.

Andrew Philip Witty: And OptumHealth is tracking well to achieve its objective of growing to serve another 750,000 patients in value-based arrangements this year, in partnership with many payers. Before I turn it over to John Rex, our President and Chief Financial Officer, I want to acknowledge Dirk McMahon, who recently retired after more than 20 years of service. I'd like to thank him for his leadership and partnership. Dirk has left an indelible mark on this company

Speaker Change: The cyber impacts in the quarter totaled about $870 million or <unk> 74 per share.

Speaker Change: At this distance we estimate the full year impact will be a $1 15 to $1 35 per share.

Speaker Change: Let me break that down into its key components.

Speaker Change: Of the $870 million about $595 million were direct costs due to the clearinghouse platform restoration and other response efforts, including medical expenses directly relating to the temporary suspension of some care management activities.

John F. Rex: Through the example he set and the many of our leaders he has mentored, John. Thank you, Andrew. This morning, I'll first provide color on some of the unique items in the quarter directly related to the Change Healthcare cyber attack, followed by care activity trends, business updates, and finally thoughts on the remainder of 24. But first, let me start at the most fundamental level.

Speaker Change: For the full year, we estimate these direct costs at 1 billion to 1.15 billion or <unk> 85 to 95 per share.

Speaker Change: It is important to note. These direct costs are included in net earnings but are excluded from adjusted earnings per share.

Speaker Change: The other component affecting our results relates to the disruption of ongoing change healthcare business.

John F. Rex: The UnitedHealth Group businesses continued to grow and perform well during the quarter, and we are encouraged by the momentum and the many opportunities to serve we're seeing across the enterprise. On the healthcare cyber attack, as Andrew noted, our guiding focus throughout has been to make sure patient care is delivered and care providers access to funding is secured as we work to bring back services fully. The cyber impacts in the corridor totaled about $870 million, or 74 cents a share.

Speaker Change: This is driven by the loss of revenues associated with the affected services, all while incurring that support and costs.

Keep these capabilities fully ready to return to service.

Notably these effects are not excluded from adjusted earnings.

Speaker Change: In the first quarter this impact was about $280 million or 25 per share.

Speaker Change: At this distance, we currently estimate the business disruption at $350 million to $450 million or 30% to 40 per share for the year.

John F. Rex: At this distance, we estimate the full-year impact will be $1.15 to $1.35 per share. Let me break that down into its key components. Of the $870 million, about $595 million were direct costs due to the clearinghouse platform restoration and other response efforts, including medical expenses directly relating to the temporary suspension of some care management activities. For the full year, we estimate these direct costs at $1 billion to $1.15 billion, or $0.85 to $0.95 per share. It's important to note these direct costs are included in net earnings but are excluded from adjusted earnings per share.

Speaker Change: This of course will depend on the ultimate timing of service and transaction volume restoration.

Speaker Change: These elements are broken out for you in the supplemental tables provided with our press release this morning.

Speaker Change: Of course, we will provide regular updates on our progress and outlook throughout the course of the year.

Speaker Change: While much of change healthcare its functionality and services have been restored we are working hard to restore more.

Speaker Change: And the objective we all share is for an even stronger change healthcare to be fully returned to expected performance levels next year.

Speaker Change: I'll come back to some of these elements in more detail in just a moment.

John F. Rex: The other component affecting our results relates to the disruption of ongoing change healthcare business. This is driven by the loss of revenues associated with the affected services, all while incurring support and costs to keep these capabilities fully ready to return to service. Notably, these effects are not excluded from adjustment. In the first quarter, this impact was about 280 million, or 25 cents per share.

Speaker Change: Turning to underlying care patterns. The headline is that these continue within our expectations.

Speaker Change: Outpatient care activity among seniors remains consistent with the elevated levels. We began seeing in the first half of 'twenty, three and for which we planned.

Speaker Change: So we continue to be comfortable with the outlook. We established last June when we filed our 2020 for Medicare advantage benefit offerings.

John F. Rex: At this distance, we currently estimate the business disruption at $350 to $450 million, or $0.30 to $0.40 per share for the year. This, of course, will depend on the ultimate timing of service and transaction volume restoration. These elements are broken out for you in the supplemental tables provided with our press release this morning.

Speaker Change: The winter seasonal activity, we discussed with you in January particularly related to strong vaccine uptake higher response respiratory illness incidents and related physician office visits has subsided.

Overall inpatient care activity also remains within our expectations.

Speaker Change: The first quarter medical care ratio at 84, 3% included roughly 40 basis points or about $340 million related to the temporary suspension of some care management activities.

John F. Rex: Of course, we will provide regular updates on our progress and outlook throughout the course of the webinar. While much of Change Healthcare's functionality and services have been restored, we are working hard to restore more. And the objective we all share is for an even stronger Change Healthcare to be fully returned to expected performance levels next year. I'll come back to some of these elements in more detail in just a moment.

Speaker Change: These have been recently reinstated.

Speaker Change: The majority of the remaining $325 million of full year medical expense impact included in our outlook.

Speaker Change: We will land in the second quarter.

Speaker Change: Notably we did not reflect any favorable earnings impacting medical reserve development in the quarter.

John F. Rex: Turning to underlying care patterns, the headline is that these continue within our expectations. Outpatient care activity among seniors remains consistent with the elevated levels we began seeing in the first half of 23, and for which we plan. So we continue to be comfortable with the outlook we established last June when we filed our 2024 Medicare Advantage benefit offering and the winter seasonal activity we discussed with you in January, particularly related to strong vaccine uptake. Higher respiratory illness incidents and related physician office visits have subsided.

Speaker Change: Out of prudent due to the potential for the cyber attack to affect claims receipt timing, we reflected an additional $800 million of claims reserves.

Speaker Change: We will continue with a judicious view as we've progressed over the next several quarters.

Speaker Change: Turning to the performance of our businesses.

Speaker Change: The most important takeaway is they are growing and performing at a level, which allows us to maintain the adjusted earnings per share objectives. We established last November even while taking on the business disruption impacts of the change healthcare Tac.

Speaker Change: At United Healthcare revenues of $75 4 billion grew nearly $5 billion.

John F. Rex: Overall inpatient care activity also remains within our expectations. The first quarter medical care ratio, at 84.3%, included roughly 40 basis points or about 340 million related to the temporary suspension of some care management activity. These have recently been reinstated. The majority of the remaining $325 million of full-year medical expense impact included in our outlook will land in the second quarter. Notably, we did not reflect any favorable earnings impacting medical reserve development in the quarter.

Speaker Change: Within our domestic commercial membership we're off to a strong start powered by disciplined growth serving $2 1 million new consumers in the first quarter.

Speaker Change: We are encouraged by the momentum and positive customer response to our differentiated offerings and look forward to building further upon that momentum heading into 'twenty five.

Speaker Change: For Medicare advantage as you would anticipate we are deeply into our 'twenty five planning activities.

Speaker Change: As we finalize our 25 benefit designs over the next several weeks, we will build competitive offerings that once again appropriately reflect the funding and cost environment.

John F. Rex: Out of prudence, due to the potential for the cyber attack to affect claims receipt timing, we reflected an additional $800 million of claims reserves. We'll continue with a judicious view as we progress over the next several quarters. Turning to the performance of our business, the most important takeaway is that they are growing and performing at a level that allows us to maintain the adjusted earnings per share objectives we established last November, even while taking on the business disruption impacts of the changed healthcare tax. At UnitedHealthcare, revenues of $75.4 billion grew by nearly $5 billion.

Speaker Change: We approached this last year with a deliberate three year plan, which continues firmly on track and positions us well going into 'twenty five.

Speaker Change: Our Medicaid business ended the first quarter with $7 7 million members.

Speaker Change: As Andrew noted key wins in Texas, Virginia, and Michigan demonstrate the value state customers see in our offerings.

Speaker Change: In Virginia, UHC was the highest scoring plan with particular strength in member centric care.

Speaker Change: Fits and service delivery quality and value based payments.

Speaker Change: In Texas UHC was awarded the maximum number of possible service areas.

John F. Rex: Within our domestic commercial membership, we're off to a strong start, powered by disciplined growth, serving 2.1 million new consumers in the first quarter. We are encouraged by the momentum and positive customer response to our differentiated offerings and look forward to building further upon that momentum heading into 25 for Medicare Advantage. As you would anticipate, we are deeply into our 25 planning activities.

Expanding the number of people, we will have the opportunity to serve.

And in Michigan.

Speaker Change: <unk> achieved perfect scores and such critical consumer centric areas as social determinants of health and health equity.

Speaker Change: Further solidifying our value proposition.

Speaker Change: Optum health revenues grew by 16% to $46 7 billion as we increased the number of patients served and are on track to approach 5 million patients in value based care by year end.

John F. Rex: As we finalize our 25 benefit designs over the next several weeks, we will build competitive offerings that, once again, appropriately reflect the funding and cost environment. We approached this last year with a deliberate three-year plan, which continues firmly on track and positions us well going into 2025. Our Medicaid business ended the first quarter with 7.7 million members.

Speaker Change: For the most complex patients that Optum health serves we havent gauged, 75% through the first quarter this year.

The significant increase in the number of patients engaged over last year.

Speaker Change: This reflects progressive earlier connectivity with patients and the ability to improve their health outcomes and experiences more rapidly.

John F. Rex: As Andrew noted, key wins in Texas, Virginia, and Michigan demonstrate the value state customers see in our offering. In Virginia, UHC was the highest-scoring plan, with particular strength in member-centric care, benefits, and service delivery, quality, and value-based payment. In Texas, UHC was awarded the maximum number of possible service areas.

Speaker Change: Optum Rx revenues grew 12% to $30 8 billion driven by new client starts.

Speaker Change: Continued expansion within existing partnerships and growth within pharmacy services.

Speaker Change: Optum insight as you know is where the change healthcare business resides.

Speaker Change: In the quarter about 500 of the $870 million total impact is within Optum insight.

John F. Rex: Expanding the number of people we will have the opportunity to serve. And in Michigan, UHC achieved perfect scores in such critical consumer-centric areas as social determinants of health and health equity, further solidifying our value proposition. Optimum Health's revenues grew by 16% to $26.7 billion as we increased the number of patients served and are on track to approach 5 million patients in value-based care by year-end.

Speaker Change: Just under half of this or direct response costs.

Speaker Change: I think clearinghouse restoration activities, which we have excluded from adjusted earnings.

Speaker Change: And slightly over half are the business disruption effects, which are not excluded from adjusted earnings.

Speaker Change: For many of the impacted change healthcare services transaction volume drives revenues.

Speaker Change: The effected the attack in the period is one of keeping all the lights brightly burning at full readiness to resume services.

John F. Rex: For the most complex patients that OptumHelp serves, we have engaged 75% through the first quarter this year, a significant increase in the number of patients engaged over last year. This reflects increasingly earlier connectivity with patients and the ability to improve their health outcomes and experiences more rapidly. OptumRx revenues grew 12% to $30.8 billion, driven by new client starts.

Speaker Change: While revenue production was essentially suspended.

Speaker Change: To be clear the optimum site team did the critical and right thing promptly shutting off services and finding any method possible to keep the care system working.

Speaker Change: Including helping clients find alternative solutions.

Speaker Change: Coming out of this incident the team will be working tirelessly with customers to recover transaction volumes and demonstrate that change healthcare is ready to serve and is more valuable than ever.

John F. Rex: Continued expansion within existing partners, and Growth Within Pharmacy Services. OptumInsight, as you know, is where the changes healthcare business results. In the quarter, about 500 of the 870 million total impact is within Optimum.

Speaker Change: Beyond change healthcare the Optum insight revenue backlog increased to nearly 33 billion growth of over $2 billion from a year ago, driven by health system partnerships to provide business process and information technology services.

John F. Rex: Just under half of this are direct response costs, think clearinghouse restoration activities, which we have excluded from adjusted earnings. And slightly over half are the business disruption effects, which are not excluded from adjusted earnings.

Speaker Change: A couple of other items of note that were affected by the cyber attack.

Speaker Change: Days claims payable in the first quarter were $47, one compared to the $47 nine in the fourth quarter 2003, and 47 eight a year ago.

John F. Rex: For many of the impacted healthcare services, transaction volume drives revenue. So the effect of the attack in the period was one of keeping all the lights brightly burning at full readiness to resume services, while revenue production was essentially suspended. To be clear, the OptumInsight team did the critical and right thing by promptly shutting off services and finding any method possible to keep the care system working, including helping clients find alternative solutions.

Speaker Change: The accelerated payments to care providers and the Brazil sale reduced what would have been our reported measure for the quarter by about three days.

Speaker Change: The medical cost payable balance increased $1 6 billion from year end 23 to 34 billion.

Speaker Change: The change reflects a $3 billion increase in the incurred but not yet reported component for IV NR.

Speaker Change: This is the result of the prudent ongoing claims receipt assessment.

Speaker Change: Set by a $1 6 billion reduction in the fully processed claims component due to care provider payments acceleration.

John F. Rex: Coming out of this incident, the team will be working tirelessly with customers to recover transaction volumes and demonstrate that Change Healthcare is ready to serve and is more valuable than ever. Beyond Change Healthcare, the OptumInsight revenue backlog increased to nearly $33 billion, growth of over $2 billion from a year ago, driven by health system partnerships to provide business process and information technology services. A couple of other items of note that were affected by the cyber attack.

Speaker Change: Cash flows from operations in the quarter were $1 1 billion impacted by about 3 billion due to the funding acceleration to care providers and collection extensions to affected customers.

Speaker Change: And were additionally impacted by the timing of some public sector receipts.

To summarize a continued focus on better serving patients and the health system underpins, our mission and growth drivers, which remain strong.

John F. Rex: Today's claims payable in the first quarter were 47.1 compared to 47.9 in the fourth quarter, 23, and 47.8 a year ago. The accelerated payments to care providers and the Brazil sale reduced what would have been our reported measure for the quarter by about three days. The medical costs payable balance increased $1.6 billion from year-end $23 to $34 billion.

Speaker Change: And as we move further into this year the broadly strong performance across our enterprise allows us to continue to expect full year adjusted earnings per share in the range of $27 50 to $28, even as we incorporate the 30 to 40 per share of business disruption impacts.

Speaker Change: Now I'll turn it back to Andrew.

Andrew Philip Witty: Thank you John as we look out over the next several years, we like many others see a health care environment in need of improvements in quality value.

John F. Rex: The change reflects a $3 billion increase in the incurred but not yet reported component, or IBNR. This is the result of the Prudent Ongoing Claims Receipt Assessment, offset by a $1.6 billion reduction in the Fully Processed Claims Component due to Care Provider Payments Acceleration. Cash flows from operations in the corridor were $1.1 billion, impacted by about $3 billion due to the funding acceleration to care providers and collection extensions to affected customers, and were additionally impacted by the timing of some public sector.

Andrew Philip Witty: <unk> and consumer responsiveness.

Well, we're a comparatively small part of the five trillion dollar U S health system Unitedhealth group strategy is focused on helping to meet those very needs and we're well positioned to do so.

Andrew Philip Witty: I'll focus on understanding opportunities to align incentives, notably led via our value based care offerings demonstrates what can be achieved through partnership and realignment of ways of working.

Andrew Philip Witty: Our commitment to improving all we do for consumers stimulates our drive to help bring care to patients where they need and want it at prices and with an experienced worthy of the 2000 twenty's.

John F. Rex: To summarize, a continued focus on better serving patients and the health system underpins our mission and growth drivers, which remain strong. And as we move further into this year, the broadly strong performance across our enterprise allows us to continue to expect full-year adjusted earnings per share in the range of $2,750 to $2,800, even as we incorporate the $0.30 to $0.40 per share of business disruption impact. Now I'll turn it back to Andrew.

Andrew Philip Witty: We have a proven commitment to making available our insights and innovations widely and quickly throughout the market alongside our relentless multi payer orientation of optum.

Andrew Philip Witty: We remain committed to partnering with others throughout health care to help make the health system more modern unresponsive.

Andrew Philip Witty: Our success depends on enabling partners and customers outside our company to succeed.

Andrew Philip Witty: The combination of this strategic design strengths and behaviors underpins our high confidence in our ability to navigate the inevitable environmental change and challenge and it reinforces our confidence in our ability to perform and grow strongly as you've come to expect from us.

Andrew Philip Witty: As we look out over the next several years, we, like many others, see a healthcare environment that is increasingly focused on simplification and consumer responsiveness. Well, we're a comparatively small part of the $5 trillion U.S. health system. UnitedHealth Group's strategy is focused on helping to meet those needs, and we're well positioned to do so. Our focus on understanding opportunities to align incentives, notably through our value-based care offerings, demonstrates what can be achieved through partnership and the realignment of ways of working.

Speaker Change: With that operator, we will turn to questions.

Speaker Change: 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 on your Touchtone phone, we ask you to limit yourself to one question. If you ask multiple questions will only be answering the first question.

Andrew Philip Witty: Our commitment to improving all we do for consumers stimulates our drive to help bring care to patients where they need and want it, at prices and with an experience worthy of the 2020s. We have a proven commitment to making our insights and innovations widely and quickly available throughout the market, alongside our relentless multi-payer orientation. We remain committed to partnering with others throughout healthcare to help make the health system more modern and accountable. Our success depends on enabling partners and customers outside our company to succeed.

Speaker Change: So we can respond to everyone in the queue. This morning.

Speaker Change: And we will go first to Lisa Gill with Jpmorgan.

Lisa Christine Gill: Thanks, very much and thanks for all the comments I just want to go back to your comment around your three year plan as it pertains to <unk> 28, 2025 final bid.

Lisa Christine Gill: <unk> anything around that that plan and how do I think about the impact in the quarter as the 28 and both Optum health as well as on the Unitedhealth sides.

Speaker Change: Yes, Lisa Thanks, so much for the question, yes, as we said a few times and certainly repeated this morning, we've looked at the changes that CMS finalized last year really thoughtfully and we see this as a three year strategy in response, obviously its phased in over three years, we want to make sure. We don't do anything that chases short term growth.

Unknown Executive: The combination of this strategic design, strengths, and behaviors underpins our high confidence in our ability to navigate the inevitable changes and challenges. And it reinforces our confidence in our ability to perform and grow strongly, as you have come to expect from us. With that, Operator, we'll turn to questions. Thank you. The floor is now open to questions. At this time, if you have a question or comment, please press Star 1 on your touchtone phone. You may remove yourself from the queue by pressing Star 2 on your touchtone phone.

Speaker Change: For example puts a lot of puts at risk long term sustainability.

Unknown Executive: We ask you to limit yourself to one question. If you ask multiple questions, we will only answer the first question, so we can respond to everyone in the queue this morning. And we'll go first to Lisa Gill from J.P. Morgan. Thanks very much.

Speaker Change: What you're also not going to see for Mazda to kind of knee jerk reaction between growth and margin we want to be very focused on ensuring that year in year out we're super reliable performer in this environment.

Speaker Change: As you look at the most recent final rate I don't think it really changes the story, obviously a little disappointing.

Speaker Change: We don't think CMS really reflected what was what we've seen over the last year in terms of actual in market medical trend, but in reality.

Andrew Philip Witty: And thanks for all the comments. I just want to go back to your comment around your three-year plan as it pertains to V-28. Does the 2025 final bid change anything around that plan? And how do I think about the impact in the quarter of V-28 on both OptumHealth as well as on the UnitedHealth side? Lisa, thanks so much for the question. Yeah, you know, as we've said a few times, and certainly repeated this morning, we've looked at the changes that CMS finalized last year really thoughtfully, and we see this as a three-year strategy in response. Obviously, it's phased in over three years. We want to make sure we don't do anything that chases short-term growth, for example, but puts at risk long-term sustainability.

Speaker Change: It's just a little extra pressure for 25 on top of what we've already seen previously with well positioned for that in terms of all the work we've been doing really from the get go last year really from February last year, we have been getting ourselves lined up for this you'll see that reflected in Q1 and a few really key features right. So you're seeing really strong cost control inside the company as you adopt <unk>.

Speaker Change: <unk> expect us to do making sure that we're not not incurring any expense that we don't need to to support our members and patients on the outside to the organization.

Speaker Change: <unk> taken a very thoughtful bid strategy last year and of course, we continue to focus on how to make sure that we manage medical cost as effectively as possible and ensuring quality of care delivered and avoiding waste all of that plays through I am very very pleased with how this first schools has played out in that respect if you look at the performance of <unk>.

Andrew Philip Witty: What you're also not going to see from us is a kind of knee-jerk reaction between growth and margin. We want to be very focused on ensuring that, year in, year out, we're a super reliable performer in this environment. As you look at the most recent final rate, you know, I don't think it really changes the story. Obviously, it's a little disappointing that we don't think CMS really reflected what we've seen over the last year in terms of actual in-market medical trends. But in reality, it's just a little extra pressure for 25 on top of what we've already seen.

Speaker Change: Some health and our MA business within United Healthcare, both very strong performance during this quarter. Despite the pressure that's been incurred on them.

Speaker Change: From the rate notice last year, and I think that bodes super well for the rest of this year and the strategy we've laid out for the next three.

Speaker Change: Thanks, Lisa next question.

Speaker Change: We'll go next to Josh Raskin with Nephron research.

Joshua Richard Raskin: Hi, Thanks. Good morning can you just explain what medical cost you categorized as accommodations to support care providers I think the U M management that you guys are talking about.

Andrew Philip Witty: We're well positioned for that in terms of all the work we've been doing really from the get-go last year, really from February last year, we've been getting ourselves lined up for this. And you're seeing that reflected in Q1 in a few really key features, right? So you're seeing really strong cost control inside the company, as you absolutely expect us to do, making sure that we're not incurring any expenses that we don't need to support our members and patients outside of the organization.

Joshua Richard Raskin: What is certain medical what puts a certain medical expense in that bucket and then when you look at your actual claims receives or claims processed inventories what percentage of a normal or expected quarter did you actually see in the quarter versus how much did you just sort of put into Ivy NR.

Joshua Richard Raskin: Josh Thanks, so much.

Joshua Richard Raskin: I'm going to ask Brian Thompson, and the second just to give you a little bit more color on the first part of your question listen I think by the time, we got to the end of the quarter. We had the overwhelming majority of what we would anticipate in receipt in terms of claims received into the organization because it's always a little bit tricky to be absolute about that because you're kind of comparing against what you were.

Andrew Philip Witty: You saw us take a very thoughtful bid strategy last year. And, of course, we continue to focus on how to make sure that we manage medical costs as effectively as possible, ensuring the quality of care delivered and avoiding waste. All of that plays through.

Andrew Philip Witty: I'm very, very pleased with how this first quarter has played out in that respect. If you look at the performance of OptumHealth and our MA business within UnitedHealthcare, both very strong performers during this quarter, despite the pressure that's been incurred on them from the rate notice last year. And I think that bodes super well for the rest of this year and the strategy that we've laid out for the next three. Thanks, Lisa.

Brian Robert Thompson: Would have expected.

Speaker Change: And as you hopefully know every quarter you see corrections, both up and down in terms of of.

Brian Robert Thompson: The actual claim submissions catching up with what you may have estimated and thats been obviously the feature of this marketplace.

Brian Robert Thompson: But overall I would say UHC claims receipt was very very close to normal by the time, we closed the quarter, but maybe Brian you can give a little more color commentary on.

Unknown Executive: Next question. Next, Josh Raskin with Nefron Research. Hi, thanks. Good morning.

Unknown Executive: Can you just explain what medical costs you categorized as, you know, accommodations to support care providers, I think, you know, the UM management that you guys are talking about? You know, what puts a certain medical expense in that bucket? And then when you look at your actual claims received or claims processed inventories, what percentage of a normal or expected quarter did you actually see in the quarter versus how much did you just sort of put into IV&R? Josh, thanks so much.

Brian Robert Thompson: How you would characterize some of that relief. We go sure I. Appreciate the question, Yes, Josh I believe we started March eight and what we did I call. It a foregone utilization management protocols and those are really in two categories. The first is we suspended our inpatient and level of care reviews, where we assess for appropriateness of inpatient versus outpatient.

Brian Robert Thompson: And that was the lion's share of our adjustment and we've got a long history of understanding those elements.

Brian Robert Thompson: Just a unit cost adjustments, so pretty simple and easy to estimate and adjust for the second element inside those practices was some outpatient prior authorizations that we also suspended those were a smaller element inside this quarter those will play out a little bit more index quarter. As you think about that lag between noticed an actual <unk>.

Andrew Philip Witty: I'm going to ask Brian Thompson in a second just to give you a little bit more color on the first part of your question. Listen, I think by the time we got to the end of the quarter, we had the overwhelming majority of what we'd anticipate in receipt in terms of claims received into the organization. Of course, it's always a little bit tricky to be absolute about that because you're kind of comparing it against what you would have expected.

Brian Robert Thompson: But again pretty easy for us to estimate these are practices. We've had in place for a very long time and feel comfortable about the adjustment that we made.

Brian Robert Thompson: Brian Thanks, so much and just again to confirm as you heard from John we brought those.

Brian Robert Thompson: Those processes back into play in the last few days.

Speaker Change: Next question.

Albert J. William Rice: We'll go next to a J rice with UBS.

Albert J. William Rice: Okay.

Albert J. William Rice: Thanks, Hi, everybody congratulations on working through all of this.

Albert J. William Rice: Maybe just make sure I understand a little more than 800 million.

Brian Robert Thompson: And as you obviously know, every quarter you see corrections both up and down in terms of actual claim submissions catching up with what you may have estimated. And that's obviously a feature of this marketplace. But overall, I would say UHC claims receipt was very, very close to normal by the time we closed the quarter. But maybe Brian, you could give a little more color commentary on how you would characterize some of that relief we gave. Sure. I appreciate the question. Yeah, Josh, I believe we started March 8. And what we did, I call it foregone utilization management protocols. And those are really in two categories.

Albert J. William Rice: Reserve that you are holding out and you did comment that you didn't take any prior period development in the bottom line.

Brian Robert Thompson: The first is that we suspended our inpatient level of care reviews where we analyzed the appropriateness of inpatient versus outpatient care. And that was the lion's share of our adjustment. We've got a long history of understanding those elements. It's just a unit cost adjustment. So pretty simple and easy to estimate and adjust for. The second element inside those practices was some outpatient prior authorization that we also suspended. Those were a smaller element inside this quarter.

Albert J. William Rice: It sounds like you've used the word prudent several times in describing that.

Albert J. William Rice: How much.

Albert J. William Rice: Yes, just maybe to follow up on the last question how much of that is.

Albert J. William Rice: Things that either from what you get insight from Optum health or from <unk>.

Albert J. William Rice: Your own ability to look at prior year claims versus what you've seen so far is which you really think is going to happen and how much of that is sort of add on just because of the moving parts out there.

And then it sounds like Youre, basically saying that the care.

Brian Robert Thompson: Those will play out a little bit more in the next quarter as you think about that lag between notice and actual and curled date. But again, pretty easy for us to estimate. These are practices we've had in place for a very long time, and we feel comfortable about the adjustment that we've made. Brian, thanks so much.

Albert J. William Rice: The dynamics are similar or is there anything you'd call out outpatient and inpatient.

Albert J. William Rice: That suggests any variance relative to your MLR assumptions for the year when you started out.

Brian Robert Thompson: And just again, to confirm, as you heard from John, we've brought those, those processes back into play in the last few days. Next question. We'll go next to A.J. Rice with UBS.

Albert J. William Rice: So I'm going to ask John just to comment on the 800 million more specifically I mean, I think as we said a couple of times AJ really not seeing anything stand out in terms of patent differentiation from what we really expected I mean.

John: As we mentioned earlier that kind of pressure we saw at the end of Q4 and rolling into the very beginning of the year on some kind of winds Windsor syndrome vaccination dynamics, we talked about last time as expected that did subside beyond that.

Unknown Executive: Thanks, Hi everybody. Congratulations on working through all this. Maybe just to make sure I understand a little more about the $800 million reserve that you're holding out. You did comment that you didn't take any prior period development to the bottom line. I guess it sounds like you've used the word prudent several times in describing that.

Was what we were anticipating beyond that I wouldn't say, there's anything really to call out within all of that John.

John: John could you maybe go a little deeper on the 800, yes. Good morning, a J so picking up on comment Andrew had made earlier, so what youre really doing there is estimating what you didn't see that.

Unknown Executive: How much, Yeah, just maybe to follow up on the last question, how much of that is things that either from what you get insight from OptumHealth or from your own ability to look at prior year claims versus what you've seen so far, is what you really think is going to happen, and how much of that is sort of an add-on just because of the moving parts out there? And then it sounds like you're basically saying that the care dynamics are similar. Is there anything you call out, outpatient, inpatient, that suggests any variance relative to your MLR assumptions for the year when you started out?

John: No claims receipts that you may have not received in the quarter and trying to make an accommodation for that as you said a prudent commented accommodation for that too.

John: <unk> acknowledged that there clearly had to be some disruption in the quarter and claims patterns and so you are trying to make some estimation in that in that zone two.

John: Anticipate that so you'd put it somewhere in the zone.

John: It's not zero and it's not 800 somewhere in between probably as you'd think about those elements and where you might where you might land.

John: And so as we as we look out and you should expect that we will probably continue with a judicious view over this over the next several quarters actually also we want to make sure that we've got full visibility into this that the claims are flowing in.

Unknown Executive: So I'm going to ask John just to comment on the $800 million more specifically. I mean, I think, as we said a couple of times, AJ, really not seeing anything stand out in terms of care pattern differentiation from what we really expected. I mean, as we mentioned earlier, that kind of pressure we saw at the end of Q4 and, you know, rolling into the very beginning of the year around some kind of winter, you know, winter syndrome vaccination dynamics, which we talked about a lot last time.

John: And as we sit here on April 16th that does we see at UHC, we see a fairly narrow normal claims receipts and payments load going on at this point, but we'll really want to be careful on that because we know there are certain care providers out there that maybe have been left out of it and so we will continue to be very judicious next quarter also in terms of.

Unknown Executive: As expected, that did subside. Beyond that, I would, you know, which was what we were anticipating. Beyond that, I wouldn't say there's anything really to call out within all of that. John, could you maybe go a little deeper on the $800? Yeah, good morning, AJ.

Speaker Change: Assessing that thanks, John Thank you a J next question.

John F. Rex: Picking up on a comment Andrew had made earlier, what you're really doing there is estimating what you didn't see. So claims receipts that you may not have received in the quarter and trying to make an accommodation for that, as you said, a prudent accommodation for that, just to acknowledge that there clearly had to be some disruption in the quarter and claims pattern. And so you're trying to make some estimations on that in that zone to anticipate that. So you need to put it somewhere in the zone.

Speaker Change: We'll go next to Justin Lake with Wolfe Research.

Speaker Change: Thanks.

Justin Lake: First I just wanted to quickly follow up on <unk> question here around the 801 billion can you just be specific around is that conservatism related to 2023 meetings, you would have had up to $800 million of development.

Justin Lake: Benefited the quarter.

Justin Lake: Or are you, saying that you just took extra reserves that actually impacted Q4 Q1, because we're looking at MLR, that's 50 basis points above where you kind of expected it and yet youre seeing trended in line. So we're trying to figure out.

John F. Rex: It's it's it's it's not zero and it's not eight hundred, somewhere in between, probably as you think about those elements and where you might land. And so as we look out, and you should expect that we'll probably continue with a judicious view on this over the next several quarters. Actually, also, we want to make sure that we've got full visibility into this, that claims are flowing, and as we sit here on April 16th, it is.

Justin Lake: There are 50 basis point, Miss or would you say that really that's just the conservatism here and then any my question was really around the.

Justin Lake: Relative visibility on cost strategy last year. It was somewhat opaque you kind of told US that there was somewhat uncertainty and that is that uncertainty turned to certainty around trend is higher.

John F. Rex: We see at UHC that we have fairly normal claims, receipts, and payment flows going on at this point. But we'll really want to be careful with that because we know there are certain care providers out there that may have been left out of it. And so we'll continue to be very judicious next quarter also in terms of assessment. Thanks, John. Thank you, AJ. Next question. We'll go next to Justin Lake with Wolf Research.

Justin Lake: In Q2, how do you feel about your visibility. This year do we have to wait until <unk> to kind of be able to declare that we're kind of through this youre not seeing what the rest of the industry is seeing.

Justin Lake: Do you think we probably have to get that updated again in second quarter, and lastly, any private dairy on Q2 MLR.

Justin Lake: You end up with a full year range for MLR would certainly be helpful. If you could provide.

Unknown Executive: Thanks. First, I just wanted to quickly follow up on AJ's question here around $800 million. Can you just be specific: is that conservatism related to 2023, meaning you would have had up to $800 million of development that would have benefited the quarter? Or are you saying that you just took extra reserves that actually impacted Q1? Because we're looking at an MOR that's 50 basis points above where you expected it, and yet you're saying the trend is in line.

Speaker Change: Okay. Justin Thanks for those questions, let me Im going to ask John in a second just to go back and again, just give you a little bit more definition around the 800 million as you asked just in terms of.

Speaker Change: Just in terms of cost trend, let me make a couple of comments can I ask Brian maybe to go little deeper as well and then come back to John.

As I look at the cost trends.

Speaker Change: This year versus last year, some big differences. So last year really I think the core of the story of what led to that step shift if I can put it that way in early Q to Q2 of last year.

Unknown Executive: So we're trying to figure out, was there a 50 basis point miss, or are you saying that really that's just the conservatism here? And then my question was really around the relative visibility on the cost trend. Last year, it was somewhat opaque.

Speaker Change: I think that was really in the hindsight.

Speaker Change: Hindsight tells us that was really around the kind of post COVID-19 or end of Covid story, playing out in terms of capacity coming on stream. Most importantly, and to some degree of pent up demand Ics into capacity come in the coming on stream was as much of an issue.

Unknown Executive: You told us that there was some uncertainty and that if that uncertainty turned to certainty around, hey, the trend is higher. In Q2, how do you feel about your visibility this year? Do we have to wait till Q2 to be able to declare that, hey, we're through this, and you're not seeing what the rest of the industry is seeing? Or do you think we probably have to get that update again in the second quarter?

Speaker Change: She was a driver of that as anything else.

Speaker Change: To some degree a one off we don't see anything like that we've seen much more stabilization. We haven't seen we haven't seen a step down from that trend may be super clear about that we haven't seen it kind of go back down again, but we certainly seen that kind of sustained activity without aggressive acceleration and then the other thing I would say to you is as you would expect given.

Unknown Executive: And lastly, any commentary on Q2 MLR, where you think you end up in the full year range for MLR would certainly be helpful if you could provide it. Thanks. Okay, Justin, thanks for those questions. Let me I'm going to ask John in a second just to go back and again, just give you a little bit more definition around the 800 million, as you asked, just in terms of and just in terms of cost trends. And let me make a couple of comments to get Brian maybe to go a little deeper as well and then come back to John.

Speaker Change: That shift we saw last year in the intervening year, we've put in a lot of sense and mechanisms across our organization both in UHC and Optum to look for early warning signals of changes at quite a low granularity in terms of trying to figure out how this patent plays out now.

Speaker Change: As all of our activities and any action, we will tell you that the gold standard of knowledge on trend as it is a paid claim.

Unknown Executive: You know, as I look at the cost trend this year versus last year, I see some big differences. So last year, really, I think the core of the story of what led to that sort of step shift, if I can put it that way, in early Q2, Q2 of last year. I think that, and hindsight tells us that was really around a kind of post-COVID or end-of-COVID story playing out in terms of capacity coming on stream, most importantly, and to some degree, pent-up demand.

Speaker Change: But nonetheless, we've tried to put in place a lot more prospective sensing capability and again, that's kind of consistent with what we're sharing with you. So so we're not really anticipating a big change there I mean, obviously the future is the future that as we sit today everything looks pretty much as expected Brian you may want to give a bit more from the UHC perspective, yes. Thanks Andrew.

Brian Robert Thompson: You summarized it well I'll reiterate what you heard from John which is what we're seeing in these underlying service types inpatient outpatient et cetera are in line with what we had planned for so I would reiterate that and.

Unknown Executive: I actually think the capacity coming on stream was as much an issue as a driver of that as anything else. So I think to some degree, a one-off. We don't see anything like that, we've seen much more stabilization, we haven't seen a step down from that trend, we'd be super clear about that we haven't seen it kind of go back down again. But we've certainly seen that kind of sustained activity without aggressive acceleration.

Brian Robert Thompson: Just to add to that level of improved visibility this year over last certainly COVID-19 being the biggest driver, but also redetermination is last year. We were at the beginning of that this year. We're nearing the end of that so two key unknowns a year ago, I think that contributed to perhaps a little less visibility both of which I think we've really got a better view to this year and the last thing I'll just point out is as.

Brian Robert Thompson: We've paid through one one I also feel good about our business mix again early in the stages of evaluation of that but how our growth has changed and what we've seen in those profiles from.

Andrew Philip Witty: And then the other thing I would say to you is, as you would expect, given that shift we saw last year, in the intervening year, we've put in a lot of sensing mechanisms across our organization, both in UAC and Optum, to look for early warning signals of changes, you know, quite a low granularity in terms of trying to figure out how this pattern plays out now. As all our actuaries and any actuary will tell you, the gold standard of knowledge on trends is a paid claim.

Brian Robert Thompson: The growth that Youre seeing in our commercial business to the growth in our Medicare business as well really feel good about all of those elements. So yes optimistic about the rest of the year and how its playing playing out against what we had planned for alright, Thanks, Brian Joel Yes, Justin Good morning, So I think the way you look at it.

Overall, the net view being so we didn't let any <unk>.

Andrew Philip Witty: But nonetheless, we've tried to put in place a lot more prospective sensing capability. And again, that's kind of consistent with what we're sharing with you. So we're not really anticipating a big change there. I mean, obviously, you know, the future is the future.

Joel: Earnings our medical care ratio impacting development flow through into the quarter and when you look at it. So you can come out of it the enormity of course of assessments would have indicated some potential for favorable development in the quarter.

Andrew Philip Witty: But as we sit today, everything looks pretty much as expected. Brian, you may want to give a bit more from a UHC perspective. I'll reiterate what you heard from John, which is that what we're seeing in these underlying service types, inpatient, outpatient, etc., is in line with what we had planned for. So I'll reiterate that. And just to add to that level of improved visibility this year over last, certainly COVID being the biggest driver, but also redeterminations. Last year, we were at the beginning of that. This year, we're nearing the end.

Joel: We would we took a position also there is likelihood that there were claims we didn't receive.

Joel: So in terms of the claims completion factors in section. So how that may have impacted and so youre really netting that all off in the course of the quarter to try to normalize that out not having any impact from any of those from those elements and taking a pretty prudent view of where you might be in terms of in terms of the claims you received in terms of your <unk>.

Brian Robert Thompson: So two key unknowns a year ago, I think, that contributed to perhaps a little less visibility, both of which I think we've really got a better view of this year. The last thing I'll just point out is, as we've paced through 1.1, I also feel good about our business mix. Again, early in the stages of evaluation of that, but how our growth has changed and what we've seen in those profiles from the growth that you're seeing in our commercial business to the growth of our Medicare business as well. Really feel good about all those elements.

Joel: <unk> on the Q2 MCR at this distance I would put it in a similar ZIP code to <unk>.

Joel: Including similar impact from the cyber effects that we had also and as I noted in response to a J 's question. It will be continue to be very judicious as we look at that those that those patterns. Also claims received so we'll continue with the judicious view of how we think about.

Brian Robert Thompson: So, yes, optimistic about the rest of the year and how it's playing out against what we had planned. Great. Thanks, Brian. John?

Joel: How we think about development of those impacts as we step out here in the next couple of quarters to make sure. We're getting our claims receipt timings fully fully incurred here great. John Thanks, So much our next question.

John F. Rex: Yeah, Justin, good morning. So I think the way you'd look at it. Overall, the net view being so we didn't let any earnings or medical care ratio impacting development flow through into the quarter. And when you look at it, so you can come at it as a normative course of assessments would have indicated some potential for favorable development in the quarter. We took a position also that there was a likelihood that there would be claims we didn't receive.

Joel: We'll go next to Stephen Baxter with Wells Fargo.

Stephen C. Baxter: Yes, hi, thanks.

Stephen C. Baxter: Business disruption caused the projected beyond the first quarter are I think smaller maybe than most had expected. Despite the fact, we've heard commentary from the stakeholders, reducing their dependence on change healthcare during the quarter I guess, what are you seeing from customers on that front I guess, how much of that recovery do you have on the revenue lines do you have line of sight to versus you have to drive throughout the balance of the year to get to that.

John F. Rex: And so in terms of the claims completion factors and such, and so how that may have impacted it. And so you're really netting that all off in the course of the quarter to try to just normalize that out, not having any impact from any of those elements, and taking a pretty prudent view of where you might be in terms of the claims you've received. In terms of your question here on the Q2 MCR, at this distance, I put in a similar zip code to 1Q, including a similar impact from the cyber effects that we also had.

Stephen C. Baxter: No impact to 2025, you seem to expect thank you.

Speaker Change: Yes, Steven Thanks, so much.

Speaker Change: So I'm going to ask Roger Krone, who runs optum insight to give you a little detail on this.

Roger Krone: First off so I just wanted to I just want to take a moment to pay credit to the teams for the speed in which they brought back the overwhelming majority of the functionality of <unk> of <unk>.

<unk> health care after the attack.

Roger Krone: It's been an extraordinary example of really the resources of UHD and frankly to support many of the biggest companies across America, and the tech environment coming into help.

John F. Rex: And as I noted in response to AJ's question, we'll continue to be very judicious as we look at those patterns also on claims receipts. So we'll continue with a judicious view of how we think about development and those impacts as we step out here in the next couple of quarters and make sure we're getting our claims receipt timings fully incurred here.

Roger Krone: Recover from this particular attack which was straight.

Roger Krone: <unk> on the U S health system and designed to create maximum damage I think.

Roger Krone: We've got through that very well in terms of the remediation and the build out functionality and Roger maybe you could shed a little bit of what you will see an unexpected in terms of customer dynamics over the next few months.

Andrew Philip Witty: John, thanks so much. Next question. We'll go next to Stephen Baxter with Wells Fargo.

Roger G. Connor: Yeah, hi, thanks. The business disruption costs you projected beyond the first quarter are, I think, smaller, maybe than most had expected, despite the fact we've heard commentary from stakeholders reducing their dependence on change healthcare during the quarter. I guess, what do you see in customers on that front? I guess, how much of that recovery do you have on a revenue line? Do you have a line of sight to versus how much you have to drive throughout the balance of the year to get to that no impact by 2025 that you seem to expect?

Roger Krone: Stephens Thanks, very much for the question.

Roger Krone: The way that we're thinking about the whole cyber attack responses is two key areas of focus first of all as Ondrej mentioned good progress on system restoration.

Stephens: If you look at the biggest areas were.

Stephens: We have the largest number of customers at the pharmacy Liam on payment, we're up to 80% functionality and Thats continuing to improve day by day, maybe you still got work to do we've got another set of products coming online and the number in the coming weeks, but pleased with up without progress I think your question is really about our next focus which is recovering.

Roger G. Connor: Thank you. Yes, Stephen, thanks so much. So I'm going to ask Roger Connor, who runs OptumInsight, to give you a little detail on that. First off, though, I just want to take a moment to pay credit to the teams for the speed in which they brought back the overwhelming majority of the functionality of OptumInsight of Change Healthcare after the attack. It's been an extraordinary example of the resources of UHG and, frankly, the support many of the biggest companies across America in the tech environment coming in to help recover from this particular attack, which was, you know, straight out an attack on the US health system and designed to create maximum damage.

Stephens: The business and this is about bringing those products back with oxy, bringing them back stronger will become routing functionality, where we can too.

Stephens: But then also bringing back customers, who because of the outage hopped to go elsewhere to get things like their clearance place support now we're confident in our ability to do that why well first of all the portfolio and the differentiation we have which is good but also as you can imagine we're talking to those customers all the time and they want their functionality Buck.

Stephens: They like what they have got the hard with change and they want to get that back. So we're working with them to ensure that we can actually do that also we provided financial support to a number of our clients and they appreciate that they have said to us that they appreciate it. It's a signal we're committed both to them, but then also to this marketplace as we.

Roger G. Connor: We've got through that very well in terms of the remediation and the build back to functionality, and Roger. Maybe you could share a little bit of what you'll see and expect in terms of customer dynamics over the next few months. I suppose the way that we're thinking about the whole cyber attack Responses is two key areas of focus. First of all, as Andrew mentioned good progress on system restoration. If you look at the biggest areas where we have the largest number of customers, that is, pharmacy claim and payment. We're up to 80% functionality, and that's continuing to improve day by day. Now,

Stephens: So when you add those elements up Steve and Thats, where we are we're confident we've got we've got more work to do this has been a heavy lift and we're going to continue that work, but that's why we're confident in getting talks about <unk> performance in 2025, Roger Thanks, So much and you know and I think Stephen what you heard in Rogers respond to say, there's a couple of really important features of the character of Unitedhealth group.

Andrew Philip Witty: We've still got work to do We've got another set of products coming the line in the number and in the coming weeks, but pleased with that with that progress I think your question is really about our next focus, which is Recovering the business and this is about bringing those products back but actually bringing them back stronger where we can we're adding functionality where we can too but then also bringing back Customers who because of the outage have to go elsewhere to get things like their clearance house support now We're confident in our ability to do that Why well first of all the portfolio and the differentiation we have which is good But also as you can imagine we're talking to those customers all the time and they want their functionality back You know, they like what they've got are they had with change and they want to get that back So we're working with them to ensure that we can actually do that Also, we provided financial support to a number of our clients and they appreciate that they have said to us that they appreciate it It's a signal that we are committed both to them, but then also to this marketplace as well So when you add those elements up Steven, that's where we're we're confident We've got it. We've got more work to do This has been a heavy lift and we're going to continue that work But that's why we're confident in getting back to that baseline performance in 2020, Roger, thanks so much.

Stephens: Super High resilience, and we will always stand by our customers and clients and when an attack like this happens, which puts our customers and clients at risk we will do whatever it takes to make sure they get through that whether its technical fixes or financial support we're going to stand by our clients who in this case all of the providers in the.

Stephens: The systems across America, we look at the American patients.

Stephens: We will do that and I think I think that means a lot to a lot of people and it's an important capability to have running through the backbone of American health care.

Speaker Change: With that Stephen Thanks for the question next question.

Speaker Change: We'll go next to Kevin Fischbeck with Bank of America.

Speaker Change: Okay.

Kevin Mark Fischbeck: Great. Thanks.

Kevin Mark Fischbeck: I wanted to go more a little more on the visibility that you guys think that you have into claims today. It sounds like you feel like you're largely back, but I guess, where would you say today that you are from a percent visibility into claims versus the same time last year and I know that there is forecasted improvement, but I think there's a lot of focus on the ability to price.

Kevin Mark Fischbeck: 25 correctly so.

Kevin Mark Fischbeck: We are submitting your MAA.

Kevin Mark Fischbeck: Bids how much back to normal it looks under back how long do you think you'll be from a claims perspective at that point and finally I'm used to hearing you guys reiterate search in the 60% long term EPS because I didn't hear that in the prepared remarks I just wasn't sure.

Andrew Philip Witty: And you know, and I think Stephen, what you heard in Roger's response, there are a couple of really important features of the character of UnitedHealth Group, super high resilience, and we will always stand by our customers and clients. And when an attack like this happens, which puts our customers and clients at risk, we will do whatever it takes to make sure they get through that; whether it's technical fixes or financial support, we are going to stand by our clients, who, in this case, are the providers and the systems across America look after American patients. And we will do that. And I think I think that means a lot to a lot of people.

Speaker Change: That would be at a time or whether there was anything that you were trying to say there. Thanks, alright, so I'm going to ask John to comment on your substantive question, Kevin and I'm going to ask you just to stay on the line from my last paragraph of closing comments for the second part of your question.

Speaker Change: John.

John: Good morning, Kevin So as we sit here today on April 16th UHC is pretty much back to normal levels in terms of claim submission activity, we view it as normalized now.

Andrew Philip Witty: And it's an important capability to have running through the backbone of American healthcare. With that, Stephen, thanks for the question. Next question. We'll go next to Kevin Fischbeck with Banks America.

John: Seeing claims flowing like.

John: We would expect them to be flowing theyre moving along so that's all progressing quite well.

John: Just a lot with it that the piece that you were just describing here in terms of where we think that is and as we move forward that look over the next month plus to finalize our bid submissions in size. So feel good about that in terms of our visibility and insights.

John F. Rex: Great, thanks. Um, just want to go a little more into the visibility that you guys think that you have into claims today. It sounds like, you know, you feel like you're largely back, but I guess, where would you say today that you are from a percent visibility into claims versus the same time last year? And I know that there's forecasted improvement, but there's a lot of focus on the ability to price 2025 correctly.

Speaker Change: Thanks, so much John and thanks, so much Kevin next question.

Speaker Change: We will go next to Nathan Rich with Goldman Sachs.

Nathan Allen Rich: Hi, good morning, Thanks for the question.

Nathan Allen Rich: Wanted to ask on the reported Doj investigation I'd be curious as the company had kind of dialogue with the Doj and do you have a sense of timeline for what the next steps might be as we look about what for what the possible outcome of this process could be.

John F. Rex: So by the time you're submitting your MA vids, you know, how much back to normal, what percent of back to normal do you think you'll be from a claims perspective at that point? And finally, I'm used to hearing you guys reiterate 13 to 16% long-term EPS, but I didn't hear that in the prepared remarks. So this wasn't sure whether that was due to time or whether there was anything that you were trying to say there.

Speaker Change: Hi, Nathan Thanks, so much for the question listen.

John F. Rex: Thanks. All right, so I'm going to ask John to comment on your substantive question, Kevin, and I'm going to ask you just to stay on the line for my last paragraph of closing comments for the second part. Good morning, Kevin.

Speaker Change: You'd probably expect we don't comment on the source of matters and I don't think it will be appropriate to do so today and certainly we would never have done in the past so.

Speaker Change: It's not something we're going to get into in the call, but I. Appreciate your interest. Thanks next question.

John F. Rex: So as we say here today on April 16, UHC is pretty much back to normal levels in terms of claim submission activity; we view it as normalized. I feel good about that in terms of our visibility. Thanks so much, John.

Speaker Change: We'll go next to Andrew Mok with Barclays.

Andrew Philip Witty: Hi, good morning, commercial risk and ASO membership both came in above the high end of your initial guidance can you help us understand what drove the membership better membership results for each segment.

Andrew Philip Witty: Thanks, So much for the question I said denki to who runs our eni business from UHC to respond to that.

Denki: Yes, Hi, Andrew and thanks for the question certainly encouraged with the broad based growth share gaining growth I would say in our individual segment, our local market segment and our national accounts business.

John F. Rex: And thanks so much, Kevin. Next question. We'll go next to Nathan Rich with Goldman Sachs. Hi, good morning.

Speaker Change: Some of the key drivers underlying that about a third of our group growth gains were attached to our most innovative products and the expansion of those into 37 states now on a fully insured basis to be and also fully available nationally on a on a.

Speaker Change: ASO fee based business, specifically inside the risk business.

Andrew Philip Witty: Thanks for the question. I wanted to ask about the reported DOJ investigation. You know, I'd be curious as to whether the company has had any kind of dialogue with the DOJ, and do you have a sense of timeline for what the next steps might be as we look at what the possible outcome of this process could be? Hey, Nathan, thanks so much for the question. Listen, you know, I think you'd probably expect we don't comment on these sorts of matters. And, you know, I don't think it would be appropriate to do so today.

Speaker Change: Our individual and family expand <unk> exchange based plans were a significant driver of the growth.

Speaker Change: We've seen some latency from membership we expected that would have come in from re determinations into the final portions of 2023 now begin to emerge into 2024, that's been a significant contributor to that risk base growth in the first quarter.

As a punchline I like our growth I like the pricing.

Speaker Change: Very much like the profile of both the groups and the consumers that we're attracting.

Speaker Change: And finally, I'm really pleased with the consumer experience that our teams are delivering to those that we serve Greg answer that question. Thanks, So much and as you saw in Dan's organization delivered an extraordinary 2 million.

Andrew Philip Witty: And certainly, we never have done in the past. So it's not something we're going to get into on the call, but we appreciate the interest. Thanks. Next question, I will go next to Andrew Mock with Barclays. Hi, good morning.

Dan Kueter: Commercial risk and ASO membership both came in above the high end of your initial guidance. Can you help us understand what drove the membership, and better membership results for each segment? Thanks.

Dan Kueter: Thanks so much for the question. This is Dan Kueter who runs our E&I business from UHC to respond to that. Hi Andrew, and thanks for the question. Certainly encouraged by the broad-based growth, share-gaining growth, I would say, in our individual segment, our local market segment, and our national accounts. Some of the key drivers underline that about a third of our group growth gains were attached to our most innovative products and the expansion of those into 37 states now on fully insured and also fully available nationally on an ASO fee-based basis, specifically inside the risk.

Greg: Member growth in the first quarter, one of the highest growth rates, we've seen for many many years and I think that it really comes down to our relentless focus on modernization of service offer and then delivery of that service offering.

Greg: I'm very proud of the whole team and the UAC commercial businesses domestically for what they've done next question.

Greg: We will go next to Lance Wilkes with Bernstein.

Thanks, a question on the Optima health.

Dan Kueter: Our individual and family exchange-based plans were a significant driver of the growth. We've seen some latent... from membership we expected that would have come in from redeterminations into the final portions of 2023 now begin to emerge independently. That's been a significant contributor to that risk-based growth. As a punchline, I like our growth. I like the price.

Lance Arthur Wilkes: As we're looking at outlook there, we've been really focused on capacity growth and the systems that you guys have any insights for your capacity growth in Optum health, obviously, you've been taking some cost actions there so interested in hiring trends and then second.

Lance Arthur Wilkes: Have you been renegotiating risk deals I know that there was likely some of that towards 24, what's the outlook for that and the impact of that in 'twenty four and the outlook of that for 25. Thanks a lot.

Speaker Change: Yes, thanks, so much and I'm glad you've asked about Optum health I'm going to start to decide to.

Dan Kueter: Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES, And finally, I'm really pleased with the consumer experience that our teams are delivering to them. Thanks so much, and as you saw, Dan's organization delivered an extraordinary two million. Member growth in the first quarter was one of the highest growth rates we've seen for many, many years. And I think that really comes down to, you know, relentless focus on the modernization of the service offer and then delivery of that service offer. And I'm very proud of the whole team in the UHC commercial businesses domestically for what they've done. We'll go next to Lance Wilkes with Bernstein.

Speaker Change: Our response to that.

Runs our Optum health business has been doing a great job of continuing to mature that business for us which for me I think is one of the great headlines of Optum health. It's it's continuous maturation as a sophisticated value based care delivery organization, maybe you could respond to these questions.

Speaker Change: Thanks for the question Lance.

Speaker Change: Take the first one in terms of hiring trends that we continue to work with more providers in a deeper way continuing to grow across a range of arrangements as you know.

Speaker Change: Physicians across the country work with us and contracted affiliated arrangements as well as employed arrangements and we continue to have strong partnership and growth.

Amar A. Desai: Thanks. Question on OptumHealth. As we're looking at Outlook there, we've been really focused on capacity growth in the systems. Do you guys have any insights on your capacity growth in OptumHealth? Obviously, you've been taking some cost actions there. I'm so interested in hiring trends. And second, have you been renegotiating risk deals? I know that there was likely some of that for 24. What's the outlook for that and the impact of that in 24 and the outlook for that for 25? Thanks a lot.

Speaker Change: Both organically and also through some of our inorganic M&A activity.

Speaker Change: We don't see a capacity constraint there in fact, we continue to see incredible incredible growth with our payer partners to the second part of your question.

Speaker Change: Risk partner growth continues to increase across multiple payers, it's being driven by.

Speaker Change: Some of the funding and benefit dynamics that are out there folks are looking for a real stable partner to be able to grow with.

Amar A. Desai: Yeah, Lance, thanks so much, and I'm glad you asked about OptumHealth. I'm going to ask Dr. Desai to respond to that. Armour runs our OptumHealth business, and he's been doing a great job of continuing to mature that business for us, which, for me, I think is one of the great headlines about OptumHealth. It's continuous maturation as a sophisticated value-based care delivery organization. Armour, maybe you could respond to Lance.

Speaker Change: We have worked with them continuously in terms of our contracts both.

Speaker Change: Looking at the benefit in funding changes and ensuring that the funding levels are appropriate for the risk that we're taking on and to be able to provide very high quality care across our membership. So we're very proud of the growth we've had and we'll continue to do so thanks alright. Thanks. So much next question.

Amar A. Desai: Thanks for the question, Lance. I'll take the first one in terms of hiring trends. We continue to work with more providers in a deeper way, and we continue to grow across a range of arrangements. As you know, physicians across the country work with us in contracted affiliated arrangements, as well as employed arrangements, and we continue to have strong partnerships and growth, both organically and also through some organic M&A activity. We have worked with them continuously in terms of our contracts, both looking at the benefit and funding changes and ensuring that the funding level is appropriate for the risk that we're taking on and to be able to provide very high-quality care across our membership. So we're very proud of the growth we've had, and we'll continue to do so. Thanks. Thanks so much.

Speaker Change: We will go next to Sarah James with Cantor Fitzgerald.

Sarah James: Thank you.

Sarah James: We wanted to understand a little bit better the 3 billion in IBM.

Sarah James: So just pull back of the envelope math.

Sarah James: Yes.

Sarah James: 20% of claims from UHC run through change.

Sarah James: Post event that would be like assuming a third of.

Sarah James: The change related claims are delayed is that in the ballpark of where your change completion factor.

Sarah James: <unk>.

Sarah James: <unk> and <unk>.

Sarah James: Keeping that conservative assumption the claims like throughout the year, what does that imply for the seasonality of the remaining 41 to 61 cents GAAP impact from change.

Sarah James: So Jamie thanks, so much John yes.

Jamie: If I'd kind of go right with some of those stats that you pulled out in terms of.

Jamie: But here's some insights that can offer on that so one of the elements. We wanted to break out on the <unk> component is so as you know what we report on the balance sheet. You received this morning medical costs payable is a combination of IBM and medical claims payable.

Jamie: So we are hoping to provide some more transparency for you as you look at looked at the quarter and such and.

Heather Rachelle Cianfrocco: Next question. We'll go next to Sarah James with Cancer Fitzgerald. Thank you. We wanted to understand the $3 billion in IBNR a little bit better. So just our back-of-the-envelope math suggests if 15 to 20% of claims from UHC run through change post-event, that would be like assuming a third of the change-related claims are delayed. Is that in the ballpark of where your change completion factor assumptions were? And keeping that conservative assumption of a claims-like throughout the year, what does that imply for the seasonality of the remaining $0.41 to $0.61 gap impact from change? So, Jayne, thanks so much. John?

Jamie: A $3 billion increase in <unk> is significant and then offsetting that on the on the on the on that line item would have been.

Jamie: Really the funding advances that component, where we just made sure that as soon as the claim was in house process. We were speeding it out the door to get it to providers that was one of the components. In addition to the interest free loans, we made debt that we were helping the provider community the provider community with as you talk to as you discussed kind of where rewards that they have today.

Jamie: We feel that United healthcare is essentially at normalized levels in terms of in terms of claims receipts as we sit here, we're going to be super.

Jamie: Prudent how we look at that because we know there are providers out there that.

Jamie: It could still be having trouble submitting claims.

John F. Rex: Yeah, sir. I don't know if I'd kind of agree with some of those stats that you pulled out in terms of where those fell, but here's some insights I can offer on that. So, one of the elements we wanted to break out on the IBNR component is, so as you know, what we report on the balance sheet you received this morning, medical costs payable, is a combination of IBNR and medical claims payable.

Jamie: And still having troubles with the payment flows and such and so we're going to be.

Jamie: Very appropriately appropriately constrained in how we think about that dynamic playing out here over the next over the next couple of quarters, but really those are the kind of mechanics of what's going on between the IV and our component that use spotlighted in the full line of medical costs payable alright. Thanks, Joe next question.

John F. Rex: And so we're hoping to provide some more transparency for you as you look at the quarter and such. And a $3 billion increase in IBNR is significant. And then offsetting that on that line item would have been the funding advances, the component where we just made sure that as soon as the claim was processed in-house, we were speeding it out the door to get it to providers. That was one of the components, in addition to the interest-free loans we made that we were helping the provider community with.

Jamie: We'll go next to Gary Taylor with Cowen.

Okay.

Gary Paul Taylor: Hi, Good morning, just wanted to follow up on that point.

Gary Paul Taylor: My understanding is on the <unk>.

Gary Paul Taylor: EBITDAR that you report in your Qs and Ks includes unprocessed claims.

Gary Paul Taylor: Inventories, so that $3 billion that just kind of tie to the number we see when the Q comes out are you, saying the $3 billion really is no true unreported claims at this point.

John F. Rex: As you discussed where we were, today, we feel that UnitedHealthcare is essentially at normalized levels in terms of claims receipts. We're going to be super prudent in how we look at that because we know there are providers out there that could still be having trouble submitting claims and still having troubles with payment flows and such. And so we're going to be very appropriately constrained in how we think about that dynamic playing out here over the next couple of quarters.

Speaker Change: Thanks, so much ghansham.

Speaker Change: $3 billion is IV NR directly that is to your point that is the IV NR component of it Gary.

Speaker Change: Okay. Thanks, Tim next question.

Speaker Change: We will go next to Erinn right with Morgan Stanley.

Erinn: Okay. Thanks, and on capital deployment, you didn't change your expectations for share repurchase, but how should we think about the priorities more broadly, whether it's M&A or otherwise and in your ability to be opportunistic on that side.

John F. Rex: But really, those are the kind of mechanics of what's going on between the IB&R component that you spotlighted and the full line of medical costs payable. Right. Thanks, Joe. Next question. Unknown Operator, Gary Taylor with Cowan.

Speaker Change: Alright, thanks, so much I'll ask John to comment on.

John: Yeah, Aaron Yeah, we didn't update any of those components here, we continue to take a very balanced view in terms of how we think about our opportunities you saw.

John: Certainly that we had activity in the quarter from in terms of both share repurchase and dividends.

John F. Rex: Hi, good morning. I just want to follow up on that point. John, my understanding is that the IBNR that you report in your Qs and Ks includes unprocessed claims and inventories. So the $3 billion, is that just going to tie to the number we see when the Q comes out? Are you saying the $3 billion really is true, unreported claims at this point? Thanks so much, Gary, and John. $3 billion is IBNR directly; that is, to your point, that is the IBNR component of it, Gary. Thanks, John. Next question. We'll go next to Erin Wright with Morgan Stanley. Okay, thanks.

John: Also we continue with the robust opportunities in the marketplace in terms of other capabilities that we are looking at so that all continued strong so youll see us continue to balance those out nicely in terms of in terms of the opportunities that are out there.

John: And with capacities really to approach all of those all of those elements strongly.

John: Yes.

John: I continue to see very interesting diverse pipeline of M&A opportunity across the marketplace in terms of business areas that we have interest in.

John: As I think you see some of the funding changes play out across the across the next few years I suspect that may also create new opportunities for us as different companies assess their positions.

John F. Rex: On capital deployment, you didn't change your expectations for share repurchases. But how should we think about the priority more broadly, whether it's M&A or otherwise, and your ability to be opportunistic on that front? Thanks. Erin, thanks so much.

John: How we look at this situation as we have a good strong strategy for how we navigate through this dynamic youre seeing that play out super well in the first quarter performance of Optum health and UHC and I think it gives us a sense of real confidence as we look not just in terms of outperformance, but potentially how we might think about M&A opportunity.

John F. Rex: I'll ask John to comment on that. Yeah, Erin, yeah, we didn't update any of those components here, and we continue to take a very balanced view in terms of how we think about our opportunities. You saw, certainly, that we had activity in the quarter in terms of both share repurchase and dividends. Also, we continue to have robust opportunities in the marketplace in terms of other capabilities that we are looking at. So that all continues to go strong.

John: And as you rightly said it would be somewhat opportunistic if those moments arrive next question.

John: We will go next to Whit Mayo with Leerink partners.

Whit Mayo: Thanks, Good morning, just back on the 2025 rate notice I think youre from hearing you correctly. It sounds like you're framing this as modestly disappointing, but perhaps manageable just any more color on growth expectations for next year and then if you could elaborate on the broker agent changes what this could potentially mean for your strategy seems like.

John F. Rex: So you'll see us continue to balance those out nicely, in terms of the opportunities that are out there, and with capacities, really, to approach all those all those elements strongly. Yeah, and you know, I continue to see, you know, a very interesting, diverse pipeline of M&A opportunities across the marketplace in terms of business areas that we have an interest in. Yeah, as I think you see, some of the funding changes play out across the next few years. I suspect that may also create new opportunities for us as different companies assess their positions.

Whit Mayo: A meaningful change don't know if you think about investing more into captive broker strategies, just any color would be helpful. Thanks.

Speaker Change: Thanks, So much for the question I mean, obviously, we're not going to get into kind of 'twenty five numbers, our expectation just yet, but Tim Noel who runs our <unk> business. So let me give you some good perspective on the rest of your question Tim.

Timothy John Noel: Yes, good morning, with thanks for the question. So on the final notice in some of the distribution elements of that we continue to believe that there is opportunities to improve the distribution environment in Medicare advantage and have been in a dialogue with CMS for several years on how to do that.

John F. Rex: Transcripts provided by Transcription Outsourcing, LLC. Next, we go to Whit Mayo with Learing Partners. Thanks, good morning. Just back on the 2025 rate notice, I think you're, if I'm hearing you correctly, it sounds like you're framing this as modestly disappointing, but perhaps, any more color on growth expectations for next year and then, if you could elaborate, broker-agent changes and what this could potentially mean for your strategy seems like a meaningful change. I don't know if you think about investing.

Timothy John Noel: Some of the elements of the final notice.

Timothy John Noel: That were published recently are directly in line with some of our recommendations and some of them are.

Timothy John Noel: Relatively consistent but but not totally as we had can see them I would also say right now it's a little bit early to comment on how this might rebalance some of the channel mix as still some questions on how some of the key elements of that will be rolled out. So we're still waiting for a little bit more.

Timothy John Noel: Detailed before we can get more specific on how it impacts go to market and 25 alright.

Speaker Change: Great. Thanks, so much Tim next question.

We'll go next to Ann Hynes with Mizuho Securities.

John F. Rex: Captive Broker Strategies, just any color. Thanks so much for the question. I mean, obviously, we're not going to get into give you any kind of 25 numbers or expectations just yet. But Tim Noel, who runs our M&R business, certainly gives you some good perspective on the rest of your question. Yeah, good morning, Whit.

Ann Kathleen Hynes: Hi, good morning.

Ann Kathleen Hynes: I would say your commentary on care patterns is definitely more positive than one investors Faired and you referenced several times that trend came in line with your expectations can you actually tell us what growth rates, you're assuming like the major trend categories and guidance, whether that's inpatient and outpatient and maybe some year over year growth versus historical averages.

Timothy John Noel: Thanks for the question. So on the final notice and some of the distribution elements of that, we continue to believe that there are opportunities to improve the distribution environment in Medicare Advantage and have been in a dialogue with CMS for several years on how to do that. Some of the elements of the final notice that were published recently are directly in line with some of our recommendations. And some of them are, you know, relatively consistent, but not totally as we had conceived them.

Ann Kathleen Hynes: And within that can you specifically talk about what youre, assuming for MAA that'd be great. Thank you.

Ann Kathleen Hynes: Okay.

Speaker Change: John would you like to install them.

John: And good morning, so the components that I would call outliers are the similar components that we've talked about for for a while here.

John: In terms of trend outlooks, so in particular.

John: We will go back to outpatient care for senior.

John: What we've seen in orthopedics cardiac those kinds of categories, primarily have been the big factors I think you just brought up a really important point, though so the percentage growth in those with much bigger last year.

John: Youre coming off an environment, where both the supply side had been constrained and the willingness of seniors in particular consumers to access that environment had been constrained for a couple of years. So those percentage factors were quite significant and you heard us talk about very significant levels on those double digit levels up last year as we as we looked at those.

Timothy John Noel: I would also say right now it's a little bit early to comment on how this might rebalance some of the channel mix, as there are still some questions about how some of the key elements of that will be rolled out. So we're still waiting for a little bit more detail before we can get more specific on how it impacts go-to-market. Thanks so much, Tim. Next question. We'll go next to Ann Hynes with Mizzou Health Securities. Hi, good morning.

John F. Rex: So I would say your commentary on care patterns is definitely more positive than what investors feared, and you referenced several times that the trend came in line with your expectations. You actually tell us what growth rates you're assuming, like the major trend categories and guidance, whether that's inpatient and outpatient, maybe some year over year growth versus historical averages. And within that, can you specifically talk about what you're assuming for MA? That'd be great. Thank you. John, would you like to start us off? Ann, good morning.

John: The way we look at those really though is because you would expect that to start.

John: Normalizing in terms of the percentage change. So you really look at that in terms of the number of units consumed per per patient served and so you look at those levels. That's what we're talking about we're seeing those kind of continue at those levels theyre continuing at those levels in terms of the number of units consumed delivered in those.

John: But the percentage levels of course would would start normalizing out a little bit in terms of what you. What you had seen so that continues to be the areas outpatient care for seniors. It's those categories that we'd call real outlier areas versus our historical levels of trend factors. The other the other historical level the trend factors.

John F. Rex: So the components that I would call outliers are the similar components that we've talked about for a while here in terms of trend outliers. So in particular, still go back to outpatient care for seniors. What we've seen in orthopedic, cardiac, those kinds of categories primarily have been the big factors. I think you just brought up a really important point though.

John: Remain remained much closer to cut our traditional views that we've that we've always had as a company.

John F. Rex: So the percentage growth in those was much bigger last year. You're coming off an environment where both the supply side had been constrained, and the willingness of seniors, in particular consumers, to access that environment had been constrained for a couple of years. So those percentage factors were quite significant. You heard us talk about very significant levels on those double-digit levels last year as we looked. The way we really look at those, really, though, is because you would expect that to start normalizing in terms of the percentage change. So you really look at that in terms of the number of units consumed per patient served. And so you look at those levels. That's what we're talking about.

John: In the quarter or other things you look at it just to get indications and by the way <unk> kind a vastly expanded all of those areas first fills that you've heard us talk about that a lot also first fills in the quarter, an indication of outpatient care physician visit activity.

John: Normalized in there also in terms of stabilizing for us and.

Speaker Change: Many of them any other factors that the company has historically looked at thank you thanks, John and maybe.

Speaker Change: Brian maybe to give you a little bit more from a U S perspective, and then maybe Heather also from Optum perspective in a second just maybe reflect a little bit on the work you will do it in terms of how we think.

Obviously medical trend is one thing then there's a question of how well we're able to engage with folks to actually help them manage that cost and maybe come to you in a second Heather on some of the word that you will lead into Optum. So Bryan for sure I think John said it well. The first headline is what we're seeing is what we planned for but as he alluded to some of those elements, we plan for them to be elevated year over year.

John F. Rex: We're seeing those kind of continuing at those levels. They're continuing at those levels in terms of the number of units consumed, delivered, and those... But the percentage levels, of course, would start normalizing out a little bit in terms of what you what you. So, that continues to be the area. It's outpatient care for seniors. It's those categories that we'd call real outlier areas versus our historical levels of trend factors. The other historical levels of trend factors remain much closer to our traditional views that we've always had as a company. You know, in the corridor, other things you look at just to get indications.

Not want to lose sight of unit costs, we've talked for some time that multiyear provider group and hospital contracts renew a little later than perhaps the inflation, we've seen and that is up year over year. The biggest driver was the outpatient we're really pleased to see that in line with as John explained, but also we've been able to see increases in specialty are actually plan for those.

John F. Rex: And, by the way, we've kind of vastly expanded all those areas. First fills, you've heard us talk about that a lot. Also, first fills in the corridor, an indication of outpatient care, physician visit activity, kind of normalized there also in terms of stabilizing for us and the many other factors that the company historically looked at. Thank you.

Speaker Change: Or in our pricing appropriately et cetera, and we certainly worked hard to create more access in the behavioral space. So all of those elements are modestly up but up as we had planned for and that will hopefully sound familiar to you because we spoke to all of these at our Investor Conference. As we ended the year. So I think thats, what I would summarize our add to John's commentary Heather.

Speaker Change: So another thing credibly consistent on the Optum side, and maybe just focusing on the medical first though I mean, I think you've heard us say this.

Speaker Change: When you look when we came out of last year looking into this year. Our focus was on the behavioral health outpatient sites consistent with United Healthcare and what was very important for Optum health was using that capacity that <unk> explained in our physicians as well as those wrap around services and our investments to ensure that we were looking at those care pattern. So they feel really good about <unk>.

Brian Robert Thompson: Then there's a question of how well we're able to engage with folks to actually help them manage their costs. And maybe I'll come to you in a second, Heather, on some of the work that you're leading at Optum. But, Brian first.

Speaker Change: Into this year that work, we've done John referenced engagement with particularly the <unk> complex in over 75% already engaged in that PCP engagement that member engagement is incredibly important whether it's with their PCP directly with some of our care <unk> care management wraparound services, because it identifies affordability opportunities incredibly quickly.

Speaker Change: It also identifies chronic disease needs to be managed and it gets some connected to primary care quickly. So that's our focus for the year and that's why we feel good about that.

Brian Robert Thompson: The biggest driver was outpatient. We're really pleased to see that in line with, as John explained. But also, we've been able to see increases in specialty Rx. We've planned for those. Those are in our pricing appropriately, et cetera. And we've certainly worked hard to create more access in the behavioral space. So, all of those elements are modestly up, but up as we had planned for.

Speaker Change: Adobe had controlling mineralization on the medical side, particularly in again.

Speaker Change: Remind you is it reduce funding environment as we go into this year. So that's what brings us.

Heather Rachelle Cianfrocco: And they'll hopefully sound familiar to you because we spoke about all of them at our investor conference as we ended the year. So, I think that's what I would summarize or add to John's commentary. Heather?

Speaker Change: That value based care proposition incredible value to all of our Payors on the pharmacy side same thing.

Speaker Change: Our clients that specialty trend is.

Heather Rachelle Cianfrocco: So, I would say incredibly consistent on the opt-in side. So, maybe just focusing on the medical first. So, I think you've heard us say this before.

Speaker Change: It's a focus and we bring those.

Speaker Change: <unk> solutions and that's why we've seen growth on the <unk> side and our pharmacy is around our clinical model and the continued innovative products that we're bringing to bear so youre seeing that pull through in the diversified growth and strength of the performance side as well.

Heather Rachelle Cianfrocco: When you look at where we came out of last year looking into this year, our focus was on behavioral health and those outpatient sites consistent with UnitedHealthcare. And what was very important for OptumHealth was using that capacity that Amar explained about our physicians as well as those wraparound services and our investments to ensure that we were looking at those care patterns. So, we feel really good about coming into this year.

Thanks, So much have a just one number has just shared with you that which I'm very pleased all in is a significant improvement year over year is that 70, 575% engagement of the most complex members and Optum health I'm just for that that means three out of every four most complex most disadvantage folks in the country I've had a direct engagement.

Heather Rachelle Cianfrocco: That work we've done, John referenced engagement with particularly those most complex numbers, 75% already engaged. And that PCP engagement, that member engagement, is incredibly important, whether it's with our PCP directly or it's with some of our own care management wraparound services because it identifies affordability opportunities incredibly quickly. It also identifies chronic disease that needs to be managed, and it gets them connected to primary care quickly.

Speaker Change: With us in the first three months of the year, that's a great rate of touch opens a dual them for us really getting to know those folks helping the system, helping bring the system to support many of these people, particularly those who were trapped in their homes are just not had access to that kind of care opportunity that engagement is the first step of doing that we really believe that is a key to <unk>.

Heather Rachelle Cianfrocco: So, that's our focus for the year. And that's why we feel good about it, our ability to control utilization on the medical side. Particularly, and again, you know, what we'll remind you of is a reduced funding environment as we go into this year. So, that's what brings us, that's what brings that value-based care proposition incredible value to all of our payers. On the pharmacy side, I'd call the

Speaker Change: How we not only deliver on it.

Speaker Change: <unk>.

Speaker Change: CAD delivery from a cost point of view, but also make sure they get the very best quality that they deserve so really pleased to see that step up year over year.

Heather Rachelle Cianfrocco: You know, for our clients, that specialty trend is, you know, a focus. And we bring those products and solutions. And that's why we've seen growth on the PBM side and in our pharmacies around our clinical model and the continued innovative products that we're bringing to bear. So, you're seeing that pull through in the diversified growth and strength of the performance in the FMRX. Thanks so much, Heather.

Speaker Change: We have time for one last question if we could take that question. Please Jonathan.

Jonathan: Yes, we'll go to our last question from Jessica <unk> with Piper Sandler.

Jonathan: Few more detail maybe on the line.

Jessica: Sorry, we missed the question, yes, sorry about that and then just been Matthew more details maybe around the launch of change to now.

Andrew Philip Witty: Just one number Heather just shared with you, which I'm very pleased about, and it's a significant improvement year over year, is that 75% engagement of the most complex members in OptumHealth. And just for that, that means three out of every four most complex, most disadvantaged folks in the country have had a direct engagement with us in the first three months of the year. That's a great rate of contact, opens the door then for us really getting to know those folks, helping the system. Yes, we'll go to our last question from Jessica Tassin with Piper Sandler.

Matthew: Could talk talk a little about what payer receptivity the reconnection as Ben.

Matthew: Change retains its legacy data rights post breach and then just any change or updated thoughts on kind of the long term thesis unchanged for something like a real time.

Matthew: Transparent.

Matthew: Payments and decision support network. Thanks, so much.

Speaker Change: Thanks very much for the question, let me ask Roger to kick that one off Jessica Thanks very much for the question first of all on your on your on your first part.

Roger Krone: <unk> 2.0 again, we're just confident in terms of our ability to reconnect I mentioned the level of functional restoration that we have you can imagine nor the next stage of this is working with payer and provider into two.

Roger Krone: <unk> reconnect him in and see if we're in an appropriate way and all of the conversations that we're having with them are positive as we were as we work through it as I mentioned there is still work to do and that's going to take us a little bit of time, but we're continuing to work through that functionality I think it's important also to recognize where <unk> fits in the overall optum insight portfolio <unk>.

Unknown Executive: A few more details may be on the line. Sorry, we missed a question. Sorry about that.

Roger Krone: There was about 15% of our projected revenue for this year and when you look at that means I've got flows of people who are continuing to work on other products outside of <unk> and is not impacted by this and their underlying performance. This quarter has been strong if you adjust for the change is it Dod businesses earnings actually grew by around 10%.

Unknown Executive: I'm interested in a few more details, maybe around the launch of change 2.0. If you could talk, talk a little about what payer receptivity to reconnection has been, whether change retains its legacy data rights post breach, and then just any changes or updated thoughts on kind of the long-term thesis on change for something like a real-time, transparent, you know, payments and decision support network. Thanks so much. Thanks very much for the question. Let me ask Roger to kick that one off.

Roger Krone: But what we haven't slowed either as you mentioned is our innovation agenda. The excitement of the <unk> portfolio plus the Optum insight portfolio is what we can bring to this market to transform it from an innovation point of view on the real time settlement work that we're doing plus workload, we have been doing with Optum health and value based care and provider risk enablement, that's all still going.

Roger G. Connor: Yeah, Jessica, thanks very much for the question. First of all, on your for your first part, that change 2.0. Again, we're just confident in terms of our ability to reconnect. I mentioned the level of functional restoration that we have. You can imagine now the next stage of this is working with payers and providers to reconnect them in a safe way in an appropriate way. And all of the conversations that we're having with them are positive, just as we were as we worked through it. As I mentioned, there's still work to do. And that's going to take us a little bit of time, but we're continuing to work through that functionality.

Roger Krone: So in terms of our innovation agenda on the performance of the underlying business within Optum insight were very positive.

Roger Krone: Roger Thanks, so much and yes, absolutely change healthcare is an important acquisition for the group.

Roger Krone: And I think important for the country that we own change healthcare without Unitedhealth group Odeon change healthcare. This attack would likely still have happened and it would have it would have left change healthcare I think extremely challenged to come back because it was a part of United Health Group, we've been able to bring it back we're going to bring it back much stronger than it was before.

Roger G. Connor: I think it's important also to recognize where Change Healthcare sits in the overall OptumInsight portfolio. Change Healthcare is about 15% of our projected revenue for this year. And when you look at that, it means I've got thousands of people who are continuing to work on other products outside of change not impacted by this, and their underlying performance this quarter has been strong. If you're just looking at the change outage, that business's earnings actually grew by around 10%, but what we haven't slowed either, as you mentioned, is our innovation agenda.

Roger Krone: And secondarily one of the reasons that we were interested in bringing the change healthcare capabilities and customer connectivity closer to Unitedhealth group's still absolutely holds fast in terms of the potential innovation around things like real time settlement clinical decision support capabilities all of those products of the future services, the future, which all to be characteristics.

Roger Krone: Have a modern health care environment. Those are all the reasons why we believe change in health and <unk> were better together the cyber attack because unfortunately created another true validation of why that was the right thing to do because the.

Roger G. Connor: The excitement of the change portfolio plus the OptumInsight portfolio is what we can bring to this market to transform it from an innovation point of view. And the real-time settlement work that we're doing, plus work that we've been doing with OptumHealth on value-based care and provider risk enablement, that's all still ongoing. So in terms of our innovation agenda and the performance of the underlying business within OptumInsight, we're very, for the group, you know, and I think it's important for the country that we own Change Healthcare. Without UnitedHealth Group owning Change Healthcare, this attack would likely still have happened, and it would have, it would have left Change Healthcare, I think, extremely challenged to come back because it was a part of UnitedHealth Group. We've been able to bring it back.

Roger Krone: USG was in position to.

Roger Krone: Resolved that much more quickly than I think ever been imaginable, if in a standalone situation.

Roger Krone: Everybody for all of your questions. This morning, it's been a bit more of a complex quarter for sure. This time around but walnuts also showed the depths and breadth of our company's capabilities.

Roger Krone: We're recovering quickly from the change healthcare attack and are a stronger more capable company. As a result, we are continuing to build our business based on the five strategic growth pillars that we are relentlessly focused on them.

Roger Krone: Steadfastly confident in our ability to achieve our 13% to 16% long term growth objective as we look to the years ahead, we very much appreciate all of your time and attention. This morning. Thank you.

Andrew Philip Witty: We're going to bring it back much stronger than it was before. And secondarily, all of the reasons that we were interested in bringing the Change Healthcare capabilities and customer connectivity closer to UnitedHealth Group still absolutely hold true in terms of the potential innovation around things like real-time settlement, clinical decision support capabilities, all of those products of the future, services of the future, which ought to be characteristics of a modern healthcare environment.

Speaker Change: This does concludes today's conference we thank you for your participation.

Speaker Change: Yeah.

Andrew Philip Witty: Those are all the reasons why we believe Change and Health and UHG were better together. This cyber attack has unfortunately created another true validation of why that was the right thing to do because it meant UHG was in a position to resolve this much more quickly than I think would ever have been imaginable in a standalone situation. Thanks everybody for all of your questions this morning.

Unknown Executive: It's been a bit more of a complex quarter for sure this time around, but one that's also shown the depth and breadth of our company's capability. We're recovering quickly from the healthcare attack and are a stronger, more capable company as a result. We're continuing to build our business based on the five strategic growth pillars that we're relentlessly focused on, and we're steadfastly confident in our ability to achieve our 13 to 16% long-term growth objective. As we look to the years ahead, we very much appreciate all of your time and attention this morning. Thank you. This does conclude today's conference. We thank you for your participation.