UNITEDHEALTH GROUP INC - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

Form 10-Q

__________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission File Number: 1-10864

__________________________________________________________

UnitedHealth Group Incorporated

(Exact name of registrant as specified in its charter)

__________________________________________________________


Delaware		41-1321939
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
UnitedHealth Group Center		55343
9900 Bren Road East
Minnetonka,	Minnesota
(Address of principal executive offices)		(Zip Code)

(952) 936-1300

(Registrant’s telephone number, including area code)

_________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value

UNH

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2022, there were 934,349,073 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.

UNITEDHEALTH GROUP

Table of Contents


			Page

Part I. Financial Information
Item 1.	Financial Statements (unaudited)		1
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021		1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021		2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021		3
	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022 and 2021		4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021		6
	Notes to the Condensed Consolidated Financial Statements		7
	1.	Basis of Presentation	7
	2.	Investments	8
	3.	Fair Value	10
	4.	Medical Costs Payable	11
	5.	Short-Term Borrowings and Long-Term Debt	11
	6.	Dividends	12
	7.	Commitments and Contingencies	12
	8.	Business Combinations	13
	9.	Segment Financial Information	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		24
Item 4.	Controls and Procedures		25
Part II. Other Information
Item 1.	Legal Proceedings		25
Item 1A.	Risk Factors		25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 6.	Exhibits		27
Signatures			28

PART I

ITEM 1. FINANCIAL STATEMENTS

UnitedHealth Group

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions, except per share data)	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	38,845	$	21,375
Short-term investments	3,682		2,532
Accounts receivable, net	17,047		14,216
Other current receivables, net	13,684		13,866
Assets under management	4,022		4,449
Prepaid expenses and other current assets	5,657		5,320
Total current assets	82,937		61,758
Long-term investments	41,557		43,114
Property, equipment and capitalized software, net	9,469		8,969
Goodwill	83,904		75,795
Other intangible assets, net	10,785		10,044
Other assets	14,412		12,526
Total assets	$	243,064	$	212,206
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable	$	29,064	$	24,483
Accounts payable and accrued liabilities	27,232		24,643
Short-term borrowings and current maturities of long-term debt	3,229		3,620
Unearned revenues	12,847		2,571
Other current liabilities	28,563		22,975
Total current liabilities	100,935		78,292
Long-term debt, less current maturities	45,438		42,383
Deferred income taxes	1,659		3,265
Other liabilities	12,111		11,787
Total liabilities	160,143		135,727
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests	4,857		1,434
Equity:
Preferred stock, $0.001 par value - 10 shares authorized; no shares issued or outstanding	—		—
Common stock, $0.01 par value - 3,000 shares authorized; 935 and 941 issued and outstanding	10		10
Retained earnings	83,722		77,134
Accumulated other comprehensive loss	(9,086)		(5,384)
Nonredeemable noncontrolling interests	3,418		3,285
Total equity	78,064		75,045
Total liabilities, redeemable noncontrolling interests and equity	$	243,064	$	212,206

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share data)	2022		2021		2022		2021
Revenues:
Premiums	$	64,491	$	56,967	$	192,457	$	168,686
Products	9,190		8,703		28,026		25,476
Services	6,700		6,164		19,717		18,181
Investment and other income	513		503		1,175		1,511
Total revenues	80,894		72,337		241,375		213,854
Operating costs:
Medical costs	52,635		47,302		157,251		138,752
Operating costs	11,663		10,725		34,773		31,307
Cost of products sold	8,306		7,802		25,389		23,034
Depreciation and amortization	828		796		2,418		2,332
Total operating costs	73,432		66,625		219,831		195,425
Earnings from operations	7,462		5,712		21,544		18,429
Interest expense	(516)		(422)		(1,416)		(1,229)
Earnings before income taxes	6,946		5,290		20,128		17,200
Provision for income taxes	(1,562)		(1,099)		(4,397)		(3,659)
Net earnings	5,384		4,191		15,731		13,541
Earnings attributable to noncontrolling interests	(122)		(105)		(372)		(327)
Net earnings attributable to UnitedHealth Group common shareholders	$	5,262	$	4,086	$	15,359	$	13,214
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic	$	5.63	$	4.33	$	16.37	$	14.00
Diluted	$	5.55	$	4.28	$	16.15	$	13.82
Basic weighted-average number of common shares outstanding	935		943		938		944
Dilutive effect of common share equivalents	13		12		13		12
Diluted weighted-average number of common shares outstanding	948		955		951		956
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents	3		1		3		2

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Net earnings	$	5,384	$	4,191	$	15,731	$	13,541
Other comprehensive loss:
Gross unrealized losses on investment securities during the period	(1,471)		(192)		(4,825)		(705)
Income tax effect	340		59		1,109		175
Total unrealized losses, net of tax	(1,131)		(133)		(3,716)		(530)
Gross reclassification adjustment for net realized losses (gains) included in net earnings	138		(20)		134		(36)
Income tax effect	(32)		4		(31)		8
Total reclassification adjustment, net of tax	106		(16)		103		(28)
Total foreign currency translation losses	(331)		(621)		(89)		(484)
Other comprehensive loss	(1,356)		(770)		(3,702)		(1,042)
Comprehensive income	4,028		3,421		12,029		12,499
Comprehensive income attributable to noncontrolling interests	(122)		(105)		(372)		(327)
Comprehensive income attributable to UnitedHealth Group common shareholders	$	3,906	$	3,316	$	11,657	$	12,172

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income				Nonredeemable Noncontrolling Interests		Total Equity
Three months ended September 30, (in millions)	Shares	Amount						Net Unrealized (Losses) Gains on Investments		Foreign Currency Translation Losses
Balance at June 30, 2022	935	$	10	$	—	$	80,540	$	(2,165)	$	(5,565)	$	3,385	$	76,205
Net earnings						5,262						99		5,361
Other comprehensive loss								(1,025)		(331)				(1,356)
Issuances of common stock, and related tax effects	2	—		294										294
Share-based compensation				163										163
Common share repurchases	(2)	—		(462)		(538)								(1,000)
Cash dividends paid on common shares ($1.65 per share)						(1,542)								(1,542)
Redeemable noncontrolling interests fair value and other adjustments				5										5
Acquisition and other adjustments of nonredeemable noncontrolling interests												32		32
Distribution to nonredeemable noncontrolling interests												(98)		(98)
Balance at September 30, 2022	935	$	10	$	—	$	83,722	$	(3,190)	$	(5,896)	$	3,418	$	78,064

Balance at June 30, 2021	943	$	10	$	—	$	73,090	$	927	$	(5,013)	$	3,008	$	72,022
Net earnings						4,086						86		4,172
Other comprehensive loss								(149)		(621)				(770)
Issuances of common stock, and related tax effects	1	—		291										291
Share-based compensation				159										159
Common share repurchases	(2)	—		(365)		(685)								(1,050)
Cash dividends paid on common shares ($1.45 per share)						(1,367)								(1,367)
Redeemable noncontrolling interests fair value and other adjustments				(85)										(85)
Acquisition and other adjustments of nonredeemable noncontrolling interests												(26)		(26)
Distribution to nonredeemable noncontrolling interests												(87)		(87)
Balance at September 30, 2021	942	$	10	$	—	$	75,124	$	778	$	(5,634)	$	2,981	$	73,259

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)				Nonredeemable Noncontrolling Interests		Total Equity
Nine months ended September 30, (in millions)	Shares	Amount						Net Unrealized Gains (Losses) on Investments		Foreign Currency Translation Losses
Balance at January 1, 2022	941	$	10	$	—	$	77,134	$	423	$	(5,807)	$	3,285	$	75,045
Net earnings						15,359						281		15,640
Other comprehensive loss								(3,613)		(89)				(3,702)
Issuances of common stock, and related tax effects	6	—		801										801
Share-based compensation				639										639
Common share repurchases	(12)	—		(1,679)		(4,321)								(6,000)
Cash dividends paid on common shares ($4.75 per share)						(4,450)								(4,450)
Redeemable noncontrolling interests fair value and other adjustments				239										239
Acquisition and other adjustments of nonredeemable noncontrolling interests												135		135
Distribution to nonredeemable noncontrolling interests												(283)		(283)
Balance at September 30, 2022	935	$	10	$	—	$	83,722	$	(3,190)	$	(5,896)	$	3,418	$	78,064

Balance at January 1, 2021	946	$	10	$	—	$	69,295	$	1,336	$	(5,150)	$	2,837	$	68,328
Net earnings						13,214						254		13,468
Other comprehensive loss								(558)		(484)				(1,042)
Issuances of common stock, and related tax effects	6	—		839										839
Share-based compensation				559										559
Common share repurchases	(10)	—		(586)		(3,364)								(3,950)
Cash dividends paid on common shares ($4.15 per share)						(3,915)								(3,915)
Redeemable noncontrolling interests fair value and other adjustments				(812)		(106)								(918)
Acquisitions and other adjustments of nonredeemable noncontrolling interests												125		125
Distribution to nonredeemable noncontrolling interests												(235)		(235)
Balance at September 30, 2021	942	$	10	$	—	$	75,124	$	778	$	(5,634)	$	2,981	$	73,259

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
(in millions)	2022		2021
Operating activities
Net earnings	$	15,731	$	13,541
Noncash items:
Depreciation and amortization	2,418		2,332
Deferred income taxes	(590)		373
Share-based compensation	675		591
Other, net	—		(195)
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
Accounts receivable	(2,563)		(847)
Other assets	(741)		(1,435)
Medical costs payable	4,192		3,925
Accounts payable and other liabilities	1,416		1,171
Unearned revenues	10,201		(331)
Cash flows from operating activities	30,739		19,125
Investing activities
Purchases of investments	(14,183)		(12,827)
Sales of investments	5,376		2,569
Maturities of investments	4,740		6,556
Cash paid for acquisitions, net of cash assumed	(7,154)		(4,727)
Purchases of property, equipment and capitalized software	(1,936)		(1,759)
Other, net	50		(900)
Cash flows used for investing activities	(13,107)		(11,088)
Financing activities
Common share repurchases	(6,000)		(3,950)
Cash dividends paid	(4,450)		(3,915)
Proceeds from common stock issuances	1,084		1,077
Repayments of long-term debt	(2,100)		(1,900)
Repayments of short-term borrowings, net	(16)		(1,301)
Proceeds from issuance of long-term debt	5,922		6,934
Customer funds administered	7,028		1,402
Purchases of redeemable noncontrolling interests	(176)		(1,338)
Other, net	(1,458)		(837)
Cash flows used for financing activities	(166)		(3,828)
Effect of exchange rate changes on cash and cash equivalents	4		(45)
Increase in cash and cash equivalents	17,470		4,164
Cash and cash equivalents, beginning of period	21,375		16,921
Cash and cash equivalents, end of period	$	38,845	$	21,085

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

UnitedHealth Group Incorporated (individually and together with its subsidiaries, “UnitedHealth Group” and the “Company”) is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two distinct, yet complementary business platforms — Optum and UnitedHealthcare — are working to help build a modern, high-performing health system through improved access, affordability, outcomes and experiences for the individuals and organizations the Company is privileged to serve.

The Company has prepared the Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, these Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and the Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC (2021 10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly.

Use of Estimates

These Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates relate to estimates and judgments for medical costs payable and goodwill. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the period in which the estimate is adjusted.

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2. Investments

A summary of debt securities by major security type is as follows:


(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2022
Debt securities - available-for-sale:
U.S. government and agency obligations	$	3,752	$	—	$	(299)	$	3,453
State and municipal obligations	7,380		2		(621)		6,761
Corporate obligations	22,533		1		(2,057)		20,477
U.S. agency mortgage-backed securities	6,868		1		(875)		5,994
Non-U.S. agency mortgage-backed securities	3,164		—		(295)		2,869
Total debt securities - available-for-sale	43,697		4		(4,147)		39,554
Debt securities - held-to-maturity:
U.S. government and agency obligations	538		—		(16)		522
State and municipal obligations	29		—		(4)		25
Corporate obligations	74		—		—		74
Total debt securities - held-to-maturity	641		—		(20)		621
Total debt securities	$	44,338	$	4	$	(4,167)	$	40,175
December 31, 2021
Debt securities - available-for-sale:
U.S. government and agency obligations	$	3,206	$	23	$	(31)	$	3,198
State and municipal obligations	6,829		297		(20)		7,106
Corporate obligations	20,947		372		(145)		21,174
U.S. agency mortgage-backed securities	5,868		88		(55)		5,901
Non-U.S. agency mortgage-backed securities	2,819		42		(23)		2,838
Total debt securities - available-for-sale	39,669		822		(274)		40,217
Debt securities - held-to-maturity:
U.S. government and agency obligations	511		2		(2)		511
State and municipal obligations	30		2		—		32
Corporate obligations	100		—		—		100
Total debt securities - held-to-maturity	641		4		(2)		643
Total debt securities	$	40,310	$	826	$	(276)	$	40,860

The Company held $3.4 billion and $3.5 billion of equity securities as of September 30, 2022 and December 31, 2021, respectively. The Company’s investments in equity securities primarily consist of employee savings plan related investments, other venture investments and shares of Brazilian real denominated fixed-income funds with readily determinable fair values. Additionally, the Company’s investments included $1.6 billion and $1.3 billion of equity method investments in operating businesses in the health care sector as of September 30, 2022 and December 31, 2021, respectively. The allowance for credit losses on held-to-maturity securities at September 30, 2022 and December 31, 2021 was not material.

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The amortized cost and fair value of debt securities as of September 30, 2022, by contractual maturity, were as follows:


	Available-for-Sale				Held-to-Maturity
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,840	$	3,809	$	330	$	326
Due after one year through five years	12,565		11,755		257		246
Due after five years through ten years	12,172		10,608		34		32
Due after ten years	5,088		4,519		20		17
U.S. agency mortgage-backed securities	6,868		5,994		—		—
Non-U.S. agency mortgage-backed securities	3,164		2,869		—		—
Total debt securities	$	43,697	$	39,554	$	641	$	621

The fair value of available-for-sale debt securities with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:


	Less Than 12 Months				12 Months or Greater				Total
(in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
September 30, 2022
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,484	$	(170)	$	866	$	(129)	$	3,350	$	(299)
State and municipal obligations	5,811		(470)		833		(151)		6,644		(621)
Corporate obligations	15,374		(1,292)		4,364		(765)		19,738		(2,057)
U.S. agency mortgage-backed securities	4,201		(517)		1,609		(358)		5,810		(875)
Non-U.S. agency mortgage-backed securities	2,182		(172)		670		(123)		2,852		(295)
Total debt securities - available-for-sale	$	30,052	$	(2,621)	$	8,342	$	(1,526)	$	38,394	$	(4,147)
December 31, 2021
Debt securities - available-for-sale:
U.S. government and agency obligations	$	1,976	$	(18)	$	249	$	(13)	$	2,225	$	(31)
State and municipal obligations	1,386		(19)		31		(1)		1,417		(20)
Corporate obligations	9,357		(130)		376		(15)		9,733		(145)
U.S. agency mortgage-backed securities	3,078		(52)		116		(3)		3,194		(55)
Non-U.S. agency mortgage-backed securities	1,321		(18)		114		(5)		1,435		(23)
Total debt securities - available-for-sale	$	17,118	$	(237)	$	886	$	(37)	$	18,004	$	(274)

The Company’s unrealized losses from debt securities as of September 30, 2022 were generated from approximately 36,000 positions out of a total of 40,000 positions. The Company believes that it will collect the timely principal and interest due on its debt securities that have an amortized cost in excess of fair value. The unrealized losses were caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities that impacted the Company’s assessment on collectability of principal and interest. At each reporting period, the Company evaluates available-for-sale debt securities for any credit-related impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the expected cash flows, the underlying credit quality and credit ratings of the issuers noting no significant credit deterioration since purchase. As of September 30, 2022, the Company did not have the intent to sell any of the available-for-sale debt securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary. The allowance for credit losses on available-for-sale debt securities at September 30, 2022 and December 31, 2021 was not material.

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3. Fair Value

Certain assets and liabilities are measured at fair value in the Condensed Consolidated Financial Statements or have fair values disclosed in the Notes to the Condensed Consolidated Financial Statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 10-K.

The following table presents a summary of fair value measurements by level and carrying values for items measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:


(in millions)	Quoted Prices in Active Markets (Level 1)			Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)			Total Fair and Carrying Value
September 30, 2022
Cash and cash equivalents	$	38,671		$	174		$	—		$	38,845
Debt securities - available-for-sale:
U.S. government and agency obligations	3,302			151			—			3,453
State and municipal obligations	—			6,761			—			6,761
Corporate obligations	85			20,213			179			20,477
U.S. agency mortgage-backed securities	—			5,994			—			5,994
Non-U.S. agency mortgage-backed securities	—			2,869			—			2,869
Total debt securities - available-for-sale	3,387			35,988			179			39,554
Equity securities	1,901			17			68			1,986
Assets under management	1,727			2,207			88			4,022
Total assets at fair value	$	45,686		$	38,386		$	335		$	84,407
Percentage of total assets at fair value	54		%	45		%	1		%	100		%
December 31, 2021
Cash and cash equivalents	$	21,359		$	16		$	—		$	21,375
Debt securities - available-for-sale:
U.S. government and agency obligations	3,017			181			—			3,198
State and municipal obligations	—			7,106			—			7,106
Corporate obligations	40			20,916			218			21,174
U.S. agency mortgage-backed securities	—			5,901			—			5,901
Non-U.S. agency mortgage-backed securities	—			2,838			—			2,838
Total debt securities - available-for-sale	3,057			36,942			218			40,217
Equity securities	2,090			23			64			2,177
Assets under management	1,972			2,376			101			4,449
Total assets at fair value	$	28,478		$	39,357		$	383		$	68,218
Percentage of total assets at fair value	42		%	57		%	1		%	100		%

There were no transfers in or out of Level 3 financial assets or liabilities during the nine months ended September 30, 2022 or 2021.

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The following table presents a summary of fair value measurements by level and carrying values for certain financial instruments not measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:


(in millions)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Fair Value		Total Carrying Value
September 30, 2022
Debt securities - held-to-maturity	$	534	$	87	$	—	$	621	$	641
Long-term debt and other financing obligations	$	—	$	43,705	$	—	$	43,705	$	48,667
December 31, 2021
Debt securities - held-to-maturity	$	534	$	102	$	7	$	643	$	641
Long-term debt and other financing obligations	$	—	$	52,583	$	—	$	52,583	$	46,003

Nonfinancial assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded during the nine months ended September 30, 2022 or 2021.

4. Medical Costs Payable

The following table shows the components of the change in medical costs payable for the nine months ended September 30:


(in millions)	2022		2021
Medical costs payable, beginning of period	$	24,483	$	21,872
Acquisitions	177		88
Reported medical costs:
Current year	157,601		140,052
Prior years	(350)		(1,300)
Total reported medical costs	157,251		138,752
Medical payments:
Payments for current year	(130,788)		(116,135)
Payments for prior years	(22,059)		(18,659)
Total medical payments	(152,847)		(134,794)
Medical costs payable, end of period	$	29,064	$	25,918

For the nine months ended September 30, 2022, prior years’ medical cost reserve development included no individual factors that were significant. For the nine months ended September 30, 2021, prior years’ medical cost reserve development was primarily driven by lower than expected health system utilization and the uncertainty of care patterns due to the disruption of the health care system caused by COVID-19. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of $20.0 billion and $17.1 billion at September 30, 2022 and December 31, 2021, respectively.

5. Short-Term Borrowings and Long-Term Debt

In May 2022, the Company issued $6.0 billion of senior unsecured notes consisting of the following:


(in millions, except percentages)	Par Value
3.700% notes due May 2027	$	600
4.000% notes due May 2029	900
4.200% notes due May 2032	1,500
4.750% notes due May 2052	2,000
4.950% notes due May 2062	1,000

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In October 2022, the Company issued $9.0 billion of senior unsecured notes consisting of the following:


(in millions, except percentages)	Par Value
5.000% notes due October 2024	$	500
5.150% notes due October 2025	750
5.250% notes due February 2028	1,000
5.300% notes due February 2030	1,250
5.350% notes due February 2033	2,000
5.875% notes due February 2053	2,000
6.050% notes due February 2063	1,500

For more information on the Company’s short-term borrowings, debt covenants and long-term debt, see Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 10-K.

6. Dividends

In June 2022, the Company’s Board of Directors increased the Company’s quarterly cash dividend to shareholders to an annual rate of $6.60 compared to $5.80 per share, which the Company had paid since June 2021. Declaration and payment of future quarterly dividends is at the discretion of the Board of Directors and may be adjusted as business needs or market conditions change.

The following table provides details of the Company’s 2022 dividend payments:


Payment Date	Amount per Share		Total Amount Paid
			(in millions)
March 22	$	1.45	$	1,363
June 28	1.65		1,545
September 20	1.65		1,542

7. Commitments and Contingencies

Pending Business Combinations

As of September 30, 2022, the Company has entered into agreements to acquire companies in the health care sector, most notably Change Healthcare (NASDAQ: CHNG) and LHC Group, Inc (NASDAQ: LHCG), subject to regulatory approval and other customary closing conditions. As of that date, the total anticipated capital required for these business combinations, excluding associated disposition proceeds and the payoff of acquired indebtedness, was approximately $14 billion. The Company completed the acquisition of Change Healthcare on October 3, 2022.

Legal Matters

Because of the nature of its businesses, the Company is frequently made party to a variety of legal actions and regulatory inquiries, including class actions and suits brought by members, care providers, consumer advocacy organizations, customers and regulators, relating to the Company’s businesses, including management and administration of health benefit plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust, privacy and contract claims and claims related to health care benefits coverage and other business practices.

The Company records liabilities for its estimates of probable costs resulting from these matters where appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy; involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could result in a change in business practices. Accordingly, the Company is often unable to estimate the losses or ranges of losses for those matters where there is a reasonable possibility or it is probable that a loss may be incurred.

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Government Investigations, Audits and Reviews

The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services (CMS), state insurance and health and welfare departments, state attorneys general, the Office of the Inspector General, the Office of Personnel Management, the Office for Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the Department of Justice (DOJ), the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau (CFPB), the Defense Contract Audit Agency and other governmental authorities. Similarly, our international businesses are also subject to investigations, audits and reviews by applicable foreign governments, including South American and other non-U.S. governmental authorities. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS has selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans.

On February 14, 2017, the DOJ announced its decision to pursue certain claims within a lawsuit initially asserted against the Company and filed under seal by a whistleblower in 2011. The whistleblower’s complaint, which was unsealed on February 15, 2017, alleges that the Company made improper Medicare risk adjustment submissions and violated the False Claims Act. On February 12, 2018, the court granted in part and denied in part the Company’s motion to dismiss. In May 2018, the DOJ moved to dismiss the Company’s counterclaims, which were filed in March 2018, and moved for partial summary judgment. In March 2019, the court denied the government’s motion for partial summary judgment and dismissed the Company’s counterclaims without prejudice. The Company cannot reasonably estimate the outcome that may result from this matter given its procedural status.

8. Business Combinations

During the nine months ended September 30, 2022, the Company completed several business combinations for total consideration of $8.2 billion.

Acquired assets (liabilities) at acquisition date were:


(in millions)
Cash and cash equivalents	$	517
Accounts receivable and other current assets	550
Property, equipment and other long-term assets	1,529
Other intangible assets	1,815
Total identifiable assets acquired	4,411
Medical costs payable	(177)
Accounts payable and other current liabilities	(660)
Other long-term liabilities	(580)
Total identifiable liabilities acquired	(1,417)
Total net identifiable assets	2,994
Goodwill	8,393
Redeemable noncontrolling interests	(3,104)
Nonredeemable noncontrolling interests	(133)
Net assets acquired	$	8,150

The majority of goodwill is not deductible for income tax purposes. The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent liabilities, are finalized.

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The acquisition date fair values and weighted-average useful lives assigned to finite-lived intangible assets were:

(in millions, except years)

Fair Value

Weighted-Average Useful Life

Customer-related

915

9 years

Trademarks and technology

802

9 years

Other

11 years

Total acquired finite-lived intangible assets

1,800

9 years

The results of operations and financial condition of acquired entities have been included in the Company’s consolidated results and the results of the corresponding operating segment as of the date of acquisition. Through September 30, 2022, acquired entities impact on revenues and net earnings was not material.

Unaudited pro forma revenues and net earnings for the nine months ended September 30, 2022 and 2021 as if the business combinations had occurred on January 1, 2021 were immaterial for both periods.

9. Segment Financial Information

The Company’s four reportable segments are UnitedHealthcare, Optum Health, Optum Insight and Optum Rx. For more information on the Company’s segments, see Part I, Item I, “Business” and Note 13 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 10-K. Total assets at Optum Health and Optum Rx increased to $67.8 billion and $47.2 billion as of September 30, 2022 compared to $60.5 billion and $40.2 billion as of December 31, 2021, respectively. The increase in total assets at Optum Health and Optum Rx was primarily due to goodwill from business combinations of $4.5 billion and $3.8 billion, respectively.

On January 1, 2022, the Company realigned its operating segments to combine UnitedHealthcare Global and UnitedHealthcare Employer & Individual. The realignment had no impact on the Company’s reportable segments.

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The following tables present reportable segment financial information:


			Optum
(in millions)	UnitedHealthcare		Optum Health		Optum Insight		Optum Rx		Optum Eliminations		Optum		Corporate and Eliminations		Consolidated
Three Months Ended September 30, 2022
Revenues - unaffiliated customers:
Premiums	$	59,375	$	5,116	$	—	$	—	$	—	$	5,116	$	—	$	64,491
Products	—		2		37		9,151		—		9,190		—		9,190
Services	2,435		2,756		1,067		442		—		4,265		—		6,700
Total revenues - unaffiliated customers	61,810		7,874		1,104		9,593		—		18,571		—		80,381
Total revenues - affiliated customers	—		10,302		2,566		15,592		(800)		27,660		(27,660)		—
Investment and other income	185		287		23		18		—		328		—		513
Total revenues	$	61,995	$	18,463	$	3,693	$	25,203	$	(800)	$	46,559	$	(27,660)	$	80,894
Earnings from operations	$	3,799	$	1,575	$	1,007	$	1,081	$	—	$	3,663	$	—	$	7,462
Interest expense	—		—		—		—		—		—		(516)		(516)
Earnings before income taxes	$	3,799	$	1,575	$	1,007	$	1,081	$	—	$	3,663	$	(516)	$	6,946
Three Months Ended September 30, 2021
Revenues - unaffiliated customers:
Premiums	$	53,345	$	3,622	$	—	$	—	$	—	$	3,622	$	—	$	56,967
Products	—		8		37		8,658		—		8,703		—		8,703
Services	2,407		2,515		970		272		—		3,757		—		6,164
Total revenues - unaffiliated customers	55,752		6,145		1,007		8,930		—		16,082		—		71,834
Total revenues - affiliated customers	—		7,441		2,037		14,400		(503)		23,375		(23,375)		—
Investment and other income	175		226		95		7		—		328		—		503
Total revenues	$	55,927	$	13,812	$	3,139	$	23,337	$	(503)	$	39,785	$	(23,375)	$	72,337
Earnings from operations	$	2,651	$	1,143	$	906	$	1,012	$	—	$	3,061	$	—	$	5,712
Interest expense	—		—		—		—		—		—		(422)		(422)
Earnings before income taxes	$	2,651	$	1,143	$	906	$	1,012	$	—	$	3,061	$	(422)	$	5,290

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			Optum
(in millions)	UnitedHealthcare		Optum Health		Optum Insight		Optum Rx		Optum Eliminations		Optum		Corporate and Eliminations		Consolidated
Nine Months Ended September 30, 2022
Revenues - unaffiliated customers:
Premiums	$	178,680	$	13,777	$	—	$	—	$	—	$	13,777	$	—	$	192,457
Products	—		14		135		27,877		—		28,026		—		28,026
Services	7,492		8,054		3,075		1,096		—		12,225		—		19,717
Total revenues - unaffiliated customers	186,172		21,845		3,210		28,973		—		54,028		—		240,200
Total revenues - affiliated customers	—		30,355		6,885		44,921		(1,941)		80,220		(80,220)		—
Investment and other income	523		528		99		25		—		652		—		1,175
Total revenues	$	186,695	$	52,728	$	10,194	$	73,919	$	(1,941)	$	134,900	$	(80,220)	$	241,375
Earnings from operations	$	11,447	$	4,340	$	2,693	$	3,064	$	—	$	10,097	$	—	$	21,544
Interest expense	—		—		—		—		—		—		(1,416)		(1,416)
Earnings before income taxes	$	11,447	$	4,340	$	2,693	$	3,064	$	—	$	10,097	$	(1,416)	$	20,128
Nine Months Ended September 30, 2021
Revenues - unaffiliated customers:
Premiums	$	158,761	$	9,925	$	—	$	—	$	—	$	9,925	$	—	$	168,686
Products	—		25		107		25,344		—		25,476		—		25,476
Services	7,197		7,312		2,861		811		—		10,984		—		18,181
Total revenues - unaffiliated customers	165,958		17,262		2,968		26,155		—		46,385		—		212,343
Total revenues - affiliated customers	—		21,614		5,779		41,196		(1,456)		67,133		(67,133)		—
Investment and other income	557		639		201		114		—		954		—		1,511
Total revenues	$	166,515	$	39,515	$	8,948	$	67,465	$	(1,456)	$	114,472	$	(67,133)	$	213,854
Earnings from operations	$	9,854	$	3,233	$	2,447	$	2,895	$	—	$	8,575	$	—	$	18,429
Interest expense	—		—		—		—		—		—		(1,229)		(1,229)
Earnings before income taxes	$	9,854	$	3,233	$	2,447	$	2,895	$	—	$	8,575	$	(1,229)	$	17,200

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with the accompanying Condensed Consolidated Financial Statements and Notes and with our 2021 10-K, including the Consolidated Financial Statements and Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in that report. Unless the context indicates otherwise, references to the terms “UnitedHealth Group,” the “Company,” “we,” “our” or “us” used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to UnitedHealth Group Incorporated and its consolidated subsidiaries.

Readers are cautioned that the statements, estimates, projections or outlook contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, including discussions regarding financial prospects, economic conditions, trends and uncertainties contained in this Item 2, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed or implied in the forward-looking statements. A description of some of the risks and uncertainties is set forth in Part I, Item 1A, “Risk Factors” in our 2021 10-K and in the discussion below.

EXECUTIVE OVERVIEW

General

UnitedHealth Group Incorporated is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two distinct, yet complementary business platforms — Optum and UnitedHealthcare — are working to help build a modern, high-performing health system through improved access, affordability, outcomes and experiences for the individuals and organizations we are privileged to serve.

We have four reportable segments across our two business platforms, Optum and UnitedHealthcare:

•Optum Health;

•Optum Insight;

•Optum Rx; and

•UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State.

Further information on our business is presented in Part I, Item 1, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 10-K and additional information on our segments, including the realignment of our UnitedHealthcare operating segments to combine UnitedHealthcare Global and UnitedHealthcare Employer & Individual, can be found in this Item 2 and in Note 9 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Business Trends

Our businesses participate in the United States, South America and certain other international health markets. Overall spending on health care is impacted by inflation, utilization, medical technology and pharmaceutical advancement, regulatory requirements, demographic trends in the population and national interest in health and well-being. The rate of market growth may be affected by a variety of factors, including macroeconomic conditions and regulatory changes, which could impact our results of operations, including our continued efforts to control health care costs.

Pricing Trends. To price our health care benefit products, we start with our view of expected future costs, including inflation and labor market dynamics. We frequently evaluate and adjust our approach in each of the local markets we serve, considering all relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio (MLR) thresholds and similar revenue adjustments. We will continue seeking to balance growth and profitability across all these dimensions.

The commercial risk market remains highly competitive in the small group, large group and individual segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs.

Government programs in the community and senior sector tend to receive lower rates of increase than the commercial market due to governmental budget pressures and lower cost trends.

Medical Cost Trends. Our medical cost trends primarily relate to changes in unit costs, health system utilization and prescription drug costs. COVID-19 related care and testing costs as well as the deferral of care have also impacted medical cost trends in the current year and may continue in future years. We endeavor to mitigate those increases by engaging physicians

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and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve high-quality, affordable care.

COVID-19 Trends and Uncertainties

During the nine months ended September 30, 2022, overall care was near normal baseline levels, with certain areas of care at or approaching seasonal baselines, and other areas below. Future care patterns and acuity may temporarily rise due to missed regular care. Future developments, such as the severity of new COVID-19 variants, could introduce new uncertainties to care patterns and our business.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select third quarter 2022 year-over-year operating comparisons to third quarter 2021 and other financial results.

•Consolidated revenues grew 12%, UnitedHealthcare revenues grew 11% and Optum revenues grew 17%.

•UnitedHealthcare served 910,000 more people, led by growth in community and senior programs.

•Consolidated earnings from operations of $7.5 billion compared to $5.7 billion last year, included growth of 43% at UnitedHealthcare and 20% at Optum.

•Diluted earnings per common share were $5.55.

•Cash flows from operations for the nine months ended September 30, 2022 were $30.7 billion.

•Return on equity was 28.5%.

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RESULTS SUMMARY

The following table summarizes our consolidated results of operations and other financial information:


(in millions, except percentages and per share data)	Three Months Ended September 30,						Increase/(Decrease)					Nine Months Ended September 30,						Increase/(Decrease)
	2022			2021			2022 vs. 2021					2022			2021			2022 vs. 2021
Revenues:
Premiums	$	64,491		$	56,967		$	7,524		13	%	$	192,457		$	168,686		$	23,771		14	%
Products	9,190			8,703			487			6		28,026			25,476			2,550			10
Services	6,700			6,164			536			9		19,717			18,181			1,536			8
Investment and other income	513			503			10			2		1,175			1,511			(336)			(22)
Total revenues	80,894			72,337			8,557			12		241,375			213,854			27,521			13
Operating costs:
Medical costs	52,635			47,302			5,333			11		157,251			138,752			18,499			13
Operating costs	11,663			10,725			938			9		34,773			31,307			3,466			11
Cost of products sold	8,306			7,802			504			6		25,389			23,034			2,355			10
Depreciation and amortization	828			796			32			4		2,418			2,332			86			4
Total operating costs	73,432			66,625			6,807			10		219,831			195,425			24,406			12
Earnings from operations	7,462			5,712			1,750			31		21,544			18,429			3,115			17
Interest expense	(516)			(422)			(94)			22		(1,416)			(1,229)			(187)			15
Earnings before income taxes	6,946			5,290			1,656			31		20,128			17,200			2,928			17
Provision for income taxes	(1,562)			(1,099)			(463)			42		(4,397)			(3,659)			(738)			20
Net earnings	5,384			4,191			1,193			28		15,731			13,541			2,190			16
Earnings attributable to noncontrolling interests	(122)			(105)			(17)			16		(372)			(327)			(45)			14
Net earnings attributable to UnitedHealth Group common shareholders	$	5,262		$	4,086		$	1,176		29	%	$	15,359		$	13,214		$	2,145		16	%
Diluted earnings per share attributable to UnitedHealth Group common shareholders	$	5.55		$	4.28		$	1.27		30	%	$	16.15		$	13.82		$	2.33		17	%
Medical care ratio (a)	81.6		%	83.0		%	(1.4)		%			81.7		%	82.3		%	(0.6)		%
Operating cost ratio	14.4			14.8			(0.4)					14.4			14.6			(0.2)
Operating margin	9.2			7.9			1.3					8.9			8.6			0.3
Tax rate	22.5			20.8			1.7					21.8			21.3			0.5
Net earnings margin (b)	6.5			5.6			0.9					6.4			6.2			0.2
Return on equity (c)	28.5		%	23.5		%	5.0		%			28.1		%	26.0		%	2.1		%

(a)Medical care ratio (MCR) is calculated as medical costs divided by premium revenue.

(b)Net earnings margin attributable to UnitedHealth Group shareholders.

(c)Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.

2022 RESULTS OF OPERATIONS COMPARED TO 2021 RESULTS OF OPERATIONS

Consolidated Financial Results

Revenues

The increases in revenues were primarily driven by growth in the number of people served through Medicare Advantage and Medicaid, pricing trends and growth across the Optum businesses.

Medical Costs and MCR

For the three and nine months ended September 30, 2022, medical costs increased due to growth in people served through Medicare Advantage and Medicaid. The MCR decreased due to COVID-19 effects, partially offset by business mix. For the nine months ended September 30, 2022, the decreases to the MCR were also partially offset by decreased prior years favorable development, primarily due to the effects of COVID-19 in 2021.

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Operating Cost Ratio

For the three and nine months ended September 30, 2022, the operating cost ratio decreased primarily due to productivity gains, offset by business mix and investments. For the nine months ended September 30, 2022, the operating cost ratio also decreased due to COVID-19 related revenue effects.

Reportable Segments

See Note 9 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information on our segments. We utilize various metrics to evaluate and manage our reportable segments, including people served by UnitedHealthcare by major market segment and funding arrangement, people served by Optum Health and adjusted scripts for Optum Rx. These metrics are the main drivers of revenue, earnings and cash flows at each business. The metrics also allow management and investors to evaluate and understand business mix, including the mix of care delivered through value-based care models at Optum Health, level and scope of services provided to people and pricing trends when comparing the metrics to revenue by segment.

The following table presents a summary of the reportable segment financial information:


	Three Months Ended September 30,						Increase/(Decrease)					Nine Months Ended September 30,						Increase/(Decrease)
(in millions, except percentages)	2022			2021			2022 vs. 2021					2022			2021			2022 vs. 2021
Revenues
UnitedHealthcare	$	61,995		$	55,927		$	6,068		11	%	$	186,695		$	166,515		$	20,180		12	%
Optum Health	18,463			13,812			4,651			34		52,728			39,515			13,213			33
Optum Insight	3,693			3,139			554			18		10,194			8,948			1,246			14
Optum Rx	25,203			23,337			1,866			8		73,919			67,465			6,454			10
Optum eliminations	(800)			(503)			(297)			59		(1,941)			(1,456)			(485)			33
Optum	46,559			39,785			6,774			17		134,900			114,472			20,428			18
Eliminations	(27,660)			(23,375)			(4,285)			18		(80,220)			(67,133)			(13,087)			19
Consolidated revenues	$	80,894		$	72,337		$	8,557		12	%	$	241,375		$	213,854		$	27,521		13	%
Earnings from operations
UnitedHealthcare	$	3,799		$	2,651		$	1,148		43	%	$	11,447		$	9,854		$	1,593		16	%
Optum Health	1,575			1,143			432			38		4,340			3,233			1,107			34
Optum Insight	1,007			906			101			11		2,693			2,447			246			10
Optum Rx	1,081			1,012			69			7		3,064			2,895			169			6
Optum	3,663			3,061			602			20		10,097			8,575			1,522			18
Consolidated earnings from operations	$	7,462		$	5,712		$	1,750		31	%	$	21,544		$	18,429		$	3,115		17	%
Operating margin
UnitedHealthcare	6.1		%	4.7		%	1.4		%			6.1		%	5.9		%	0.2		%
Optum Health	8.5			8.3			0.2					8.2			8.2			—
Optum Insight	27.3			28.9			(1.6)					26.4			27.3			(0.9)
Optum Rx	4.3			4.3			—					4.1			4.3			(0.2)
Optum	7.9			7.7			0.2					7.5			7.5			—
Consolidated operating margin	9.2		%	7.9		%	1.3		%			8.9		%	8.6		%	0.3		%

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UnitedHealthcare

The following table summarizes UnitedHealthcare revenues by business:


	Three Months Ended September 30,				Increase/(Decrease)				Nine Months Ended September 30,				Increase/(Decrease)
(in millions, except percentages)	2022		2021		2022 vs. 2021				2022		2021		2022 vs. 2021
UnitedHealthcare Employer & Individual - Domestic	$	15,929	$	15,094	$	835	6	%	$	47,318	$	44,668	$	2,650	6	%
UnitedHealthcare Employer & Individual - Global (a)	2,120		2,139		(19)		(1)		6,500		6,292		208		3
UnitedHealthcare Employer & Individual - Total (a)	18,049		17,233		816		5		53,818		50,960		2,858		6
UnitedHealthcare Medicare & Retirement	27,895		24,931		2,964		12		85,620		75,709		9,911		13
UnitedHealthcare Community & State	16,051		13,763		2,288		17		47,257		39,846		7,411		19
Total UnitedHealthcare revenues	$	61,995	$	55,927	$	6,068	11	%	$	186,695	$	166,515	$	20,180	12	%

(a) On January 1, 2022, we realigned our operating segments to combine UnitedHealthcare Global and UnitedHealthcare Employer & Individual.

The following table summarizes the number of people served by our UnitedHealthcare businesses, by major market segment and funding arrangement:


	September 30,		Increase/(Decrease)
(in thousands, except percentages)	2022	2021	2022 vs. 2021
Commercial - domestic:
Risk-based	8,055	7,960	95	1	%
Fee-based	18,500	18,595	(95)	(1)
Total commercial - domestic	26,555	26,555	—	—
Medicare Advantage	7,035	6,455	580	9
Medicaid	8,005	7,510	495	7
Medicare Supplement (Standardized)	4,370	4,405	(35)	(1)
Total community and senior	19,410	18,370	1,040	6
Total UnitedHealthcare - domestic medical	45,965	44,925	1,040	2
Commercial - global	5,360	5,490	(130)	(2)
Total UnitedHealthcare - medical	51,325	50,415	910	2	%
Supplemental Data:
Medicare Part D stand-alone	3,310	3,725	(415)	(11)	%

Medicare Advantage increased due to growth in people served through individual and group Medicare Advantage plans. The increase in people served through Medicaid was primarily driven by states continuing to ease redetermination requirements due to COVID-19 and growth in people served through Dual Special Needs Plans.

UnitedHealthcare’s revenues increased due to growth in the number of individuals served through Medicare Advantage and Medicaid, including a greater mix of people with higher acuity needs. For the three months ended September 30, 2022, earnings from operations increased due to growth in people served and COVID-19 effects. For the nine months ended September 30, 2022, earnings from operations increased due to growth in people served and COVID-19 effects, partially offset by decreased prior years favorable development, primarily due to the effects of COVID-19 in 2021.

Optum

Total revenues and earnings from operations increased due to growth across the Optum businesses. The results by segment were as follows:

Optum Health

Revenues at Optum Health increased primarily due to organic growth in value-based care arrangements and business combinations. Earnings from operations increased due to organic growth in the number of people served under value-based care arrangements, cost management initiatives, asset dispositions and COVID-19 effects. For the three months ended September 30, 2022, increases in earnings from operations were partially offset by care activity levels at fee-for-service practices. Optum Health served approximately 101 million people as of September 30, 2022 compared to 99 million people as of September 30, 2021.

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Optum Insight

Revenues and earnings from operations at Optum Insight increased due to growth in technology and managed services, with managed services growth driven by higher payer volumes and new health system partnerships.

Optum Rx

Revenues and earnings from operations at Optum Rx increased due to higher script volumes from growth in people served, increased utilization and organic growth in pharmacy care services, including community-behavioral and specialty pharmacy. Earnings from operations also increased as a result of continued supply chain management initiatives. Optum Rx fulfilled 359 million and 344 million adjusted scripts in the third quarters of 2022 and 2021, respectively.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES

Liquidity

Summary of our Major Sources and Uses of Cash and Cash Equivalents


	Nine Months Ended September 30,				Increase/(Decrease)
(in millions)	2022		2021		2022 vs. 2021
Sources of cash:
Cash provided by operating activities	$	30,739	$	19,125	$	11,614
Issuances of short-term borrowings and long-term debt, net of repayments	3,806		3,733		73
Proceeds from common stock issuances	1,084		1,077		7
Customer funds administered	7,028		1,402		5,626
Other	50		—		50
Total sources of cash	42,707		25,337
Uses of cash:
Common stock repurchases	(6,000)		(3,950)		(2,050)
Cash paid for acquisitions, net of cash assumed	(7,154)		(4,727)		(2,427)
Purchases of investments, net of sales and maturities	(4,067)		(3,702)		(365)
Purchases of property, equipment and capitalized software	(1,936)		(1,759)		(177)
Cash dividends paid	(4,450)		(3,915)		(535)
Purchases of redeemable noncontrolling interests	(176)		(1,338)		1,162
Other	(1,458)		(1,737)		279
Total uses of cash	(25,241)		(21,128)
Effect of exchange rate changes on cash and cash equivalents	4		(45)		49
Net increase in cash and cash equivalents	$	17,470	$	4,164	$	13,306

2022 Cash Flows Compared to 2021 Cash Flows

Increased cash flows provided by operating activities were primarily driven by an increase in unearned revenue due to the September receipt of our October CMS premium payment of $9.8 billion and increased net earnings. Other significant changes in sources or uses of cash year-over-year included increased customer funds administered, primarily driven by Medicare Part D timing, and decreased purchases of redeemable noncontrolling interests, partially offset by increased cash paid for acquisitions and common stock repurchases.

Financial Condition

As of September 30, 2022, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of $81.8 billion included approximately $38.8 billion of cash and cash equivalents (of which $3.7 billion was available for general corporate use), $39.6 billion of debt securities and $3.4 billion of investments in equity securities. Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. Our available-for-sale debt securities portfolio had a weighted-average duration of 4.1 years and a weighted-average credit rating of “Double A” as of September 30, 2022. When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.

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Capital Resources and Uses of Liquidity

In addition to cash flows from operations and cash and cash equivalent balances available for general corporate use, our capital resources and uses of liquidity are as follows:

Cash Requirements. A summary of our cash requirements as of December 31, 2021 was disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 10-K. During the nine months ended September 30, 2022, there were no material changes to this previously disclosed information outside the ordinary course of business. We believe our capital resources are sufficient to meet future, short-term and long-term, liquidity needs. We continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and business combinations.

Short-Term Borrowings. Our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program, which facilitates the private placement of unsecured debt through independent broker-dealers, and are available for general corporate purposes. For more information on our commercial paper and bank credit facilities, see Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2021 10-K.

Our revolving bank credit facilities contain various covenants, including covenants requiring us to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than 60%. As of September 30, 2022, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately 35%.

Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, such as, to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. For more information on our long-term debt, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2021 10-K.

Credit Ratings. Our credit ratings as of September 30, 2022 were as follows:

Moody’s

S&P Global

Fitch

A.M. Best

Ratings

Outlook

Ratings

Outlook

Ratings

Outlook

Ratings

Outlook

Senior unsecured debt

Positive

A+

Stable

Commercial paper

P-2

n/a

A-1

n/a

AMB-1+

n/a

The availability of financing in the form of debt or equity is influenced by many factors, including our profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions, regulatory requirements and economic and market conditions. A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.

Share Repurchase Program. During the nine months ended September 30, 2022, we repurchased approximately 12 million shares at an average price of $497.41 per share. As of September 30, 2022, we had Board of Directors’ authorization to purchase up to 33 million shares of our common stock.

Dividends. In June 2022, the Company’s Board of Directors increased our quarterly cash dividend to shareholders to an annual rate of $6.60 compared to $5.80 per share. For more information on our dividend, see Note 6 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Pending Business Combinations. As of September 30, 2022, we have entered into agreements to acquire companies in the health care sector, most notably Change Healthcare (NASDAQ: CHNG) and LHC Group, Inc. (NASDAQ: LHCG), subject to regulatory approval and other customary closing conditions. As of that date, the total anticipated capital required for these business combinations, excluding associated disposition proceeds and the payoff of acquired indebtedness, was approximately $14 billion. The Company completed the acquisition of Change Healthcare on October 3, 2022.

For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2021 10-K.

RECENTLY ISSUED ACCOUNTING STANDARDS

There are no recently issued accounting standards that are expected to have a material impact on our Condensed Consolidated Financial Statements.

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CRITICAL ACCOUNTING ESTIMATES

In preparing our Condensed Consolidated Financial Statements, we are required to make judgments, assumptions and estimates, which we believe are reasonable and prudent based on the available facts and circumstances. These judgments, assumptions and estimates affect certain of our revenues and expenses and their related balance sheet accounts and disclosure of our contingent liabilities. We base our assumptions and estimates primarily on historical experience and consider known and projected trends. On an ongoing basis, we re-evaluate our selection of assumptions and the method of calculating our estimates. Actual results, however, may materially differ from our calculated estimates, and this difference would be reported in our current operations.

Our critical accounting estimates include medical costs payable and goodwill. For a detailed description of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2021 10-K. For a detailed discussion of our significant accounting policies, see Note 2 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2021 10-K.

FORWARD-LOOKING STATEMENTS

The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements which are intended to take advantage of the “safe harbor” provisions of the federal securities law. The words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. Actual results could differ materially from those that management expects, depending on the outcome of certain factors including: risks associated with public health crises, large-scale medical emergencies and pandemics, such as the COVID-19 pandemic; our ability to effectively estimate, price for and manage medical costs; new or changes in existing health care laws or regulations, or their enforcement or application; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; reductions in revenue or delays to cash flows received under government programs; changes in Medicare, the CMS star ratings program or the application of risk adjustment data validation audits; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; cyberattacks, other privacy/data security incidents, or our failure to comply with related regulations; failure to protect proprietary rights to our databases, software and related products; risks and uncertainties associated with our businesses providing pharmacy care services; competitive pressures, including our ability to develop and deliver innovative products to health care payers and expand access to virtual care; changes in or challenges to our public sector contract awards; failure to develop and maintain satisfactory relationships with health care payers, physicians, hospitals and other service providers; failure to attract, develop, retain, and manage the succession of key employees and executives; the impact of potential changes in tax laws and regulations (including any increase in the U.S. income tax rate applicable to corporations); failure to achieve targeted operating cost productivity improvements; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of strategic transactions; fluctuations in foreign currency exchange rates; downgrades in our credit ratings; our investment portfolio performance; impairment of our goodwill and intangible assets; and our ability to obtain sufficient funds from our regulated subsidiaries or from external financings to fund our obligations, maintain our debt to total capital ratio at targeted levels, maintain our quarterly dividend payment cycle, or continue repurchasing shares of our common stock. This above list is not exhaustive. We discuss these matters, and certain risks that may affect our business operations, financial condition and results of operations, more fully in our filings with the SEC, including our reports on Forms 10-K, 10-Q and 8-K. By their nature, forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual results may vary materially from expectations expressed or implied in this document or any of our prior communications. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We manage exposure to market interest rates by diversifying investments across different fixed-income market sectors and debt across maturities, as well as by matching a portion of our floating-rate assets and liabilities, either directly or through the use of interest rate swap contracts. Unrealized gains and losses on investments in available-for-sale debt securities are reported in comprehensive income.

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The following table summarizes the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of September 30, 2022 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):


	September 30, 2022
Increase (Decrease) in Market Interest Rate	Investment Income Per Annum		Interest Expense Per Annum		Fair Value of Financial Assets		Fair Value of Financial Liabilities
2 %	$	845	$	186	$	(3,027)	$	(6,014)
1	422		93		(1,563)		(3,261)
(1)	(422)		(93)		1,656		3,894
(2)	(845)		(186)		3,391		8,586

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this quarterly report on Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2022. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2022.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

A description of our legal proceedings is included in and incorporated by reference to Note 7 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our 2021 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2021 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

There have been no material changes to the risk factors as disclosed in our 2021 10-K.

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ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities (a)

Third Quarter 2022


For the Month Ended	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under The Plans or Programs
	(in millions)			(in millions)	(in millions)
July 31, 2022	0.6	$	517.91	0.6	34.3
August 31, 2022	0.7	539.26		0.7	33.6
September 30, 2022	0.6	518.97		0.6	33.0
Total	1.9	$	525.74	1.9

(a) In November 1997, our Board of Directors adopted a share repurchase program, which the Board of Directors evaluates periodically. In June 2018, the Board of Directors renewed our share repurchase program with an authorization to repurchase up to 100 million shares of our common stock in open market purchases or other types of transactions (including prepaid or structured repurchase programs). There is no established expiration date for the program.

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ITEM 6. EXHIBITS*

The following exhibits are filed or incorporated by reference herein in response to Item 601 of Regulation S-K. The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-10864.


3.1						Certificate of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A/A filed on July 1, 2015)
3.2						Amended and Restated Bylaws of UnitedHealth Group Incorporated, effective February 23, 2021 (incorporated by reference to Exhibit 3.2 to UnitedHealth Group Incorporated’s Current Report on Form 8-K filed on February 26, 2021)
4.1						Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
4.2						Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
4.3						Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
4.4						Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
31.1						Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101).

________________


*						Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITEDHEALTH GROUP INCORPORATED

/s/ ANDREW P. WITTY

Chief Executive Officer
(principal executive officer)

Dated:

November 2, 2022

Andrew P. Witty

/s/ JOHN F. REX

Executive Vice President and
Chief Financial Officer
(principal financial officer)

Dated:

November 2, 2022

John F. Rex

/s/ THOMAS E. ROOS

Senior Vice President and
Chief Accounting Officer
(principal accounting officer)

Dated:

November 2, 2022

Thomas E. Roos