UnitedHealth Group Incorporated

Good morning and welcome to United Health Group third 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 U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. Reconciliation of the non-GAAP to GAAP amounts is available on the Earnings Reports and SEC Filings section of the company's Investors page at www.unitedhealthgroup.com. Information presented on this call is obtained in earnings release we issued this morning and in our form 8K dated October 15th, 2019, which may be accessed from the investor's page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, Mr. David Wickman. Please go ahead.

Thank you. Good morning and thank you for joining us today. The 325,000 dedicated people of UnitedHealth Group made measurable progress again this quarter. and developing the next generation health system aligned to achieve better health outcomes at lower costs and improve patient and care provider experiences, increasing healthcare value for everyone, one person at a time. In turn, we delivered strong, well-balanced revenue and earnings growth across our business. Total revenues through the first three quarters of this year grew 8% year over year, or $13.4 billion to $181 billion. and adjusted earnings per share advanced 17% to $11.22. Operating cash flows were $12.3 billion, or 1.2 times net earnings. Both UnitedHealthcare and Optum contributed strongly to these results. Based on this year's year-to-date performance, we have increased our outlook for full-year 2019 adjusted earnings to a range of $14.90 to $15 per share. As always, we are focused on operating our businesses, lowering healthcare costs for people, advancing quality in the consumer experience, building on our strategic growth platforms, and driving innovative change and societal returns at scale, all designed to achieve the full and unique growth potential of this enterprise. We have a strong track record of thriving and fluid environments similar to the one we find ourselves in today. We are uniquely diverse with significant experience and weight in every aspect of healthcare, Medicare, Medicaid, and commercial coverages in both at-risk and self-funded forms, with considerable presence in healthcare services, including high-value healthcare delivery at emerging scale all across the United States. These are substantial, fast-growing businesses, not new initiatives. This diversity combined with a conscious adaptability orientation allows us to consistently perform for the people we serve and for you, our investors, through a wide and ever-changing spectrum of environmental conditions. Our growth agenda is purpose-built to align with the changes necessary to develop the next generation more modern and effective health system. We are reinventing healthcare delivery, now directly serving 25 million patients in 35 local U.S. markets and in South America. Transforming pharmacy care services, driving transparent, digitally-enabled, high-quality plan designs at lower costs with more consumer-responsive point-of-sale discounts, saving nearly $2,000 per person per year on average. Accelerating digital. Our consumer digital platform, serving nearly 20% of the U.S. population by January 2020, is being extended to include proprietary, deeply personalized Next Best Action recommendations within portable medical records maintained real-time for nearly 50 million Americans and their doctors. Engagement strategies and incentives around this data hold the potential to achieve double-digit cost of care reductions. And advancing consumer-centric benefits, our Bind, Nexus ACO, Allsavers, and Harmony products are beginning to gain considerable traction in the commercial markets this fall. And our Medicare Advantage and dual offerings are well positioned to again drive distinctive growth from the differentiated value we deliver to people. Our relentless focus on quality, experiences, and costs is increasingly apparent. Our NPS levels have never been higher. We just completed our regular three-year Medicare audit with exceptional results. Expected members in four stars or greater plans for 2021 payment year are at an all-time high of 84% at UHC, and a consistently strong 92% at Optum. Every one of our Medicaid states are referenceable. Our overall per capita health care cost trends have averaged well below 4% for the past half decade, even as we've expanded MA benefits. And our operating costs continue to come in line, preserving consumer premiums for medical care. I could go on. You should get a sense today that our business is progressing across multiple dimensions with many of our growth and performance efforts beginning to fall in place. Higher quality, better outcomes and experiences, lower costs, building the next generation health system in a socially conscious way. These have been and will continue to be the consistent themes for our enterprise, an enterprise built for growth. So with confidence, I turn you to our exceptional business leaders for updates on our businesses, and financial results and expectations, starting with Andrew Witte, CEO of Optum. Andrew.

Thank you, Dave. An aging population, increasing numbers of people with multiple chronic conditions, and the rise of increasingly costly therapies, most notably specialty medicines and gene therapy, are all challenges to achieve in a simpler, more cost-effective health system. Optum is addressing these areas through applied technology, distinctive clinical expertise, and an intense focus on improving the consumer and physician experience, all underpinned by an unparalleled set of assets with far-reaching data transformed into information by powerful analytic tools and deployed throughout the health system. We're making the system more transparent and simpler while bringing our core capabilities even more closely together to provide more fully integrated solutions and advance higher quality outcomes at a lower cost. OptumRx is treating patients holistically. aligning pharmacy, medical, and behavioral health needs using data and evidence-based protocols to enable end-to-end management of care. This approach has been honed over several years now and is making a meaningful difference for patients and customers. This includes deepening our capacity to serve people who need high-cost specialty drugs, including convenient, high-quality, and less costly access to specialty pharmaceuticals through direct delivery of infusion services. The number of patients we support with these services has more than doubled to 60,000 over the last five years, and we expect this number to more than triple over the next five years. Real-life savings are 30% to 50% per infusion versus an inpatient setting with comparable quality. OptumInsight continues to fuel a rapid technology and information innovation agenda across both UnitedHealthcare and Optum. Its increasingly diverse spectrum of best-in-industry capabilities are driving strong growth in backlog for an expanding client list of health systems, governments, health plans, and other health system participants with broader solution sets, such as those offered in the John Muir health announcement last quarter. Business momentum is accelerating as these solutions extend the positive impact Optum Insight is having on the cost and quality of the care experience. But today, I'd like to focus on how OptumCare The largest part of OptumHealth is positively impacting the health system. OptumCare works to form modern local health systems that are physician-led, technology-enabled and integrated to deliver the lowest total cost of care with exceptional outcomes and a better patient and physician experience. We empower primary care doctors with insights and information by focusing on proactive preventative medicines. We surround them with select high-performance specialists and provide in-home and outpatient services, care for people at the optimal site of service. We understand care delivery is an intensely local experience, so I'd like to provide a few examples of how OptumCare and our full range of capabilities are developing and delivering at a local level. Southern Nevada is among our most developed geographies and continues to grow rapidly. Our physician-based care has expanded by nearly 60% just since 2016. Our doctors are fully supported by opt-in data, analytics, technology, and a single medical record, allowing them to deliver exceptional care to more than 300,000 people, 85% of whom are in capitation arrangements. In the commercial population, our total cost of care is more than 10% lower than the competition. In Medicare Advantage, nearly all plans are four-star, with cost trends averaging well less than 1% per year over the last two years, and with EDIS quality measurements 20% better than peers. In Southern California, we're creating the most comprehensive accountable care platform in the region, now serving 1.5 million people through value-based arrangements, nearly triple the 2016 levels. Our OptumCare platform in Southern California serves 30 payers through a network of aligned physicians, 100 clinics, and our nearly 30 ambulatory surgery centres. With our geographic presence and integrated open system of care, we recently co-created with United Healthcare a distinctive product called Harmony that provides a seamless experience by uniting care and coverage, achieving 20% savings for people as compared to United Healthcare's comparable coverage offerings. In Texas, Our nationally recognized physician groups continue to deliver superior outcomes for patients, care providers, and benefit sponsors. This has enabled us to expand across the state from a single geography in San Antonio to communities like Dallas, Austin, and Houston. In 2020, we expect to serve more than 500,000 people in value-based care relationships across Texas, up from 200,000 in 2016. This advanced clinical model is producing a Medicare Advantage medical trend that runs at one-half the national average. Finally, in New Jersey, a newer stage region, we're taking major steps forward to augment and align with other OptumCare assets, integrating MedExpress urgent care centers and partnering our ambulatory surgery centers to create a more seamless experience for patients. Our advanced offerings deliver more than 15% lower total cost of care than peers in the commercial markets, and approximately 10% in Medicaid. Since 2016, our OptumCare practice in New Jersey has grown its physician base by 60%, and the number of consumers served has increased by 70%. To summarize, we are growing our physician base, applying data analytics and technologies, advancing collaboration, driving distinctive quality, and serving diverse payers to improve health outcomes at lower costs. We will further expand and deepen our local presence aligning and integrating our capabilities across OptumCare, as well as Optum more broadly, in areas including specialty pharmacy, behavioral health services, and community-based pharmacy dispensaries. All this to improve clinical quality, consumer and physician experiences, and cost structures in a growing number of OptumCare regions, leading to growth and earnings performance. With that, I'll turn it over to Dirk Maman, CEO of UnitedHealthcare.