UnitedHealth Group Incorporated

Good morning and welcome to the United Health Group fourth quarter and full year 2018 earnings conference call. A question and answer session will follow United Health Group's prepared remarks. As a reminder, this call is being recorded. Here is some important introductory information. This call contains forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical difference or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the Financial Reports and SEC Filing section of the company's Investors page at www.unitedhealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning in NR Forum 8K dated January 15, 2019, which may be accessed from the investor's page of the company's website. I will now turn the conference over to Chief Executive Officer of UnitedHealth Group, Mr. David Wickman. Please go ahead.

Good morning, everyone, and thank you for joining us today. At our investor conference just a few weeks ago, we provided an extensive and positive review of our business and expectations for 2019 and beyond. Our outlook today remains consistent with that view. We are strongly confident in the fundamentals of our business as we enter 2019. in our ability to invest, innovate, and grow, and in the breadth of opportunities across healthcare available to a company with the unique capabilities we have built over time to deliver ever more value to society and consistent results for our shareholders. The results we reported this morning bear that out. Full-year revenues exceeded $226 billion, growing 12% or $25 billion over 2017. Fourth quarter and full year 2018 adjusted earnings per share were stronger than our investor conference outlook, with full year adjusted earnings per share growing 28% to $12.88 per share. Revenues, operating earnings, and cash flows were in line with or ahead of the expectations for 2018 we discussed with you at that time. Optum's earnings were ahead and UnitedHealthcare's earnings were in line, and virtually all businesses closed out the year with strong momentum. Overall medical costs remain well controlled, and our positive forecast for 2019 remains consistent across all lines of business. We continue to address performance pressures in a handful of Medicaid markets in the fourth quarter as we executed actions on both structural costs and rate recovery to ensure 2019 will see a return to stronger margin levels for this business. Our nation is early in an exciting healthcare innovation wave, one we expect to help lead, which will drive growth at UnitedHealth Group for years to come. Our approach to this wave has several characteristics. flowing critical health information to all health care participants by linking physical interactions to digital channels supported by embedded proprietary clinical ontology and sophisticated data analytics designed to align and optimize performance. Engaging people in their health care, both individually and at scale, a difficult but essential step in improving people's health and finances. A step supported by our consumer digital platform, Rally, now with 22 million registered users on a multi-payer platform, and offering an expanded suite of services for UnitedHealthcare's Medicaid members as of January 1. Applying high-touch human interactions, again, singly at high volumes, to improve the consumer experience and drive better medical care outcomes. This is supported by our rapidly growing team of clinicians, like the physicians of Polyclinic in Seattle, who joined us at the end of 2018. Evolving pharmacy care services by advancing market-leading transparency, improved adherence and clinical effectiveness, combined with distinguished consumer value, ranging from point-of-care discounts that offer more affordable prescriptions and whole-person medical pharmacy management to a simpler transaction experience through market-leading digital support tools and services. and introducing innovative, lower-cost, consumer-centric health benefit designs and services, such as BIND, Colorado Doctors Plan, Motion, and Nexus ACO. This health care system will increasingly operate in a multi-payer and value-based context, with aligned incentives for care providers and consumers to make better health care decisions, leveraging deeply personalized information and clinical science. This modern approach produces measurable value and looks and feels refreshingly different than traditional healthcare today. So I hope you can see why we are energized by the opportunities ahead of us. With that, let me turn it to Optum's CEO, Andrew Witte, to discuss Optum's results and its unique market position and momentum heading into 2019. Andrew? Thank you, Dave.

Our focus is to accelerate the access to and integration of the individual strengths of Optum to deliver better healthcare and more affordability across the whole of the health system. In leveraging our data analytics capability to improve care pathways with local care delivery and pharmacy care services, we have unique potential to improve patient well-being and health while bringing healthcare costs under better control. Our ability to use data to better understand the next best action or better option for treatment allows us to significantly affect both the outcome as well as the cost per member for our clients and patients. Within OptumRx, the increasing impact of PreCheckMyScript and the growth of our infusion services illustrate how our expanding breadth of services are gaining significant market acceptance, growing share, and diversifying our earnings streams. Our momentum in pharmacy care services was excellent in 2018 with retained business rates in excess of 98% and several major new business awards from health plans and employer plan sponsors. We expect this to continue given the early positive signs in this year's selling season for 2020 business. In care delivery, our clinical leaders are applying clinical decision support based on evidence-based guidelines that promote better health and ensure the right care at the right time in the right setting. Today, 99% of OptumCare patients in our advanced form of Medicare value arrangements are in four-star plans or better, and OptumCare's average net promoter score is nearly 80, evidence of outstanding clinical outcomes and patient experiences. We achieved significantly lower total medical costs by keeping people healthier and avoiding unnecessary hospital use, which translates to up to 30% lower costs for our Medicare Advantage patients relative to original Medicare. Our increased number of our groups have been recognized for achieving lower costs for commercial customers as well. For example, our Reliant medical group was recognized as having the lowest total cost of care by the state of Massachusetts. We complement our medical groups with high-value ambulatory care services like our SCA surgery centers, MedExpress neighborhood care clinics, free over infusion capabilities, and Optum house calls. all of which support improving the quality, cost, and experience of healthcare. As we move forward, we will continue to build out our comprehensive portfolio of care delivery services in key markets, including through our pending combination with the DaVita Medical Group. By 2030, there will be over 80 million people in the U.S. with three or more chronic conditions, up from 30 million in 2015. More fully leveraging data analytics across all of Optum through digital and physical engagement with patients and physicians will be key to reducing costs and improving the value and experience for people in this increasingly resource-intensive market segment. We are building platforms that are convenient for the provider, ensuring the very best and most contemporary information is available to support each patient management decision. Initiatives including the rollout of the individual health record, adoption of emerging genomic knowledge, and full understanding of the implications of the data Optum manages will be key building blocks over the next year or two. Turning to Optum's financial results, full year 2018 revenue surpassed $100 billion for the first time. Revenue growth of over $10 billion for the year accelerated to 11% from 9% in 2017. And likewise, our operating margins once again strengthened across the Optum portfolio, with our overall operating earnings growing more than $1.5 billion, or 23%, to $8.2 billion, reflecting the leverage of Optum's scaled businesses and putting us in a strong baseline earnings position entering 2019. Looking ahead. The 150,000 people at Optum are incredibly enthusiastic about 2019 and our opportunities for longer-term growth and performance. We will continuously modernize our ways of working, seek solutions to improve value delivery to our clients and the patients we serve, and explore ways of aligning with others who strive in an accountable way to deliver quality care at lower cost. We are seeing the fruits of two decades' worth of strategic investments with strong business wins and pipelines and the many platform expansion opportunities we have in the United States alone, not to mention the global potential. As we continue to grow, invest, and diversify, we are just beginning to realize the potential that exists when we deploy Optum's cross-platform capabilities more fully on behalf of our customers and all of those we serve. Now, I'll turn the call over to Steve Nelson, UnitedHealthcare CEO.