UnitedHealth Group Incorporated

Good morning and welcome to the United Health Group third quarter 2023 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's some important introductory information. This call contains forward-looking statements under U.S. federal security laws. These statements are subject to risk and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the Financial and Earnings Reports section of the company's Investor Relations page at www.unitedhealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning and in our form 8K dated October 13th, 2023, 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 Witte.

Good morning, and thank you for joining us. The third quarter results we reported today reflect well-balanced and durable growth. supported by disciplined execution, and a steadfast commitment to ensure high-quality comprehensive care is well within reach for every person we're privileged to serve. Evolution in our marketplace, including regulatory changes, means agility and adaptability must continue to be defining characteristics of our company. The people of Optum and UnitedHealthcare continuously strive to find new ways to innovate, serve, and grow. As a direct result of their mission-driven focus, this year we'll serve even more people more comprehensively than anticipated in the outlook we offered at the end of 2022. By the close of this year, we will serve nearly 900,000 additional patients under value-based care arrangements at Optum Health, almost 1 million new consumers across UnitedHealthcare's Medicare Advantage offerings, and a total more than 1.5 billion scripts to the people who rely on OptumRx. Based on this performance, we're strengthening our 2023 adjusted earnings outlook to a range of $24.85 to $25 per share. The confidence we have in our sustained long-term growth outlook is exemplified by the 14% third quarter revenue increase we reported this morning. more than $11 billion above last year. The sources of this growth will drive many more years of strong performance. Value-based care is the centerpiece of our long-term strategy, precisely because it delivers on the promise of high-quality clinical outcomes and experiences at lower cost than traditional models. This year, we expect OptumHealth will serve more than 4 million people in fully accountable relationships, almost twice as many people as we served just two years ago. Many of these patients have serious health challenges, few economic resources, and until now, often had limited access to care or the type of care they truly need. Ramping up to engage these patients requires significant upfront investment and high touch reach. These early efforts ensure we can address patients' unique needs and design personalized care plans that drive better health outcomes, increase quality of life, and deliver cost savings throughout the health system. Making investments to serve people who have endured far too many barriers to care is an easy choice for us all. In 2023, you have seen both our commitment and financial capacity to invest. to further enable our ability to serve and to grow far into the future. In recent years, we've invested significant resources in building our capabilities to care for people most effectively for the life or health stage they find themselves in, whether they need preventative or palliative care or are best served in a clinic at home or virtually. In particular, we're advancing our ability to care for people in their homes and integrating that physical care with our pharmacy and behavioral offerings. This work means developing an even more versatile clinical workforce to serve consumers in more ways through clinic-based OptumCare delivery capabilities and extending our reach to consumers who may not have ready access to physical clinics. Medicare Advantage continues to be a powerful force in driving superior health outcomes for consumers and in helping to lower costs at the system level. Today, about half of all seniors in the U.S. have chosen Medicare Advantage over traditional Medicare, and that number will continue to expand for very good reasons. The results are well documented. Medicare Advantage outperforms traditional fee-for-service for seniors on many measures, including lower rates of hospitalization, and they spend up to 45% less out-of-pocket compared to those in Medicare fee-for-service. Importantly, this high value for consumers is delivered at a lower cost to the health system. UnitedHealthcare serves more people in high-quality four-star and higher Medicare Advantage plans than any other organization. Looking to the 2024 enrollment period, which begins Sunday, we're confident our offerings will again resonate with consumers as they prioritize high-quality care and stable benefits. In the reduced funding environment health plans face, I credit our teams for investing in the areas consumers value most, including zero dollar premium plans, no co-pays for primary, virtual, and preventative care, and no co-pays for hundreds of the most commonly prescribed drugs. I want to highlight one more aspect of our growth story, the consistently strong performance of our pharmacy businesses. Pharmacy, as you know, is the most common consumer touchpoint in healthcare. What consumers and employers want more than anything is access to the most effective treatments in the moment they need them for the lowest possible cost. OptumRx is delivering on those expectations. This most recent selling season is on track to be among our strongest, reflecting a combination of new clients and retention rates in the very high 90s. And as the coming season for 2025 develops, we're expecting another year of robust growth. Our clients tell us they value the enhancements we are making to our pharmacy offerings, providing them transparency and choice while also integrating new tools and capabilities. Notably, our pharmacy service offerings go far beyond the foundational benefit management capabilities and now account for about half of all OptumRx revenues. We continue to expand the reach of our community pharmacies and our diverse specialty and infusion offerings are growing double digits. Driving this expanding market demand is the enormous pressure facing employers, health plans, governments and others to manage and respond to manufacturer list pricing. The services offered by OptumRx and others are the only counterbalance to drug company pricing. The foundational business objectives for PBMs is to lower costs and make medicines more affordable and accessible for individuals and families. PBMs are the only entities in the drug supply chain with that exclusive focus and incentive, and we're honored to play this critical role. These pillars of our growth, value-based care, pharmacy, and our innovative benefits businesses, alongside our health technology and financial service capabilities, underpin our ability to develop ever stronger value propositions for the people who receive and those who pay for care, and support our confidence in a future of growth. And with that, I'll pass it to Dirk McMahon, our President and COO.

Thanks, Andrew. I recently hosted UnitedHealthcare's National Accounts Forum, where we bring together client leaders twice a year to share ideas and gather feedback. These are some of the biggest and most sophisticated companies in America that collectively employ and sponsor coverage for millions of people. And to no surprise, healthcare costs top their list of concerns, especially the rising cost of drugs. In addition, they want innovation, new tools to help their employees take full advantage of their benefits, achieve better health outcomes, and save money. And of course, it has to be digital. Let me offer a few examples of innovation that have fueled our growth outlook, starting with our mobile platform, the primary access point for millions of UHC members. Each year, we add new capabilities to provide consumers with increased on-demand care access, highly personalized information about their benefits, real-time support, cost estimation tools, integrated pharmacy capabilities, and enhanced rewards. Another example, our newest and fastest-growing commercial offerings which feature no annual deductibles and incentivize people to make good healthcare choices by offering an unprecedented view into quality and cost. When seeking care options, consumers see potential care providers' latest reviews and quality designations, and they see what they will actually pay for their care, which will help them make the most informed decisions. UnitedHealthcare members in these offerings are receiving more preventative care while paying about 50% less out of pocket compared to people enrolled in traditional offerings. And their employers can reduce the total cost of care with an average savings of 11%. These results are why such new offerings are among our fastest growing. Beyond these consumer facing innovations, we're leveraging the latest technologies to create greater operational capacity and productivity so we can better serve consumers and focus on the highest value work. Our teams are significantly improving how quickly we respond to the millions of benefit questions we receive each year. We are using AI and natural language processing to expedite call documentation. to rapidly generate accurate summaries of consumer interactions with our contact centers, saving millions of dollars in administrative work and freeing up capacity for our people to prioritize engagement. We're also utilizing these technologies to translate and interpret unstructured data, such as physician notes, which will help, for example, provide deeper insights for life sciences customers so they can better assess the efficacy of their treatments. Of course, these are just a few of the hundreds of AI applications powered by OptumInsight we are actively developing, testing, and deploying today to further elevate the consumer and care provider experience while driving increased quality and lower costs. And with that, I'll turn it over to our CFO, John Rex.