Q2 2024 UnitedHealth Group Inc Earnings Call

Good morning and welcome to the UnitedHealth Group Second 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.

Jennifer: UnitedHealth Group Here is some important introductory information. This call contains forward-looking statements under U.S. Federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings.

Here is some important introductory information. This call contains forward-looking statements under U.S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.

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

Jennifer: 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. Information presented on this call is contained in the earnings release we issued this morning and in our Form 8K dated July 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.

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.

Information presented on this call is contained in the earnings release we issued this morning and in our Form 8K dated July 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.

Andrew Philip Witty: Thank you, Jennifer. Good morning, and thank you for joining us. The second quarter results we reported today reflect diversified and durable growth and a commitment to ensuring high-quality care is available to every person we're privileged to serve. In the first half of the year, revenues grew by nearly $14 billion, with strong contributions from across the enterprise, led by double-digit growth. UnitedHealth Group enters the second half of the year with continuing and broad-based growth momentum. As a result, we are affirming our full year Adjusted Earnings Outlook, even as we absorb 60 to 70 cents per share in business disruption impacts related to the cyber attack.

Andrew Philip Witty: Thank you Jennifer, good morning and thank you for joining us. The second quarter results we reported today reflect diversified and durable growth and a commitment to ensuring high quality care is available to every person we're privileged to serve.

Andrew Philip Witty: In the first half of the year, revenues grew by nearly $14 billion, with strong contributions from across the enterprise, led by double-digit growth at Optum.

Andrew Philip Witty: UnitedHealth Group enters the second half of the year with continuing and broad-based growth momentum. As a result, we are affirming our full-year Adjusted Earnings Outlook, even as we absorb 60 to 70 cents per share in business disruption impacts related to the cyberattack.

Andrew Philip Witty: These results come from the sustained focus of the 400,000 people of UnitedHealth Group on adding value for patients, consumers, and customers through the fundamental execution of our key priorities. We're also well positioned for growth in 2025. In the selling season to date, the most sophisticated, thoughtful buyers of health benefits and services in the U.S., such as large employers, unions, states, seniors..., all continue to choose the offerings of UnitedHealth Group when they're looking for managed care, pharmacy services, or a Medicare Advantage plan that provides the best value.

Andrew Philip Witty: These results come from the sustained focus of the 400,000 people of UnitedHealth Group on adding value for patients, consumers and customers through the fundamental execution of our key priorities.

Andrew Philip Witty: We're also well positioned for growth in 2025.

Andrew Philip Witty: In the selling season to date, the most sophisticated, thoughtful buyers of health benefits and services in the U.S., such as large employers, unions, states, seniors,

Andrew Philip Witty: All continue to choose the offerings of UnitedHealth Group when they're looking for managed care, pharmacy services, or a Medicare Advantage plan that provides the best value.

Andrew Philip Witty: This consistent growth reflects customers' recognition of the need for a company like ours. As you know, UnitedHealth Group strives to help reduce the fragmentation and lack of coordination that drives up costs and erodes care outcomes in the $5 trillion U.S. health care market. We aim to better coordinate and align incentives among caregivers, payers, and pharmacists, enabling us to focus on the whole patient throughout their health journey. We believe this increases value for customers and consumers, improves people's experience and health, reduces redundancies and waste, and ultimately leads to a more sustainable health system.

Andrew Philip Witty: This consistent growth reflects customers' recognition of the need for a company like ours.

Andrew Philip Witty: As you know, UnitedHealth Group strives to help reduce the fragmentation and lack of coordination that drives up costs and erodes care outcomes in the $5 trillion U.S. healthcare marketplace.

Andrew Philip Witty: We aim to better coordinate and align incentives among caregivers, payers, and pharmacy.

Andrew Philip Witty: enabling us to focus on the whole patient throughout their health journey. We believe this increases value for customers and consumers, improves people's experience and health, reduces redundancies and waste, and ultimately leads to a more sustainable health system.

Andrew Philip Witty: For example, the proven health and economic value to consumers and taxpayers of Medicare Advantage. A recent study by Milliman found that the cost to taxpayers of Medicare Advantage is 4% less than traditional fee-for-service Medicare. At the same time, Medicare Advantage provides seniors well over $2,000 per year in additional value through lower out-of-pocket costs and important services like dental, vision, and hearing, none of which fee-for-service Medicare covers. That means a lot to the majority of the people Medicare Advantage serves, who have limited economic resources and otherwise would lack access to such services.

Andrew Philip Witty: For example, the proven health and economic value to consumers and taxpayers of Medicare Advantage.

Andrew Philip Witty: A recent study by Milliman found that the cost to taxpayers of Medicare Advantage is 4% less than traditional fee-for-service Medicare.

Andrew Philip Witty: At the same time, Medicare Advantage provides seniors well over $2,000 per year in additional value through lower out-of-pocket costs and important services like dental, vision, and hearing, none of which fee-for-service Medicare covers.

Andrew Philip Witty: That means a lot to the majority of the people Medicare Advantage serves, who have limited economic resources and otherwise would lack access to such services.

Andrew Philip Witty: The home visits we offer seniors further illustrate the value of MA. Last year, our medical professionals made more than 2.5 million home visits. As a direct result, our clinicians identified 300,000 seniors with emergent health needs that may otherwise have gone undiagnosed. Additionally, they connected more than 500,000 seniors to essential resources to help them with unaddressed needs such as food insecurity, medication affordability, transportation, and financial support. They also identified and helped close more than three million gaps in care that made a real difference in people's lives.

Andrew Philip Witty: The home visits we offer seniors further illustrate the value of MA.

Speaker Change: Last year, our medical professionals made more than 2.5 million home visits. As a direct result, our clinicians identified 300,000 seniors with emergent health needs that may otherwise have gone undiagnosed.

Speaker Change: They connected more than 500,000 seniors to essential resources to help them with unaddressed needs such as food insecurity, medication affordability, transportation, and financial support.

Speaker Change: They also identified and helped close more than 3 million gaps in care that made a real difference in people's lives. Within 90 days of one of our home visits, 75% of patients received follow-up in a clinical setting.

Andrew Philip Witty: Within 90 days of one of our home visits, 75% of patients see follow-up in a clinical setting. Additionally, Medicare Advantage patients with chronic conditions who receive these home visits end up with better managed and more stable health outcomes, as evidenced by spending measurably less time than fee-for-service patients in the emergency room and other hospital settings. The bottom line is that our home visit programs help patients live healthier lives and save taxpayers money. It is only Medicare Advantage that makes programs and results like this possible.

Speaker Change: Additionally, Medicare Advantage patients with chronic conditions who receive these home visits end up with better managed and more stable health outcomes as evidenced by spending measurably less time than fee-for-service patients in emergency room and other hospital settings.

Speaker Change: The bottom line, our home visit programs help patients live healthier lives and save taxpayers money. It is only Medicare Advantage that makes programs and results like this possible.

Andrew Philip Witty: Similarly, OptumRx clients continue to appreciate the efforts we make to ensure delivery of the lowest cost drugs in the face of drug companies' sole ability to set prices. They also recognize the importance of the comprehensive pharmacy services we provide. That's driving our momentum this year and bodes well for 2025. We also continue to bring practical innovation to people through new products and services and by using new and emerging technologies to improve our own operating efficiency.

Speaker Change: Similarly, OptumRx clients continue to appreciate the efforts we make to ensure delivery of the lowest-cost drugs in the face of drug companies' sole ability to set prices.

Speaker Change: They also recognize the importance of the comprehensive pharmacy services we provide to people that's driving our momentum this year and bodes well for 2025.

Speaker Change: We also continue to bring practical innovation to people through new products and services and by using new and emerging technologies to improve our own operating efficiency.

Andrew Philip Witty: For example, Surest continues to differentiate itself in the marketplace, which is why more and more customers are offering it to their employees, and why the offering continues to grow substantially. Additionally, investments in modernization of legacy technology and new emerging technologies are enabling our consumer-centric advancement of healthcare. For example, our growing AI portfolio made up of hundreds of practical use cases will generate billions of dollars of efficiencies over the next several years.

Speaker Change: For example, Surest continues to differentiate itself in the marketplace, which is why more and more customers are offering it to their employees, and why the offering continues to grow substantially.

Speaker Change: Additionally, investments in modernization of legacy technology and new emerging technologies are enabling our consumer-centric advancement of health care.

Speaker Change: For example, our growing AI portfolio made up of hundreds of practical use cases will generate billions of dollars of efficiencies over the next several years.

Andrew Philip Witty: These investments enable us to improve the consumer experience, enhance provider find and price care capabilities to meet people's needs, and improve clinical back office execution. We expect technology innovation to become an increasingly core driver of our growth over the next two to five years. Now, I'll turn it over to our President and Chief Financial Officer, John Rex.

Speaker Change: These investments enable us to improve consumer experience, enhance provider find and price care capabilities to meet people's needs, and improve clinical back-office execution.

Speaker Change: We expect technology innovation to become an increasingly core driver of our growth over the next two to five years. And now, I'll turn it over to our President and Chief Financial Officer, John Rex.

John F. Rex: Thank you, Andrew. I'll start this morning by providing context on some of the unique items in the quarter. Then I'll follow with perspectives on care activity and general business updates. The overarching theme I hope you leave with today is that UnitedHealth Group continues to deliver broadly diversified growth with expanding opportunities. Work that positions us for continued strong performance in 25 and beyond. Now, to update you on Change Healthcare. Our focus has centered on the patients, care providers, and customers who rely on us to keep the health system running. Payment and claims flows for most care providers are back to normal, but we know that is not the case for some. So we continue to work with those who are not there yet.

John F. Rex: Thank you Andrew. I'll start this morning by providing context on some of the unique items in the quarter, then I'll follow with perspectives on care activity and general business updates.

John F. Rex: The overarching theme I hope you leave with today is that UnitedHealth Group continues to deliver broadly diversified growth with expanding opportunities, work that positions us for continued strong performance in 25 and beyond.

John F. Rex: UnitedHealth Group has provided more than $9 billion in loans and advance payments to help providers mitigate the impact of the attacks, all at no cost to them. Cyber impacts in the quarter totaled $0.92 per share, and we now estimate the full-year impact will be $1.90 to $2.05. Let me break that down a couple of steps further.

John F. Rex: Now to update on Change Healthcare.

John F. Rex: Our focus has centered on the patients, care providers, and customers who rely on us to keep the health system running.

John F. Rex: payment and claims flows for most care providers are back to normal but we know that is not the case for some. So we continue to work with those who are not there yet.

Speaker Change: UnitedHealth Group has provided more than nine billion dollars in loans and advanced payments to help providers mitigate the impact of the attack, all at no cost to them.

Speaker Change: Cyber impacts in the quarter totaled $0.92 per share and we now estimate the full year impact will be $1.90 to $2.05 per share.

John F. Rex: Of the total in the quarter, $0.64 per share was direct costs incurred in restoring the Clearinghouse platform and other response efforts. These included higher medical expenses directly stemming from the temporary pause of some care management activities. For the full year, we now estimate these direct costs at $1.30 to $1.35 per share. The $0.40 to $0.45 per share increase in this estimate is primarily related to care provider financial support and costs for producing and mailing the consumer notifications that will begin later this month. As a reminder, these direct costs are included in net earnings but are excluded from adjusted earnings.

Speaker Change: Let me break that down a couple of steps further for you.

Speaker Change: Of the total in the quarter, 64 cents per share were direct costs incurred in restoring the clearinghouse platform and other response efforts. These included higher medical expenses directly stemming from the temporary pause of some care management activities.

Speaker Change: For the full year, we now estimate these direct costs at $1.30 to $1.35 per share.

Speaker Change: The $0.40 to $0.45 per share increase in this estimate is primarily related to care provider financial support and costs for producing and mailing the consumer notifications that will begin later this month.

Speaker Change: As a reminder, these direct costs are included in net earnings, but are excluded from adjusted earnings per share.

John F. Rex: The other component affecting our results relates to disruption of the ongoing change healthcare business. This largely encompasses the loss of revenues combined with the cost of keeping these capabilities fully ready to serve. Notably, these effects are not excluded from a. In the second quarter, this impact was $0.28 per share.

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

Speaker Change: This largely encompasses the loss of revenues combined with the cost of keeping these capabilities fully ready to serve. Notably, these effects are not excluded from adjusted earnings.

John F. Rex: For the full year, we now estimate the business disruption impacts at $0.60 to $0.70 per share, compared to the $0.30 to $0.40 we estimated last quarter. Most of the service functionality is now restored, and revenues are rebuilding, even as the pacing of this process varies. These important services are now more modern, secure, and capable, and they are continuing to advance rapidly. Our ambition continues to be to return to baseline performance in 2025 and to grow strongly from there. Turning to the international...

Speaker Change: In the second quarter, this impact was $0.28 per share. For the full year, we now estimate the business disruption impacts at $0.60 to $0.70 per share, compared to the $0.30 to $0.40 we estimated last quarter.

Speaker Change: Most of the service functionality is now restored and revenues are rebuilding even as the pacing of this process varies.

Speaker Change: These important services are now more modern, secure, and capable, and continuing to advance rapidly.

Speaker Change: Our ambition continues to be to return to baseline performance in 2025 and to grow strongly from there.

John F. Rex: Following the sale last quarter of our much larger Brazil operations, we classified the remaining South American businesses as held for sale. This is a natural step following the Brazil sale. We highly value the relationships we have built with our dedicated colleagues over the last several years and wish them continued success. In a diverse enterprise with a strong growth record and capabilities such as ours, such portfolio evolutions enable us to keep our focus on the many compelling growth opportunities before us. The second quarter includes a total of $1.3 billion in South American impacts, the majority of which is non-cash and largely due to foreign currency translation losses accumulated over the years.

Speaker Change: Turning to International.

Speaker Change: Following the sale last quarter of our much larger Brazil operations, we classified the remaining South American businesses as held for sale.

Speaker Change: This is a natural step following the Brazil sale. We highly value the relationships we have built with our dedicated colleagues over the last several years and wish them continued success.

Speaker Change: In a diverse enterprise with a strong growth record and capabilities such as ours, such portfolio evolutions enable us to keep our focus on the many compelling growth opportunities before us.

Speaker Change: The second quarter includes a total of $1.3 billion in South American impacts, the majority of which is non-cash, and largely due to foreign currency translation losses accumulated over the years.

John F. Rex: About $220 million of this stems from a regulatory action in Chile affecting all health. You'll see that as a component in the Supplemental Financial Tables we provided this week. The action relates to industry premium increases dating back to 2020, but as configured, will be reflected in consumer premium credits to be issued in future years. As a result, the entire $220 million was recorded as a reduction in premium revenue in the second quarter.

Speaker Change: About 220 million of this stems from a regulatory action in Chile affecting all health plans.

Speaker Change: You'll see that as a component in the Supplemental Financial Tables we provided this morning.

Speaker Change: The action relates to industry premium increases dating back to 2020, but as configured, will be reflected in consumer premium credits to be issued in future years.

Speaker Change: As a result, the entire $220 million was recorded as a reduction to premium revenue in the second quarter, increasing our reported medical care ratio by about 25 basis points.

John F. Rex: Increasing our reported medical care ratio by about 25 basis points. Turning to the second quarter medical care ratio, it was also impacted by about 40, or $290 million, due to the suspension of some care management activities after the cyber attack. That makes for a total of about 65 basis points of non-repeating impacts, including South. Beyond These Effects

Speaker Change: Turning to the second quarter medical care ratio, it was also impacted by about 40 basis points or 290 million due to the suspension of some care management activities after the cyber attack.

Speaker Change: That makes for a total of about 65 basis points of non-repeating impacts, including South America.

John F. Rex: The care ratio in the quarter was also modestly affected by three other factors. One was member mix within Medicare Advantage and dual special needs, which this year has been shaped by the unusual competitive benefit configurations in the marketplace. A second was the timing mismatch between the current health status of remaining Medicaid members and the state rate-up, a timing mismatch we expect to realign in the months ahead.

Speaker Change: Beyond these effects, the care ratio in the quarter was also modestly affected by three other factors.

Speaker Change: One being member mix within Medicare Advantage and dual special needs plans, which this year has been shaped by the unusual competitive benefit configurations in the marketplace.

Speaker Change: A second being the timing mismatch between the current health status of remaining Medicaid members and the state rate updates, a timing mismatch we expect to realign in the months ahead.

John F. Rex: And third, the lingering upshift in provider coding intensity, which we believe was spurred by the temporary suspension of our care review activities and carried on past. This impact is not reflected in our cyber attack direct response costs, and we have been addressing, Nonetheless, we continue to expect our full-year medical care ratio, excluding 30 basis points of cyber and South American effects, to be within the range we offered in November, albeit at the upper end.

Speaker Change: And third, the lingering upshift in provider coding intensity, which we believe was spurred by the temporary suspension of our care review activities and carried past.

Speaker Change: This impact is not reflected in our cyber attack direct response costs, and we have been addressing it.

Speaker Change: Nonetheless, we continue to expect our full year medical care ratio, excluding 30 basis points of cyber and South American effects to be within the range we offered in November , albeit at the upper end.

John F. Rex: For our 2025 Medicare Advantage planning process, we assumed care patterns and myths at the levels we are seeing today, in addition to fully incorporating the second of the three-year phased funding cuts. And we have been fully attuned to how the Inflation Reduction Act will affect Medicare Part D offerings in 2025.

Speaker Change: For our 2025 Medicare Advantage planning process, we assumed care patterns and MIPS at the levels we are seeing today, in addition to fully incorporating the second of the three-year phased funding cuts.

Speaker Change: And we have been fully attuned to how the Inflation Reduction Act will affect Medicare Part D offerings in 2025.

John F. Rex: Also, as noted, we expect the Medicaid timing mismatch to subside as rates are updated throughout the remainder of this year and into next, appropriately reflecting current member health status. Turning to the performance of our businesses, at UnitedHealthcare, revenues of $74 billion grew by $3.6 billion. UHC domestic commercial membership grew $2.3 million in the first half of this year as employers and consumers responded to our distinctive offer.

Speaker Change: Also as noted, we expect the Medicaid timing mismatch to subside as rates are updated throughout the remainder of this year and into next, appropriately reflecting current member health status.

Speaker Change: Turning to the performance of our businesses. At UnitedHealthcare, revenues of 74 billion grew by 3.6 billion.

Speaker Change: UHC domestic commercial membership grew $2.3 million in the first half of this year as employers and consumers responded to our distinctive offerings.

John F. Rex: And while the 25 selling season is ongoing, we are encouraged by the continued momentum we see. Our recently filed Medicare Advantage bids for 25 again took a balanced approach to provide as much stability for seniors as possible, while factoring in the realities of the funding cuts and current care patterns. You can expect us to continue to prioritize balanced and durable performance over transitory market share gains. For Medicaid, we expect membership levels to stabilize as we head into the second half of the year, and our teams are executing well with both renewals and extensions.

Speaker Change: And while the 25-selling season is ongoing, we are encouraged by the continued momentum we see.

Speaker Change: A recently filed Medicare Advantage bid for 25 again took a balanced approach to provide as much stability for seniors as possible while factoring in the realities of the funding cuts and current care patterns.

Speaker Change: You can expect us to continue to prioritize balanced and durable performance over transitory market share gains.

Speaker Change: In Medicaid, we expect membership levels to stabilize as we head into the second half of the year, and our teams are executing well with both renewals and expansions.

John F. Rex: OptimHealth's revenues grew by 13% to $27 billion, and the operating margin expanded over last year. We are on track to approach 5 million patients in value-based care by the end of this year and are progressing strongly on our earlier and deeper engagement with patients with a purposeful focus on our newer regions to more rapidly improve health outcomes and patient experience. OptumRx revenues grew 13% to over $32 billion.

Speaker Change: OptumHealth's revenues grew by 13% to $27 billion, and the operating margin expanded over last year.

Speaker Change: We are on track to approach 5 million patients in value-based care by the end of this year and are progressing strongly on our earlier and deeper engagement with patients with a purposeful focus on our newer regions to more rapidly improve health outcomes and experiences.

Speaker Change: OptumRx revenues grew 13% to over $32 billion, driven by strong customer response to the differentiated value, consumer experience, and clinical expertise we offer.

John F. Rex: Driven by strong customer response to the differentiated value, consumer experience, and clinical expertise we offer. At OptumInsight, for services beyond change healthcare, we see strong performance in line with our expectations. The revenue backlog increased to nearly $33 billion, growth of over $1 billion from a year ago, driven by business process and information technology services for health systems. A few additional items of note.

Speaker Change: At OptumInsight, for the services beyond change healthcare, we see strong performance in line with our expectations.

Speaker Change: The revenue backlog increased to nearly $33 billion, growth of over $1 billion from a year ago, driven by business process and information technology services for health systems.

John F. Rex: As we highlighted in April, we established an additional 800 million in medical reserves in the first quarter to reflect the potential for the cyber attack to have affected claims receipt time. With claims now flowing at more normalized levels, we continue to prudently analyze these trends. Similar to last quarter, the second quarter results do not reflect any favorable earnings impacting medical reserve development. Days and claims payable were 45.2 compared to 47.1 in the first quarter.

Speaker Change: A few additional items of note.

Speaker Change: As we highlighted in April , we established an additional $800 million in medical reserves in the first quarter to reflect the potential for the cyber attack to have affected claims receipt timing.

Speaker Change: With claims now flowing at more normalized levels, we continue to prudently analyze these trends.

Speaker Change: Similar to last quarter, the second quarter results do not reflect any favorable earnings impacting medical reserve development.

Speaker Change: Days and claims payable at 45.2 compared to 47.1 in the first quarter.

John F. Rex: The change was due primarily to the return to more normal claim submission patterns from providers and, to a lesser extent, some impact from reclassifying the remaining South American operations as held for sale. Cash flows from operations in the quarter were at $6.7 billion, or 1.5 times net income, even with the accelerated funding for care providers. In June, our Board of Directors increased the dividend by 12%, marking the 15th consecutive year of double-digit dividend increases to shareholders.

Speaker Change: The change was due primarily to the return to more normal claim submission patterns from providers, and to a lesser extent, some impact from reclassifying the remaining South American operations to held for sale.

Speaker Change: Cash flows from operations in the corridor were at $6.7 billion, or 1.5 times net income, even with the accelerated funding for care providers.

Speaker Change: In June , our Board of Directors increased the dividend by 12%, marking the 15th consecutive year of double-digit dividend increases to shareholders.

John F. Rex: During the quarter, as I mentioned earlier, we prioritized devoting resources to support care providers in the wake of a cyber attack over some activities such as share repurchase. It was the right thing to do, focusing all our efforts to provide stability for the health system. Still, with our ongoing strong capital capacities and with support needs abating, we expect to achieve the full year repurchase objective we shared with you last November. In summary, it is the confidence we have in the performance of our diversified businesses that allows us to affirm full year adjusted EPS in the range of $2,750 to $2,800.

Speaker Change: During the quarter, as I mentioned earlier, we prioritize devoting resources to support care providers in the wake of the cyber attack over some activities such as share repurchase.

Speaker Change: It was the right thing to do.

Speaker Change: Devoting all our efforts to provide stability for the health system.

Speaker Change: Still, with our ongoing strong capital capacities and with support needs abating, we expect to achieve the full-year repurchase objective we shared with you last November .

Speaker Change: In summary,

Speaker Change: It is the confidence we have in the performance of our diversified businesses that allows us to affirm full year adjusted EPS in the range of $2,750 to $2,800.

John F. Rex: The objective we established last year, even as we have absorbed the unanticipated $0.60 to $0.70 in business disruption impact. Within this, we expect a balanced pacing in the second half. Now I'll turn it back to Andrew.

Speaker Change: The objective we established last year, even as we have absorbed the unanticipated $0.60-$0.70 in business disruption impacts.

Speaker Change: Within this, we expect a balanced pacing in the second half.

Andrew Philip Witty: As I said in November, our investors... We operate in an environment where change is constant. What you've come to see is that when changes happen, foreseen or unforeseen, we just deal with them. UnitedHealth Group is a nimble and adaptable enterprise, well suited to meet the challenges that come our way and the opportunities we pursue with the many and diverse capabilities available to us. In this first half, as we've done before, we navigated a complex external environment while managing through a significant business disruption. We continue to deliver on our growth objectives and are committed to delivering on our 13 to 16% long-term growth target. Now, we'll answer any questions you might have. Operator, please. Thank you.

Speaker Change: Now I'll turn it back to Andrew. John , thank you.

Andrew Philip Witty: As I said in November , our Investor Conference

Andrew Philip Witty: We operate in an environment where change is constant.

Andrew Philip Witty: What you've come to see is that when changes happen, foreseen or unforeseen, we just deal with it. UnitedHealth Group is a nimble and adaptable enterprise, well suited to meet the challenges that come our way and the opportunities we pursue with the many and diverse capabilities available to us.

Andrew Philip Witty: In this first half, as we've done before, we navigated a complex external environment while managing through a significant business disruption.

Andrew Philip Witty: We continue to deliver on our growth objectives and are committed to delivering on our 13 to 16% long-term growth target. We'll now answer any questions you might have. Operator, please.

Unknown Executive: Thank you. The floor is now open for 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. 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 queue this morning. We'll go first to A.J. Rice with UBS.

Speaker Change: Thank you. The floor is now open for 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: We ask you to limit yourself to one question. If you ask multiple questions, we will only be answering the first question, so we can respond to everyone in queue this morning.

Speaker Change: We'll go first to AJ Rice with UBS.

Albert J. William Rice: Hi, thanks for the question. Just to make sure, expanding on John's comments, if we're thinking about the, you're thinking about MLR overall for the rest of the year, it sounds like beyond change, beyond Latin America, there are two items you're calling out. One is the Medicaid timing mismatch, which sounds like you think it's short-term, and then this up-coding, coding intensity comment, and I assume that's mainly in the insurance business, but maybe it's in OptumHealth as well. Can you just give us a sense of how much those are impacting your thinking, and how much the second quarter versus the impact in the back half on those?

Speaker Change: Hi, thanks for the question. Just to make sure, expanding on John's comments,

Speaker Change: If we're thinking about the, you're thinking on MLR overall for the rest of the year, it sounds like beyond change, beyond Latin America.

Albert J. William Rice: There's two items you're calling out. One is the Medicaid timing mismatch, which sounds like you think it's short term. And then this upcoding coding intensity comment.

Speaker Change: And I assume that's mainly in the insurance business, but maybe it's in OptumHealth as well. Can you just give us a sense of how much those are impacting your thinking and how much is second quarter versus the impact in the back half on those?

John F. Rex: Thanks for the question; I'll ask John to get right to it.

John F. Rex: Good morning, AJ. Yeah, and really, kind of three items that we're talking about, in addition to those two here, also the member mix component here. When we bring it all together, those additional items that we're looking at in terms of versus where we were and how we're thinking about it. I would say they're kind of roughly equivalent in a roughly equivalent zone in terms of their impact here and then how they flow throughout the year, the rest of the year. Really, you'll see some of those elements.

Speaker Change: Thanks for the question. Let me ask John to get right to it. Good morning, AJ. Yeah, and really kind of three items that we're talking to in addition to those two here, also the member mix component here, when you bring it all together, those additional items that we're looking at in terms of

John F. Rex: versus where we were and how we're thinking about it. I would say they're kind of roughly equivalent in roughly equivalent zone.

John F. Rex: in terms of their impact here.

John F. Rex: and then how they flow throughout the year, the rest of the year. Really, you'll see some of those elements as it relates to Medicaid impacts.

John F. Rex: So as it relates to Medicaid impacts, pricing goes on for a period of, say, kind of 12 months or so. So there's pricing that occurs over the rest of this year into next year. So those elements, in terms of catching up, that mismatch catching up with the acuity that we're, that we have in the remaining population, occur over a period. Certainly, we are addressing the elements we talked about in terms of what we're seeing in the coding up shift, and we're, we're well underway in addressing those elements, but we'll continue to address them throughout the course of the year.

John F. Rex: Pricing goes on over a period of, say, kind of 12 months or so. So there's pricing that occurs over the rest of this year into next year. So those elements in terms of catching up, that mismatch catching up with the acuity that we have in the remaining population occurs.

John F. Rex: Over a period, certainly we are addressing the elements we talked about in terms of what we're seeing in the Coding up shift and where we're well underway in addressing those elements, but we'll continue to address them

John F. Rex: The member mix is kind of the member mix we have now at this point, and that really pertains to just the elements that I mentioned in my prepared comments about some of the benefit design impacts and how that impacted both our growth and also the type of membership that we were left with as we saw, as we saw our full configuration. That really lasts with us throughout the year. So, but that was an element we also incorporated into our view for 2025 as we approached our bids for 25. Thank you.

John F. Rex: throughout the course of the year. The member mix is kind of the member mix we have now at this point.

John F. Rex: That really pertains to just the elements that I mentioned in my prepared comments about...

John F. Rex: Some of the benefit design impacts and how that impacted both our growth and also

John F. Rex: The type of membership that we were left with as we saw our full configuration. That really lasts with us throughout the year.

A.J.: So, but that was an element we also incorporated into our view for 2025 as we approached our bids for 2025. Thank you. Well said, John . And maybe just to, you know, reiterate one thing John said, and then maybe add a further point, AJ.

Andrew Philip Witty: Well said, John, and maybe just to reiterate one thing John said, and then maybe add a further point, AJ. It's super important just to hear what he said in terms of that member mix.

Andrew Philip Witty: Obviously, we deal with it during this year, but we obviously have the opportunity to incorporate it into our 25 planning and bids, so I feel very good about that. And then, secondly, maybe just to reflect, step back just a little bit as we think about MLR. Really, the biggest incoming dynamic on MLR at the beginning of this year was the funding reduction in MA, the V28 significant reduction in funding. And you can see that we are fundamentally navigating that, I think, extremely well.

A.J.: It's super important just to hear what he said in terms of, you know, that member mix. Obviously, we deal with it during this year, but we obviously have the opportunity to incorporate into our 25 planning and bids, so I feel very good about that.

A.J.: And then secondly, maybe just, you know, just to reflect, step back just a little bit on, as we think about MLR, really the biggest...

A.J.: The biggest incoming dynamic on MLR at the beginning of this year was the funding reduction in MA, the V28 significant reduction in funding.

A.J.: And you can see that we are fundamentally navigating that, you know, I think extremely well. And yes, there are a couple of areas of pressure at the margin. I think, as you just heard from John , they're primarily boxed off in terms of they're going to work their way through.

Andrew Philip Witty: And yes, there are a couple of areas of pressure at the margin. But I think, as you just heard from John, they're primarily boxed off in terms of they're going to work their way through the pricing cycle with Medicaid, or in the case of concerns around coding activity, we're very focused on that, confident we are addressing that. So those things feel transitory.

John F. Rex: the pricing cycle with Medicaid, or in the case of concerns around coding activity, we're very focused on that, confident we'll be able to, we are addressing that. So those things feel transitory. Most importantly, we feel good about the way our response to the V-28 funding cut is playing out for us in the overall business and really

John F. Rex: Most importantly, we feel good about the way our response to the V28 funding cut is playing out for us in the overall business. And really, as we started the year, that was a much bigger thing to make sure we got right, and I feel like we're well on the way through the first year of this three-year cycle, and we've talked to you repeatedly about how critical it is to make sure we navigate that over the long run, and we feel good about that.

John F. Rex: As we started the year, that was the much bigger thing to make sure we got right, and I'm feeling like we're well on the way through the first year of this three-year cycle, and we've talked to you repeatedly about how critical it is to make sure we navigate that over the long run, and we feel good about that. So thanks, AJ. Next question?

John F. Rex: So thanks, AJ. Next question. Yes, we'll go next to Lisa Gill with JPMorgan. Thanks very much and good morning. I want to focus for a minute on SG&A, which came in much better than expected. Can you maybe talk about the

Lisa Christine Gill: Yes, we'll go next to Lisa Gill with J.P. Morgan.

John F. Rex: Yes, we'll go next to Lisa Gill with J.P. Morgan.

Lisa Christine Gill: Thanks very much and good morning. I want to focus for a minute on SG&A, which came in much better than expected. Can you maybe talk about the key components of where you're seeing cost savings, the durability? And Andrew, you touched a little bit about AI efficiencies there. Are you starting to see that in this quarter? And how much opportunity is there from an SG&A perspective when we think about AI?

Andrew Philip Witty: Um, Lisa, thanks so much for the question. I'm going to ask John to comment a little bit.

John F. Rex: Lisa, thanks so much for the question. I'm going to ask John to comment a little bit. Let me make a couple of kind of upfront comments and maybe a couple of examples more specifically to help you a little bit on this.

John F. Rex: Let me make a couple of kind of upfront comments and maybe a couple of examples more specifically to help you a little bit on this. So, you know, to get your last point, you know, we are running hundreds of AI use case deployments now. I'd say the first wave of those is essentially allowing us to do things much more quickly, much more reliably, much more efficiently than humans can do them. So an ability to navigate complexity, to find answers within complex data sets. And it's super important.

John F. Rex: So, you know, to get your last point, you know, we are running now hundreds of AI use case deployments. I'd say the first wave of those are essentially...

John F. Rex: Allowing us to do things much more quickly, much more reliably, much more efficiently than humans can do them. So an ability to navigate complexity, to find answers within complex data sets.

John F. Rex: And I'll give you a couple of examples of how that begins to help us as we go on. I think we are now, and you will also start to see as we roll through the end of this year and next year, those same kinds of tools begin to be deployed in a fundamental reimagination of business processes. So one is essentially allowing an existing process to run more efficiently. The second is, can we actually take steps out of a process and really start to change things? I'd call out payment integrity as a front runner in that particular regard.

John F. Rex: It's super important and I'll give you a couple of examples of how that begins to help us as we go on. I think we are now, you will also start to see as we roll through the end of this year and next year, those same kind of tools begin to be deployed in fundamental reimagination of business process.

John F. Rex: So one is essentially allowing an existing process to run more efficiently. The second is can we actually take steps out of a process and really start to change things.

John F. Rex: I'd call out payment integrity as a front-runner in that particular regard, and you'll start to see a lot of movement there over the next year or so, Lisa, and it's going to be, I think, OptumInsight 25, 26, 27, in terms of deployment of technology to change many of the processes that we've been used to for decades is coming, and that's going to be a very

John F. Rex: And you'll start to see a lot of movement there over the next year or so, Lisa. And it's going to be, I think, OptumInsight 25, 26, 27, in terms of the deployment of technology to change many of the processes that we've been used to for decades. And that's going to be a very exciting phase.

John F. Rex: If you look at the short run, I'll give you a couple of examples. And this plays a little bit around technology. I certainly wouldn't say these are all generative AI examples, but they're certainly digitization examples.

Lisa Christine Gill: exciting phase. If you look in the short run, I'll give you a couple of examples.

Lisa Christine Gill: And this plays a little bit around technology. I certainly wouldn't say these are all generative AI examples, but they're certainly digitization examples. They are certainly technology-enabled examples. So for example, we've brought on this year OptumRx.

John F. Rex: They are certainly technology-enabled examples. So, for example, we've brought OptumRx on this year. A record number of clients. You've seen the growth. You can imagine the number of folks who've been signed up for our RxPlatforms. We actually spent 9% less. So a zero increase in headcount in a business which has increased its served members by close to 40%. So those are just a couple of examples. You're seeing that show up in those two examples, Optum.

John F. Rex: A record number of clients. You've seen the growth. You can imagine the number of folks who've been signed up into our RxPlatforms. We actually spent 9% less.

John F. Rex: This year in the onboarding of that record volume than we did the prior year. 9% entirely due to digitization, technology, efficiency deployed through the organization. Let me take you to another part of the organization, OptumHealth.

John F. Rex: We've more or less increased our number of fully risk-delegated lives within OptumHealth by about 40% over the last two years.

John F. Rex: That's, by the way, that's in excess of a million, almost a million and a half more lives over that period, with zero increase in personnel headcount in the risk-based businesses.

John F. Rex: So, zero increase in headcount in a business which has increased its served members by close to 40%. So, those are just a couple of examples. You're seeing that show up in those two examples. Optum, that's why you're starting to see that leverage.

John F. Rex: That's why you're starting to see that leverage flow through the Optum business line. And it's something we obviously expect to continue to sustain over many, many quarters and years. And John, I'd love you to go a little deeper.

John F. Rex: flow through the Optum business line, and it's something we obviously expect to continue.

John F. Rex: Yeah, good morning, Lisa. As you can see, it is early in that journey in terms of the potential and opportunity for what we can do. And yes, it was a very, strong quarter in terms of cost management. But let me just step back a moment here.

John F. Rex: to sustain over many, many quarters and years. And John , I'd love you to go a little deeper.

John F. Rex: Yeah, good morning, Lisa. As you can, I guess I'd start by it is early in that journey in terms of the potential and opportunity.

John F. Rex: for what we can do. And yes, it was a very strong, strong quarter in terms of cost management. But let me just step back a moment here. You know, as you can imagine, given how some of these businesses

John F. Rex: So you know, as you can imagine, given how some of these businesses were built and the fragmentation of the system, there are duplicative functions and uneven consumer experiences throughout that we're addressing. And as our businesses begin to scale, our ability to produce efficiency accelerates, while at the same time, we can improve those customer experiences and expand the best practices across the broader base. These comments are the comments that Andrew was offering in his answer to your question.

John F. Rex: were built and the fragmentation of the system, there are duplicative functions and uneven consumer experiences throughout that we're addressing.

John F. Rex: And as our businesses begin to scale, our ability to produce efficiency accelerates. While at the same time, we can improve those customer experiences and expand the best practice across the broader base. The comments that Andrew was offering in his answer to your question.

John F. Rex: It's just really a natural outgrowth as these businesses begin to move beyond what we have viewed in the earliest phases to a more adolescent phase. That's what we're seeing very strongly this quarter. Over the longer term, we can expect progress, but I wouldn't expect it to remain at this level consistently. As we look ahead over the next few quarters, though, it was a super strong quarter, but we are going to look to invest in many of these items that Andrew just articulated here, getting to a more modern, streamlined experiences as these businesses evolve further. So I wouldn't expect it to persist right at this level as we make those investments, and we're anxious and ambitious to make those investments.

Andrew Philip Witty: It's just really a natural outgrowth as these businesses begin to move beyond what we have viewed the earliest phases to a more adolescent phase. That's what we're seeing.

Speaker Change: Very strong this quarter. Over the longer term we can expect advancement. I wouldn't expect it to remain at this level consistently as we look ahead over the next few quarters though. It was a super strong quarter, but we are going to look to invest in many of these items that Andrew just articulated here.

Andrew Philip Witty: Getting to a more modern streamlined experiences as these businesses evolve further. So I wouldn't expect it to persist right at this level as we make those investments and we're anxious and ambitious to make those investments.

Andrew Philip Witty: Great. So, Lisa, thanks for raising it. You can tell, you know; it's a big focus for us. We laid out when D28 first was announced that one of the three ways that we would respond to this is to double down on our own cost management, efficiency, and productivity. You're absolutely seeing that, and that coincides with an extraordinarily exciting moment around technological innovation, whether that's generative AI, or digitization, all wrapped together in our march toward a greater consumer focus within the organization. All of that really hangs together. It's the very core focus of how we think about things going forward. Thanks, Lisa.

Andrew Philip Witty: Great. So, Lisa, thanks for raising it. You can tell, you know, it's a big focus for us. We laid out when V28 first was announced.

Speaker Change: One of the three ways that we would respond to this is we would double down on our own cost management, efficiency, and productivity. You're absolutely seeing that.

Speaker Change: And that coincides with an extraordinarily exciting moment around technological innovation, whether that's generative AI, digitization, all wrapped together in our march toward a greater consumer focus within the organization. All of that really hangs together.

Speaker Change: is very much the core focus of how we think about things going forward. Thanks Lisa, next question.

Joshua Richard Raskin: We'll go next to Josh Raskin with Nefron Research.

Speaker Change: We'll go next to Josh Raskin with Nefron Research.

Joshua Richard Raskin: Hi, thanks. Good morning. Looking at your bids that you submitted for MA for 2025, I'd be curious if you could tell us if you were bidding to improve MA margins in 2025, or if you're still within that target range in light of the G&A savings. And then, more importantly, maybe just some early thoughts on what sort of growth assumptions you have included in those bids, both your assumptions for the market as well as any potential market share gains.

Joshua Richard Raskin: Hi, thanks. Good morning. Looking at your bids that you submitted for MA for 2025, I'd be curious if you could tell us if you were bidding to improve MA margins in 2025, or if you're still within that target range in light of the G&A savings.

Speaker Change: And then more importantly, maybe just some early thoughts on what sort of growth assumptions you have included in those bids, both your assumption for the market as well as any potential market share gains.

Andrew Philip Witty: Hey Josh, thanks so much. I'm going to ask Tim Noel to address the first part of your question. On the second part, you're not going to be surprised that I'm going to defer from making any predictions about next year. It's still a little early. We'd like to see where everybody else plays out in this cycle. I think we also saw in the 2024 cycle that, you know, ultimately, the way growth plays out in the marketplace depends on how everybody bids, not just on how you bid.

Dirk C. McMahon: and Dirk McMahon.

Speaker Change: Hey Josh, thanks so much. I'm going to ask Tim Noel to address the first part of your question. On the second part, you know, you're not going to be surprised that I'm going to defer from making any

Timothy John Noel: Predictions about next year still a little early. We'd like to see where everybody else plays out in this cycle. I think we also all saw in the 2024 cycle, you know, ultimately, ultimately, the way growth plays out in the marketplace depends on how everybody bids, not just on how you bid. And it only takes one bid to be kind of out of expectation to completely distort.

Andrew Philip Witty: And it only takes one bid to be kind of out of expectation to completely distort your view of how things could play out. So I'm going to defer a little bit on that one. But on the first point, Tim, I'd love you to make a few comments.

Tim: your view of how things could play out. So just going to defer a little bit on that one, but on the first point, Tim, I'd love you to make a few comments. Thanks, Josh, for the question. So as we think about margins in the MA business, and as it relates to our bid, I think we've talked about

Timothy John Noel: Yeah, thanks, Josh, for the question. So as we think about margins in the MA business and as it relates to our bid, I think we've talked about the consistent approach to how we plan margins. And we will continue to maintain that, and we're operating comfortably within that margin range, as we have in the past and as we're planning for 2025. And then when I think about, you know, our pricing approach for 2025, as Andrew mentioned, it's too early to get into a lot of specifics as CMS is reviewing those bids right now. But we're in a posture, and how we've priced those products, as we'll be comfortable with whatever growth is the outcome of the products that we bring to the marketplace in 2025. Right.

Tim: That's the consistent approach to how we plan margins.

Tim: and we maintain, continue to maintain that and we're operating.

Tim: Comfortably within that margin range as we have in the past and as we're planning in 2025.

Andrew Philip Witty: And when I think about our pricing approach for 2025, as Andrew mentioned, too early to get into a lot of specifics as CMS is reviewing those bids right now, but we're in a posture in how we've priced those products as we'll be comfortable.

Speaker Change: with whatever growth is the outcome of the products that we bring to marketplace in 2025. Great. Thanks so much, Tim and Josh. Appreciate the question. Next question, please.

Timothy John Noel: Right. Thanks so much, Tim and Josh.

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

Joshua Richard Raskin: Appreciate the question. Next question, please. We'll go next to Stephen Baxter with Wells Fargo. Yeah, hi, thanks. Can you speak in a little greater detail about your expectation that the Medicaid pressure will start to

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

Stephen C. Baxter: Yeah, hi, thanks.

Stephen C. Baxter: Can you speak in a little greater detail about your expectation that the Medicaid pressure starts to subside in the second half of the year? I guess, specifically, can you maybe speak to what you actually know about rates today, either draft or finalized, versus perhaps speaking to a general reliance on actuarially sound rates playing out over a reasonable period of time, just trying to understand the level of visibility that you have a bit better. Thank you.

Krista Nelson: Okay, hey Stephen, thanks for the question. I'm going to ask Krista Nelson, who leads our Medicaid business, to respond to that.

Krista Nelson: Okay, hey Stephen, thanks for the question. I'm going to ask Krista Nelson, who leads our Medicaid business, to respond to that question.

Krista Nelson: Yeah, thanks so much for the question. As it relates to visibility, you know, we've got visibility into the majority of our rates for 24. And while there's just a slight gap in the second quarter, we really like how our 7-1 rates are shaping up and continue to work with state partners to influence key assumptions before those rates become final in the future. And while we might see a little bit of dislocation the rest of the year, you know, states have really committed to accurately reflecting the change in acuity from redeterminations into current and future adjustments. And I really expect this to even out as we pace through the remainder of 24 and early 25. Thanks for the question.

Krista Nelson: Yeah, thanks so much for the question.

Krista Nelson: So, as it relates to visibility, you know, we've got visibility into the majority of our rates for 24, and while there's just a slight gap in the second quarter, we really like how our 7-1 rates are shaping up and continue to work with state partners to influence key assumptions before those rates become final in the future.

Krista Nelson: And while we might see a little bit of dislocation the rest of the year, you know, states have really committed to accurately reflecting the change in acuity from redeterminations into current and future adjustments and really expect this to even out as we pace through the remainder of 24 and early 25.

Andrew Philip Witty: Krista, thanks so much. So, listen, Stephen, I think, you know, you heard there why we're confident that this is really a kind of time-fenced issue. And, you know, in the grand scheme of things, I would characterize this as at the margin. You know, it's a part of what you've seen in this small deviation in Q2. But, you know, we don't really see it as a sustainable structural issue.

Andrew Philip Witty: And, and you heard exactly why just there. So thanks, Krista and Stephen. Thanks for your question. Next question, please.

Speaker Change: Thanks for the question.

Speaker Change: Krista, thanks so much. So I mean, listen, Stephen, I think, you know, you heard there, you know, why we're confident that this is really a kind of time fenced issue. And, you know, in the grand scheme of things, I would characterize this as at the margin.

Speaker Change: It's a part of what you've seen in this small deviation in Q2, but we don't really see it as a sustainably structural issue, and you heard exactly why just there. So thanks, Krista, and Stephen, thanks for your question. Next question, please.

Justin Lake: We'll go next to Justin Lake with Wolf Research.

Justin Lake: Thanks, good morning. Just a quick clarification and then a question about the second half of the MLR. So first, the clarification on the MLR, it sounded like John, you're guiding to a core MLR at the high end of the range or 84.5. And then I would add 30 basis points of the one-timer charges for the full year that you've seen in the first half, that would leave gap MLR at 84.8. Is this correct?

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

Justin Lake: Thanks, good morning. Just a quick clarification and then a question about second half MLR. So first the clarification on the MLR, it sounded like John

Justin Lake: You're guiding to a core MLR.

Justin Lake: at the high end of the range or 84.5.

Speaker Change: And then I would add 30 basis points of the one-timers for the full year that you've seen in the first half. That would leave gap MLR at 84.8.

Speaker Change: Is this correct, and to be clear, is there any expectation for further one-timers in the second half of the year, or should the third and fourth quarter kind of be clean? And then my question is just around core MLR in the first quarter, extra one-timers was 84-2.

John F. Rex: And to be clear, is there any expectation for further one-timers in the second half of the year, or should the third and fourth quarter kind of be clean? And then my question is just around core MLR in the first quarter; extra one-timers was 84.2. Sounds like it'll be 84.8 in the second half. Maybe you can help us think about 3Q versus 4Q just to make sure expectations are set correctly, given how much focus there is here. Thanks.

Speaker Change: Sounds like it will be 84-8 in the second half. Maybe you can help us think about 3Q versus 4Q just to make sure our expectations are set correctly given how much focus there is here. Thanks.

John F. Rex: Good morning Justin. I'd say first, yes, the way you described our assumptions around core at full year MLR are consistent with our expectations. So how you describe that is quite consistent. As it relates to just looking at the 3Q and such, I'd expect that to be in the neighborhood of 84%. Very likely a few tens of basis points higher than that, though, so kind of a little bit above that in that zone.

Speaker Change: Good morning, Justin. I'd say first, yes, the way you described our assumptions around core at full year MLR are consistent with our expectations. So how you describe that is quite consistent.

Speaker Change: As it relates to just looking at towards the 3Q and such, I'd expect that to be in the neighborhood of 84%. Very likely a few tens of basis points higher than that, though, but kind of a little bit above that.

John F. Rex: As it relates to kind of other elements that we've pulled out here, no, they shouldn't be material. Those cyber effects should continue to abate. You know, as we mentioned, we're not... We're not adjusting for the elements. We talked about the provider and coding intensity, so that kind of pulls through a little bit. But there shouldn't be any material other impacts that we're thinking about. Thank you.

Speaker Change: In that zone, as it relates to kind of other elements that we've pulled out here, no, they shouldn't be material. Those cyber effects should continue to abate. As we mentioned, we're not

Speaker Change: We're not adjusting for the elements. We talked about the provider and coding intensity So that kind of pulls through a little bit, but but there shouldn't be any material other impacts that we're thinking about. Thank you Thanks, John . Thanks, Justin. Next question, please

John F. Rex: Thanks, John. Thanks, Justin. Next question, please.

Scott J. Fidel: We'll go next to Scott Fidel with Stephen.

Speaker Change: We'll go next to Scott Fidel with Stevens.

Scott J. Fidel: Hi, thanks. Good morning.

Scott J. Fidel: Hi, thanks. Good morning. Actually, I was hoping we could maybe do a similar exercise as Justin just asked about with MLR for OptumHealth margins.

Scott J. Fidel: And maybe first, if you can talk about how...

Speaker Change: and I'm going to be talking about how the OH margins came in in 2Q relative to your expectations, and then how you're thinking about OH margins progressing in 3Q and 4Q, and then how comfortable you are with getting into that, you know, the four-year target.

Scott J. Fidel: Actually, I was hoping we could maybe do a similar exercise, as Justin just asked about with MLR, for OptumHealth margins, and maybe first, if you can talk about how the OH margins came in in 2Q relative to your expectations, and then how you're thinking about OH margins progressing in 3Q and 4Q, and then how comfortable you are with getting into that, you know, the 4-year target range that you had And John, I thought it might be helpful to, you know, as we think about the sort of pacing in the back half of the year, in particular, how you're thinking about an exit rate for OptumHealth margins as we're exiting 2024 would be helpful. Thanks.

John F. Rex: range that you had provided. And John, I thought it might be helpful to, you know, as we think about the sort of pacing in the back half of the year, in particular, how you're thinking about an exit rate for optimal health margins as we're exiting 2024 would be helpful. Thanks.

Amar A. Desai: Scott, thanks so much for your question. I'm going to ask Dr. Amar Desai, who leads OptumHealth, to give you a few comments there. I mean, let me just preface that by saying, look, you know, we feel very good about the continued progression and, in particular, the way in which OptumHealth has adjusted to deal with the new funding environment. I'm also very, very encouraged by the degree of external payer engagement with our OptumHealth platform as they deal with the environment themselves and look at OptumHealth as a part of that solution.

Speaker Change: Scott, thanks so much for your question. I'm going to ask Dr. Amar Desai, who leads OptumHealth, to give you a few comments there. I mean, let me just preface that by saying, look,

Amar A. Desai: You know, we feel good, very good about the continued progression and in particular the way in which OptumHealth has adjusted to deal with the new funding environment.

Speaker Change: I'm also very, very encouraged by the degree of

Speaker Change: External payer engagement with our OptumHealth platform as they deal with the environment themselves and look at OptumHealth as a part of that solution.

Amar A. Desai: And I think, you know, the performance of the business you see is, it continues to improve over last year; you continue to see, you know, decent progression. And let me ask Amar to give you a little bit of a sense of how he sees the second half of the year playing out.

Amar: And I think, you know, the performance of the business you see is, it continues to improve over last year. You continue to see, you know, decent progression. And let me ask Amar to give you a little bit of a sense of how he sees the second half of the year playing out.

Amar A. Desai: Hi Scott. Thanks for the question.

Alma: Hi, Scott. Thanks for the question. So, as Andrew said, we're in the middle of the first year of a large rate reduction over the next three years, effectively being a price cut.

Speaker Change: As we think about the initiatives, we're pleased with the early success, mitigating the impact of that changing rate environment. In 23, we developed a three-year plan to manage through V-28. Medical cost management and affordability initiatives was at the center of it.

Speaker Change: Proactive clinical engagement that impacts member experience and total cost of care is obviously core to that, including better prevention and chronic disease management.

Speaker Change: Disciplined Operating Cost Management, More Efficient Ways to Work, Improvements in Productivity, Driving Consistency in our Workflows and Systems, which Andrew and John alluded to.

Speaker Change: We're executing very well on this plan, seeing solid progress across each of these areas. As an example, at this time last year, we had engaged 62% of all members. Year-to-date, we've engaged three-fourths of all members and above that for our highest risk membership.

Speaker Change: We're also focused on coordination of care, particularly at transition points in care, where we've increased post-discharge visits for patients who have been hospitalized. That has, in fact, reduced readmission rates by 10% in our most mature markets.

Alma: So, as we pace through the balance of the year, we expect to continue to build on this momentum across engagement, affordability, and operating cost management, and are confident in the 7.78% target for the year. Great, Amar, thanks so much, and Scott, thanks again for the question. Next question, please.

Amar A. Desai: So, as Andrew said, we're in the middle of the first year of a large rate reduction over the next three years, effectively a price cut. And as we think about the initiatives, we're pleased with the early success, mitigating the impact of that changing rate environment. In 23, we developed a three-year plan to manage through V-28.

Amar A. Desai: Medical cost management and affordability initiatives were at the center of it. Proactive clinical engagement that impacts member experience and total cost of care is obviously core to that, including better prevention and chronic disease management. And then disciplined operating cost management, more efficient ways to work, improvements in productivity, and driving consistency in our workflows and systems, which Andrew and John alluded to. We're executing very well on this plan, seeing solid progress across each of these areas.

Amar A. Desai: As an example, at this time last year, we had engaged 62% of all members. Year-to-date, we've engaged three-fourths of all members, and above that for our highest risk membership. We're also focused on coordination of care, particularly at transition points in care, where we've increased post-discharge visits for patients who have been hospitalized. That has, in fact, reduced readmission rates by 10% in our most mature market. So as we pace through the balance of the year, we expect to continue to build on this momentum across engagement, affordability, and operating cost management and are confident in the 7.78% target for the year.

Amar A. Desai: Great Amar, thanks so much, and Scott, thanks again for the question. Next question, please.

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

Kevin Mark Fischbeck: We'll go next to Kevin Fischbeck with Banks America.

Kevin Mark Fischbeck: Great, thanks. I just wanted to clarify, I guess, something and then I think we're good.

Kevin Mark Fischbeck: Great, thanks. I just wanted to clarify, I guess, something that I have another question about. It wasn't clear to me what you were saying about, you know, no favorable reserve development. Does that mean that 800 million that you mentioned previously is still somehow in the numbers? Or is that, you know, kind of working its way through at the end of Q2? And then, I guess just trying to understand better where the outperformance is, because obviously, you guys have assumed 60 to 70 cents of change costs in your guidance, but reaffirmed the numbers, and it doesn't sound like Medicare is the answer, doesn't sound like Medicaid is the answer, change isn't the answer. So where has the outperformance come in that's allowed you to maintain guidance?

Kevin Mark Fischbeck: Another question, it wasn't clear to me what you were saying about, you know, no favorable reserve development. Does that mean the $800 million that you mentioned previously is still somehow?

Kevin Mark Fischbeck: In the numbers, or is that, you know, kind of worked its way through at the end of Q2, and then...

Speaker Change: I guess just trying to understand better where the outperformance is because obviously you guys have assumed 60 to 70 cents of

Speaker Change: of change costs in your guidance, but reaffirm the numbers and doesn't sound like Medicare is the answer, doesn't sound like Medicaid's the answer, change isn't the answer. So where where has the outperformance come in that's allowed you to maintain guidance? Thanks.

John F. Rex: Yeah, good morning, Kevin, it's John. So exactly what we said, there was nothing material going on in development, no favorable, no favorable P&L impacting development in the quarter, very similar to last quarter, in terms of there just being no impact. And in terms of just the comments, comments, sorry, questions regarding outperformance, well, maybe some across a number of the businesses in terms of where we're seeing very strong growth, certainly in our commercial health benefits businesses, we're seeing strong growth, and we're seeing margin progression in opt-in health.

Speaker Change: Yeah, good morning, Kevin, John . So yeah, so exactly what we said, there was nothing material there going on in development, no favorable.

Speaker Change: No favorable P&L-impacting development in the corridor. Very similar to last quarter, in terms of there was just no impacting there. And in terms of just the comments, sorry, questions regarding outperformance, well, maybe if some...

Speaker Change: across a number of the businesses in terms of where we're seeing, we're seeing very strong growth, certainly in our commercial health benefits businesses, we're seeing strong growth. We're seeing margin progression and often health. So we're seeing advancement. The really the

John F. Rex: So we're seeing advancement, the really strong approach that the team at MNR took until they looked at 24 in terms of overcoming the headwinds of V28, and the very disciplined approach they took to how they stepped out into the marketplace with the products that they took. Even with some of the elements that we talked about that were overcoming there, but certainly all those creating a good impact. Clearly, just across the company, the strong operating efficiencies that the company is driving.

Speaker Change: The strong approach that the team at MNR took until how they looked at 24 in terms of overcoming the headwinds of E28.

Speaker Change: and the very disciplined approach they took to how they stepped out into the marketplace with the products that they took even with some of the elements that we talked about that that were that were overcoming there but but certainly that all those creating a good impact from us.

Speaker Change: Clearly, just across the company, the strong operating efficiencies that the company is driving. Strong and sustained. As I said, look, we will continue to make investments, but really significant progress on that.

John F. Rex: Strong and sustained. As I said, look, we will continue to make investments, but really significant progress on that, and it still feels fairly early stage to us, as Andrew commented, in terms of the potential we have as we look over the next five years and this impact, and we're just getting some of these businesses to a maturity level where we think we can really harness that. Thank you. Yeah. Thanks, John.

Andrew Philip Witty: And it still feels fairly early stage to us, as Andrew commented, in terms of the potential we have as we look over the next five years and this impact, and we're just getting some of these businesses.

Andrew Philip Witty: to a maturity level, or he think we can really harness that. Thank you. Yeah. Thanks, Jon, and let me just also reiterate that point. I mean, part of what you're seeing here, kevin, is obviously, you know, the big, the big change this year was the V 28 funding cut price reduction, which obviously focuses.

Andrew Philip Witty: And let me just also reiterate that point. I mean, part of what you're seeing here, Kevin, is obviously the big change this year was the V28 funding cut and price reduction, which obviously focuses primarily on our Medicare Advantage business that Tim runs and the Optum Health business that Arma runs, both of whom are responding super well. But let's be clear. While those pricing cuts are focused on two businesses, Team UHG is responding, right?

Speaker Change: primarily on our Medicare Advantage business that Tim runs and the OptumHealth business that Arma runs, both of whom are responding super well. But let's be clear, you know, while those pricing cuts are focused on two businesses, Team UHG is responding, right, the entire corporation.

Andrew Philip Witty: The entire corporation is engaged in how it manages itself better, reduces costs across the company, leverages technology, accelerates our consumer agenda, all designed to play our part across the board in how we offset the pressure that's been inflicted on those two important businesses. It's why we're confident we can navigate this. I think you're seeing that in the performance of the business, and we're going to continue to do so. That's why I said what I said earlier today. Next question. This will go next to Andrew Mock with Barclays. Hi, good morning. The OptumInsight backlog

Speaker Change: is engaged in how it manages itself better, reduces cost across the company, leverages technology, accelerates our consumer agenda, all designed to play our part across the board in how we offset the pressure that's been

Speaker Change: Inflicted on those two important businesses. Why we're confident we can navigate this, I think you're seeing that in the performance of the business.

Speaker Change: And we're going to continue as why, you know, why I said what I said earlier today, you know, we're going to continue to focus on every aspect of our business to make sure that the model we've laid out, we believe is the right one for delivering best value care for patients is the one that prospers. And we're super confident in that.

Unknown Attendee: We'll go next to Andrew Mock with Barclays.

Speaker Change: Next question.

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

Unknown Attendee: Hi, good morning. The OptumInsight backlog was down about $200 million sequentially. Can you give us color on the drivers of that and the nature of conversations you're having with providers following the cyber attack? Do you expect further declines in the backlog this year? Thanks.

Unknown Attendee: Andrew, thanks so much for that. Let me ask Roger Connor to address that. It's pretty straightforward, but let me ask Roger to answer that, maybe give you a little bit more flavor of what he's seen.

Roger G. Connor: Andrew, thanks so much for that. Let me ask Roger Connor to address that, it's pretty straightforward, but let me ask Roger to answer that, maybe give you a little bit more flavor on what he's seen. Yeah, Andrew, thanks very much for the question. Just in terms of FACOG, obviously an important measure and there has been some impact from the change.

Roger G. Connor: Yeah, Andrew, thanks very much for the question. Just in terms of Black Dog, obviously an important measure, and there has been some impact from the Change event within that. What it doesn't include, obviously, is what we're doing in terms of bringing in new clients and what we're doing in our whole innovation space. But fundamentally, we're very confident in terms of performance going into next year. The cyber event, certainly from an impact on the overall health system, is now absolutely minimal.

Roger G. Connor: What it doesn't include, obviously, is what we're doing in terms of bringing in new clients and what we're doing in our halls.

Speaker Change: Innovation Space. But fundamentally, we're very confident in terms of the performance going into next year with the cyber event.

Roger G. Connor: When you look at our overall focus, it's now on driving that business recovery, and that's all about bringing volume back into the system. And we're seeing that actually really ramping up and seeing momentum and acceleration. We're not only trying to bring volume back into our current customers. We're also working to bring new clients in. And that's exciting because this event has really transformed the marketplace. They're looking for, again, access to innovation, access to security in the system.

Speaker Change: certainly from an impact on the overall health system is now absolutely minimal. When you look at our overall focus it's now on driving that business recovery and that's all about bringing volume back into the system and we're seeing that actually really ramping up and seeing momentum.

Speaker Change: and Acceleration. We're not only trying to bring volume back into our current customers.

Roger G. Connor: And that's what we've brought back, we've brought back a very secure system. And that is responding, we're seeing that momentum. You add that to the underlying strength of the OptumInsight business, again, only 15% of our overall business performance this year was planned. That's why we're confident in terms of getting back to our baseline performance in 2025. Right, thanks.

Speaker Change: We're also working to bring new clients in and that's exciting because this

Speaker Change: This event has really transformed the marketplace. They're looking forward.

Speaker Change: Again, access to innovation, access to security in the system, and that's what we've brought back. We've brought back a very secure system, and that is resonating, we're seeing that momentum. You add that to the underlying strength of the Optimum Insight business.

Speaker Change: Again, changed only 15% of our overall business performance this year, it was planned. That's why we're confident in terms of getting back to our reassigned performance in 2025. Great. Thanks so much, Roger. Thanks, Andrew. Next question.

Roger G. Connor: Great. Thanks so much, Roger. Thanks, Andrew. Next question.

Nathan Allen Rich: Next to Nathan Rich with Goldman Sachs

Speaker Change: Next to Nathan Rich with Goldman Sachs.

Nathan Allen Rich: Hi, good morning. Thanks for the question. I wanted to go back to the provider coding activity that you called out and ask, you know, maybe what you saw as a kind of change in the quarter and what actions you're taking to address this change. And is this pressure something that you accounted for in bids for next year? And then, if I could just have a very quick clarification on the change impact on EPS. You talked about the return to baseline performance in 2025. Does that mean you would expect to recover the 60 to 70%? That is in earnings this year. Thank you.

Nathan Allen Rich: Hi, good morning. Thanks for the question. I wanted to go back to the provider coding activity that you called out and ask, you know, maybe what you saw kind of change in the quarter and what actions you're taking to address this change. And is this pressure something that you accounted for in bids for next year? And then if I could just have some very quick clarification on the change impact on EPS. You talked about the return to baseline performance in 2025. Does that mean you would expect to recover the 60 to 70 cents that is in earnings this year? Thank you.

Brian Robert Thompson: Okay, thanks so much for the question, Nathan. Brian, if you'd like to go first, sure, I'll answer that.

Brian Robert Thompson: Sure, I'll answer that first part on the upshift that we saw in provider level of care coding patterns. We actually believe that was largely caused by our level of care waivers that we did during the cyber disruption. The reason we believe that is because we really saw a higher level of mix to inpatient versus observation after we went back to turning on our utilization management protocols, pretty distinct on April 15th and thereafter.

Brian: Okay, thanks so much for the question, Nathan. Brian , if you'd like to go first. Sure, I'll answer that first part on the upshift that we saw in provider level of care coding patterns. We actually believe that was largely induced by our level of care waivers that we did during the cyber disruption. The reason we believe that is we really saw a higher level of mix to inpatient versus observation after we went back to

Speaker Change: turning on our utilization management protocols pretty distinct on April 15th and thereafter. So that's why we see that certainly aware of that activity as we plan for 2025 in our bid. So really no concerns with respect to that feel like it's an anomaly tied to what we saw during our waiver. And we have reinforced our utilization management protocols and believe that these impacts will dampen as we pace through the remainder of the year.

Brian Robert Thompson: So that's why we see that, and we're certainly aware of that activity as we plan for 2025 in our bid. So really no concerns with respect to that, feel like it's an anomaly tied to what we saw during our waiver. And we have reinforced our utilization management protocols and believe that these impacts will dampen as we pace through the remainder of the year.

John F. Rex: Yeah, and regarding change, as you and we mentioned in our comments, and Roger mentioned, our ambition is to get back to baseline expectations for performance for that business in 2025. So those baseline expectations are what we would have expected prior to any of this happening. And clearly, this quarter, we increased the impact of the business disruption here. So as we bring those back, there's the pacing of those revenues coming back, taking sometimes a little bit more time to bring in. But that is actually our ambition, as we look ahead.

Speaker Change: Yeah, and regarding change, yes, as we mentioned in our comments and Roger mentioned, our ambition is to get back to baseline expectations performance for that business in 2025, so those baseline expectations being what we would have expected prior to any of this happening.

Speaker Change: and it clearly this quarter we have increased the the impact of the the business disruption here so as we bring those back there's

Speaker Change: You have the pacing of those revenues coming back, taking sometimes a little bit more time to bring in, but that is our ambition, actually, as we look ahead.

John F. Rex: Thanks, John, and Brian. I mean, again, you know, just on this business interruption piece, I think, in all honesty, we were a little optimistic in hindsight about the pace at which we thought people would come back in terms of putting their flow through the system once it was reconnected. I think as we've looked at the last several weeks, that momentum and pace, in particular as we look at new new clients coming in, as well as returning clients, feel good about where we are now.

Speaker Change: Thanks, John , Brian . I mean, again, you know, just on this business interruption piece, I mean, I think in all honesty, you know, we were a little optimistic in hindsight, at the pace at which we thought people would come back in terms of putting their flow through the system once it was reconnected.

Speaker Change: I think as we've looked at the last several weeks that momentum and pace in particular as we look at new new clients come in and as well as returning clients feel good about where we are now so

John F. Rex: So I think I was probably a little overly optimistic three months ago, but now I feel like we have this now and we're in a good position, and the rest of the year, we've got a clear path for how this plays out. And I think the platform that we've rebuilt is going to serve people extremely well. Next question. We'll go next to Erin Wright with Morgan Stanley. Great, thanks. So on the earlier topic of potential offsets, I wanted to ask about OptumRx and in relation to the recent level of

Speaker Change: I think probably a little over optimistic three months ago. I think now I feel like we have this now and we're in good position and the rest of the year we've got a clear path how this plays out. And I think the platform that we've rebuilt is going to serve people extremely well. Next question.

Erin Elizabeth Wilson Wright: We'll go next to Erin Wright with Morgan Stanley.

Speaker Change: We'll go next to Erin Wright with Morgan Stanley .

Erin Elizabeth Wilson Wright: Great, thanks. So on the earlier topic of potential offsets, I wanted to ask on OptumRx and with the recent level of industry attention kind of on the PBM business as well as kind of specialty pharmacy, how should we think about

Speaker Change: How those drivers are playing out relative to your expectations, whether it's biosimilars or GLP-1s, in terms of that therapeutic category, how should we think about those near-term drivers across OptumRx? Thanks.

Heather Rachelle Cianfrocco: Erin, thanks so much for the question. Let me ask Heather, who runs Optum, for us to make a couple of comments on that, if you don't mind, Heather.

Heather: Erin, thanks so much for the question. Let me ask Heather who runs Optum for us to make a couple of comments on that, if you don't mind, Heather.

Heather Rachelle Cianfrocco: Just basically, I think you can see in the quarter, just strong performance, maybe a couple of things I would just highlight for that. We've talked for a few years about the investments we've been making in OptumRx on both the PBM side and on the pharmacy side. You've seen the growth there in clients and just in volume, sort of the same with respect to volume within our existing clients as well.

Speaker Change: Sure.

Heather: Just basically, I think you can see in the quarter, just strong performance, maybe a couple of things I would just highlight for that. We've talked for a few years about the investments we've been making in OptumRx on both the PBM side, but also on the pharmacy side, PBM side, you've seen the growth there in client and just in volume, sort of same with respect to volume within our existing clients as well. We take that as a sign of strong retention of existing clients and continuing to perform with them. I think the thing I'd highlight on the PBM side is, I've said this before, the modular effect of the PBM business. We serve at

Heather Rachelle Cianfrocco: We take that as a sign of strong retention of existing clients and continuing to perform with them. I think the thing I'd highlight on the PBM side is, I've said this before, the modular effect of the PBM business. We serve at the pleasure of our clients, so what they need, we serve, and that is, we administer their benefits, and we offer the programs, and services to drive the affordability of medications for them in the best interest of their members.

Heather: Unknown Speaker, the privilege of our clients, so what they need, we serve. And that is we administer their benefit and we, you know, offer the programs, the services to drive affordability of medications for them in the best interest of their members. And we've brought a lot of products and services in the last year, two or three new products this market that are leading, differentiating in the marketplace.

Heather Rachelle Cianfrocco: We've brought a lot of products and services to the market in the last year, two or three new products in this market that are leading, differentiating in the marketplace that we are seeing our health plans and our employers take advantage of this year that are really market differentiators, and we're seeing that drive not just growth with health plans but growth in products and services. I think you're seeing that show up.

Speaker Change: that we are seeing our health plans and our employers.

Speaker Change: take advantage of this year that are really market differentiating. And we're seeing that drive not just growth with health plans, but growth in products and services. I think you're seeing that show up. The other thing you're seeing is the cost efficiency show up in the business, one of the, you know, Andrew brought up an example, and you're seeing some of the timing of supply chain efficiency. On the services side of the business, you mentioned specialty, I'd call out the diversification of the pharmacies in general. Remember, we've got the integrated behavioral health business, which continues to grow and expand.

Heather Rachelle Cianfrocco: The other thing you're seeing is cost efficiency show up in the business. Andrew brought up an example, and you're seeing some of the timing of supply chain efficiency. On the services side of the business, you mentioned specialty; I'd call out the diversification of the pharmacies in general. Remember we've got the integrated behavioral health business, which continues to grow and expand. It's a very differentiated business in that it's co-located, and it's specifically directed at those behavioral health members to ensure access and affordability and holistic care for individuals with mental health conditions.

Speaker Change: It's a very differentiated business in that it's co-located, and it's specifically directed at those behavioral health members to ensure access and affordability and holistic care to individuals with mental health conditions. And then our Frontier and our infusion services that really drive those specialty medications in-home, we're seeing continued need for that from our PBM clients, but also non-PBM clients. And so that's where we're really seeing that diversified growth. So you're just seeing that show up in continued, consistent performance in that business through the quarter.

Heather Rachelle Cianfrocco: And then our frontier and our infusion services that really drive those specialty medications in home, we're seeing continued need for that from our PBM clients but also non-PBM clients. And so that's where we're really seeing that diversified growth. So you're just seeing that show up in continued, consistent performance in that business through the quarter.

Heather Rachelle Cianfrocco: Heather, thank you. Erin, thanks so much for the question. We have time for one final question, please.

Speaker Change: Heather, thank you. Erin, thanks so much for the question. We have time for one final question, please.

Lance Arthur Wilkes: We'll go next to Lance Wilkes with Bernstein.

Lance Arthur Wilkes: Great, thanks. For OptumHealth, could you talk a little bit about what pricing has been like there? And on investor day, it seemed like you may have seen some improved pricing as far as global cap rates are concerned, and likewise, given higher global cap rates of the MA business, I was wondering whether or not we should be expecting continued improvement in that or whether there needs to be a retrenchment or retracing of that to kind of make up for what was given. And also, are you starting to exclude things from the global cap as you look at 2025? Thanks.

Speaker Change: We'll go next to Lance Wilkes with Bernstein.

Lance Wilks: Great, thanks. For OptumHealth, could you talk a little bit about...

Lance Arthur Wilkes: What pricing has been like there? And investor day, it seemed like

Lance Arthur Wilkes: You may have...

Lance Arthur Wilkes: seen some improved pricing as far as global cap rates and likewise given higher global cap rates of the MA business was wondering if 25 we should be expecting continued improvement in that or whether there needs to be a retrenchment or a retracing of that.

Speaker Change: to kind of make up for what was given, and also, are you starting to exclude things from global cap as you look at 2025? Thanks.

Andrew Philip Witty: Hey Lance, thanks for the question, and love the cheeky attempt at the end of the call to get us to predict, give you some numbers for 25. We're going to defer from that, but well done on the last ditch effort. I'm going to ask Alma to give you a little bit more of a kind of general sense of how we're seeing this, and please go ahead, Alma.

Speaker Change: Hey Lance, thanks for the question and uh...

Speaker Change: I love the cheeky attempt at the end of the call to get us to predict, give you some numbers for 25. We're going to defer from that, but well done on the last-ditch effort. I'm going to ask Alma to give you a little bit more of a kind of general sense of how we're seeing that, and please go ahead, Alma.

Amar A. Desai: Thanks for the question, Lance. Look, we continue to have very strong relationships across our over 100 plan partners. And, in fact, in a pretty dynamic rate and benefit environment, we've seen increased outreach from payers looking for an enduring partner that's very adept at operating within fully capitated value-based arrangements. In particular, the discussions have been productive around benefit design, funding, and market-level planning, and we're confident in the position as we go

Alma: Thanks for the question, Lance. Look, we continue to have very strong relationships across our over 100 plan partners, and in fact, in a pretty dynamic rate and benefit environment, we've seen increased outreach from payers looking for

Alma: an enduring partner that's very adept at operating within fully capitated value based arrangements.

Alma: In particular, the discussions have been productive around benefit design, funding, market level planning, and we're confident in the position as we go into 2025.

Amar A. Desai: We're down the path of adding plan partners as well as adding geographies for 2025. Foundational to those relationships and as we think about those arrangements is quality, the quality of care of our providers that are anchored in the community, our strong ability to drive clinical outcomes, achievement in STAR measures, and, of course, strong documentation and diagnosis. We also are seeing that the strength of our network that's aligned in geographies is an important focus area for plan partners, and of course, continued focus on clinical engagement, which I mentioned previously.

Alma: We're down the path in adding plan partners as well as adding geographies.

Alma: for 2025.

Alma: foundational within that to those relationships and as we think about those arrangements is quality.

Alma: Quality of care of our providers that are anchored in the community, our strong ability to drive clinical outcomes, improvements and achievement in STAR measures, and of course strong documentation and diagnosis.

Alma: We also are seeing that the strength of our network that's aligned in geographies is an important focus area for plan partners.

Alma: and of course continued focus on clinical engagement, which I mentioned previously. So when you take that together, great momentum across those areas gives us confidence as we drive value for our plan partners and as we pace through the next two years of the risk model changes and grow.

Amar A. Desai: So when you take all that together, great momentum across those areas gives us confidence as we drive value for our plan partners and as we pace through the next two years of risk model changes and growth.

Amar A. Desai: Amar, thank you very much, and as I think you could probably sense from those couple of answers that Amar has given you during the course of the call, Amar leads a very, very special team of people running a very, very special business in terms of what it's able to do on behalf of patients and the way it's able to provide a great work experience for the healthcare professionals and colleagues who work in that business. I'm very pleased with how the continuation of that business is progressing. We're coming toward the end of the call.

Alma: Thank you very much and as I think you could probably sense from those couple of answers that Amar has given you over the course of the call.

Amelie: Amelie is a very, very special team of people running a very, very special business in terms of what it's able to do on behalf of patients and the way it's able to.

Speaker Change: Provide a great work experience for the health care professionals and colleagues who work in that business. I'm very pleased with how the continuation of that business progresses.

Andrew Philip Witty: I'd like to thank you all for your questions this morning. As you have heard, our focus on fundamental execution, our restless spirit, and our ability to adapt to changing environments gives us great confidence. As we look ahead and as a testament to the hard work and discipline of the people of UnitedHealth Group who work every day to serve patients, consumers, and care providers efficiently and effectively, we appreciate your time this morning. Thank you.

Speaker Change: We're coming toward the end of the call. I'd like to thank you all for your questions this morning. As you've heard, our focus on fundamental execution, our restless spirit, and our ability to adapt to changing environments gives us great confidence.

Speaker Change: As we look ahead and as a testament to the hard work and discipline of the people of UnitedHealth Group who work every day to serve patients, consumers, and care providers, customers, efficiently and effectively. We appreciate your time this morning. Thank you.

Operator: Thank you.

Operator: This does conclude today's conference. We thank you for your participation.

Unknown Executive: This does conclude today's conference. We thank you for your participation.