UnitedHealth Group Incorporated

Good morning and welcome to the United Health Group second quarter 2019 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 the U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risk 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 earnings reports and SEC filing section of the company's investors page at www.unitedhealthgroup.com. Information represented on this call is contained in the earnings release we issued this morning and enter Form 8K, dated July 18, 2019, which may be accessed from the Investors page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, David Wickman. Please go ahead.

Good morning, and thank you for joining us. Today we reported strong, well-balanced revenue and earnings growth across our businesses, continuing trends of the last several years. We have considerable momentum improving the consumer, physician, and customer experience. applying rigorous net promoter disciplines within a culture built to serve people's most fundamental need, their health. Executing on our mission, helping people live healthier lives and helping make the health system work better for everyone, produces value for people, the health system, and society overall, and strong returns for our shareholders. In the first half of 2019, total revenues grew year over year by 9%, or $9.6 billion to $121 billion. Adjusted earnings per share advanced 18%. Both UnitedHealthcare and Optum contributed strongly to these results, generating total enterprise operating cash flows of $9.1 billion, or 1.3 times net earnings. Confidence in our ability to continue to advance our fundamental performance and profitable growth leads us to increase our outlook for full-year adjusted earnings to a new range of $17.40 from $14.70 to $14.90 per share. We are constantly developing and refining our differentiated set of core capabilities, enriching, integrating, and applying deep proprietary information sets to improve engagement and clinical decision-making, embedding modern analytics and technologies across the system to make it more interoperable, transparent, and efficient, and expanding the scope and effectiveness of our clinical capacities and aligning with others through value-based incentives to improve health outcomes while lowering costs. As we work in partnership with the care community and others, these competencies enable us to develop the next generation health system in a socially conscious way, a system that provides high quality, efficient, and fair access for all. You can see the latest evidence of our progress on a number of fronts. Our recently completed combination with the Vita Medical Group meaningfully expands OptumCare's nationwide network of physicians. The John Muir Health strategic relationship announced yesterday is unique in its breadth of services and demonstrates the role Optum can play when it is fully aligned with its customers, serving the needs of local communities. Continued OptumRx gains in employer, health plan, and coalition markets reflect the distinctive, more wide-ranging, and more modern consumer approaches OptiMARx applies to deliver value, addressing one of the most challenging burdens of healthcare, excessive drug and biologic costs. The first 20 million real-time interoperable individual health records are being scheduled for market deployment. We remain optimistic about the potential of these deeply personalized health records and associated Next Best Action recommendations to improve the health of people we serve and the overall system performance. Consumer engagement aligned to this actionable health information plays a critical role in developing the next generation health system. By the end of this year, Rally's digital engagement capacities will be available to nearly 20% of the U.S. population, solidifying its opportunity to advance individual health at scale. Physician data sharing and value-based incentives round out a true end-to-end alignment of a progressive health system. Value-based payments to care providers are growing at more than 15% in 2019, aligning incentives to practice high-quality care while improving the effective use of health system resources. We expect these value-based payments to ramp at an even more accelerated pace in the coming years. All of these and the examples offered by our business leaders today are only a partial reflection of the steady progress we are making in advancing our enterprise mission to make healthcare work for everyone, so everyone can live healthier lives. The results are compelling. We are lowering cost trends, steadily improving NPS, and achieving improved clinical outcomes leading to continued long-term sustainable performance and growth for our business. With that, I'll now turn to UnitedHealthcare's new Chief Executive Officer, Dirk McMahon. Most of you know Dirk from when he first joined UnitedHealthcare in 2003. Having worked in major leadership roles at United Healthcare, Optum, and United Health Group, he knows firsthand how to maximize the full capabilities of this enterprise, including the clinical capacities of Optum Health, the data, insights, and advanced technologies of Optum Insight, and the distinguished pharmacy care solutions offered by OptumRx. Dirk?

Thank you, Dave. I'm glad to be back at United Healthcare. I'm pleased with what I've seen in the first few weeks in the role. We don't need a major shift in direction, but we will sharpen our focus on delivering consistent growth performance across all market segments. An essential step to drive growth is consistently achieving superior operating and medical cost structures. Cost impacts member health when it is a barrier to getting care, and we need to address that even better for people. It's the primary driver of consumer satisfaction in NPS. When we improve satisfaction in NPS, we drive growth. We'll continue our intense focus on simplifying and improving the experience for people. Using our digital platforms and applications, we can improve our ability to help people navigate the complexities of healthcare and get people on effective care pathways. This creates a better clinical and service experience, which leads to better outcomes, cost containment, and satisfied members. Some of the essential elements of this include better information sharing with consumers and their doctors, creating aligned incentives among consumers, care providers, and UnitedHealthcare, tailoring products to consumer needs, providing digital and human navigators to support consumers in their health and care journeys, and offering practical technology at key decision points. Simplicity is vital to making healthcare easier. Our Navigate for Me offering simplifies and personalizes care for seniors with complex conditions. It provides them with a single point of contact for concierge services and a dedicated team of experts. Supported by a proprietary technology platform with integrated data, navigators help coordinate care through personalized care plans and address social determinants. Results have been positive, with a 14% reduction in hospitalizations and a 9% reduction in ER visits for patients with congestive heart failure. Navigate4Me dramatically improves NPS, now nearly 20 points higher than traditional approaches. With nearly 1,000 navigators now in place, we will continue to expand deployment and impact over the coming quarters. We have created simplified paths, enabling doctors to provide high-quality surgical procedures in ambulatory settings. These can be less than half the cost of traditional inpatient settings, with higher quality outcomes and greater consumer satisfaction. And our recently launched preferred lab networks create paths for patients and physicians and patients to use to lower cost testing facilities, make it easier to order labs electronically, and provide prompt turnaround times for results. From these examples and more across inpatient and outpatient services, we see an opportunity for more than $20 billion in potential annual savings and spend managed by UnitedHealthcare's employer and individual business alone in reducing unwanted variations in care, converting care to the most appropriate site of service, and aligning with high-performing delivery systems. We continue to diversify and extend our employer and individual business, organizing local systems of care physically, virtually, and digitally, building collaborative relationships with care providers and sharing data bidirectionally with them, and innovating around product designs. For example, our partnership with Centura Health announced last year in the Colorado Doctors Plan is achieving price points 20% lower than our broad access offerings. Some of the attributes driving this success include the use of effective referral patterns, timely texting with alternative care options when a patient registers at the emergency room, and virtual appointments. This is the type of total cost of care product innovation you should expect from us. Likewise, at community and state, medical cost and operational improvements are advancing nicely as planned. And on the growth front, we're preparing to serve more people later this year with our recently awarded North Carolina opportunity. Our businesses serving people who are duly eligible for Medicaid and Medicare continue to expand and perform well. The outlook for further growth in this category, and more broadly in the group and individual Medicare Advantage, remains exceptional. Year over year, we've grown by more than 540,000 people across these important areas, greater than 10%. We see significant macro revenue growth opportunities in these categories for years to come. As such, we will continue to invest in many ways, ranging from stable benefits to better coordination of care. For example, in 2020, we will provide all duly eligible members with a personal care coordinator to help manage their Medicaid and Medicare benefits and coordinate clinical needs such as appointment scheduling, filling prescriptions, and closing gaps in care. UnitedHealthcare's financial performance continues to be strong. Revenues grew 6% to $48.6 billion while operating earnings advanced 12% to $2.6 billion in the quarter. I'm looking forward to working with our team to further elevate UnitedHealthcare's performance from the strong position we hold today, delivering more value across multiple dimensions in healthcare. Now, let me turn it over to Andrew Witte, Chief Executive Officer of Optum.