UnitedHealth Group Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Justin Lake - Wolfe Research - Analyst : Thanks. Good morning. My question is on Medicare Advantage cost trend. You said that you came into the year assuming trend at similar levels to 2024. Can you share with us precisely what that trend estimate was, meaning what did you expect for this year? And what are you expecting now? And can you tell us how much of that you actually saw in the first quarter? For instance, how much did you miss your MLR by your own estimate of MLR? And how much you're expecting that to accelerate? Or how different the back three quarters is versus what you saw in the first quarter? Thanks. (multiple speakers)

Question: Josh Raskin - Nephron Research - Analyst : Hi, thanks. Good morning. Can you help us connect the higher incidence of primary care visits and the Optum Health pressure? I assume you don't have that primary care issue in Optum Health which should also mitigate the downstream impact. So why are you expecting the higher follow-through if you control primary care? And then based on the fact that you're seeing worse performance in Optum Health or value-based care, could you remind us why you think you can control cost better in that environment, and it's probably a good time to get the refresher on why the strategy to allocate a lot more capital to VBC in the ecosystem totally is best in the long term?

Question: A.J. Rice - UBS - Analyst : Thanks. Hi everybody. Just to put a finer point on some of this discussion around especially what's happening at the MA side. It sounds like you're saying most of the elevated care that you're seeing is on the group side. And it sounds like you're putting more of that on the benefit and premium changes that have occurred rather than just an underlying uptick in utilization. I want to make sure I understood that. Also on the competitive exits and the impact of that. It doesn't sound like you're calling that out on the insurance side. You're just calling that out on the Optum side. And then finally, on Part D, you had been cautious about that coming into the year, but you're not mentioning that at all. So is that playing out about as expected? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 12:45PM, UNH.N - Q1 2025 UnitedHealth Group Inc Earnings Call

Question: Lisa Gill - JPMorgan - Analyst : Very much and good morning. Andrew, I just want to go back to the path to the long-term growth rate. You reiterated that you feel confident you can get back there. With the 2026 rates looking better, we're going to move into the final year of V28. How do I think about what the key elements are to get back to that long-term growth rate?

Question: Stephen Baxter - Wells Fargo Securities, LLC - Analyst : Yeah, hi, thanks. Just a follow-up on the trend discussion. Could you talk about where MA margins are now expected to shake out inside your 2025 guidance? And what you think is a reasonable timeline to recovering the target margins? And whether there's any change to what you're thinking is as a reasonable long-term margin target in this business? Post V28 and some of the issues you have adapting to it? And then again, my confidence that you can improve MA margins in 2026 if trend stays at this level? Thank you.

Question: Erin Wright - Morgan Stanley - Analyst : Great, thanks for taking my question. So on the policy front, I guess what is your latest thinking in terms of just PBM reform? Your model has obviously evolved on that front, but also Medicaid funding cuts and what sort of permutations you could you could anticipate there and your ability to navigate that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 12:45PM, UNH.N - Q1 2025 UnitedHealth Group Inc Earnings Call

Question: Andrew Mok - Barclays - Analyst : Hi, good morning. I was hoping to get your thoughts on the risks and implications of tariffs, particularly around the impact of pharmaceutical tariffs that are currently being contemplated by the administration? Thanks.

Question: David Windley - Jefferies - Analyst : Hi, good morning. Thanks for taking my question, Andrew, I appreciate your comments about kind of the macro cost of health care in the United States. We have an administration that seems more focused on budget deficit reduction, which entails cutting to health care. I guess my philosophical question here is why isn't modest, persistent underfunding of the system the right way to get those costs more in balance and to force innovation in the system? And how does United operate in an environment that might bring that without having the snafus or whatever that like a V28 model brings?

Question: Ben Hendrix - RBC Capital Markets - Analyst : Hi, thank you very much. I wonder if we could touch briefly on Medicaid. Just wanted to get an update on what you're seeing from state renewals through April. And if we're still on track to close that rate acuity gap by the end of the year? Thanks.

Question: Lance Wilkes - Bernstein - Analyst : Great, thanks. Could you talk a little bit about the first quarter MLR impacts? And maybe breaking out the impacts that were driven by the premium increases that you described and maybe any sort of deductible increases. But also, were there impacts as a result of the way in which you're approaching prior authorization, any changes in that? And then do you have a sense as to maybe increased follow-through from your house calls and primary care actions as far as getting follow-up visits tied to risk adjustment activity. And lastly, were there any onetime good guys in the first quarter, which perhaps supported medical loss ratio and caused the distinction between 1Q versus guidance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 12:45PM, UNH.N - Q1 2025 UnitedHealth Group Inc Earnings Call

Question: Sarah James - Cantor Fitzgerald - Analyst : Thank you. I just want to circle back to the tariff question quickly. Are the penalties under the IRA for pharma manufacturers who raised price above inflation enough to protect you from tariff pass-through on Medicare? And I'm not sure if that implies exchanges as well. But with those bids do earlier, like April to June, do you have to assume that tariffs are in place? Or do you think the states will give you some flexibility to submit two versions of bids with and without tariffs?

Question: Jessica Tassan - Piper Sandler - Analyst : Hi guys, thank you so much for the question. I wanted to ask about -- so UHC has achieved really phenomenal growth in MA year-to-date, up 521,000 members through April. Almost half of that growth has come from C-SNP plans. So just wondering if you all can elaborate on UHC's dominance in the C-SNP market? Do these plans offer the beneficiary? Why is UHC been so successful in this segment? And what does C-SNP enrollment mean from an economic perspective for UHC in 2025 and then over the long term? Thanks.