Unitedhealth Group Inc Q2 2024 Earnings Call Transcript

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

Question: AJ Rice - UBS Investment Bank - Analyst : Hi, thanks for the question. Just to make sure -- expanding on John's comments, if we're thinking about the -- you're thinking on MLR overall for the rest of the year, it sounds like beyond Change, beyond Latin America, there's two items you're calling out. One is the Medicaid timing mismatch, which sounds like you think it's short term and then this upcoding, coding intensity comment. And I assume that's mainly in the insurance business, but maybe it's in OptumHealth as well. Can you just give us a sense of how much those are impacting your thinking? And how much is second quarter versus the impact in the back half on those?

Question: Lisa Gill - JPMorgan Chase & Co - Analyst : Thanks very much and good morning. I want to focus for a minute on SG&A, which came in much better than expected. Can you maybe talk about the key components of where you're seeing cost savings, the durability? And Andrew, you touched a little bit about AI efficiencies there. Are you starting to see that in this quarter? And how much opportunity is there from an SG&A perspective when we think about AI? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2024 / 12:45PM, UNH.N - Q2 2024 Unitedhealth Group Inc Earnings Call

Question: Josh Raskin - Nephron Research LLC - Analyst : Hi, thanks. Good morning. Looking at your bids that you submitted for MA for 2025, I'd be curious if you could tell us if you were bidding to improve MA margins in 2025 or if you're still within that target range in light of the G&A savings. And then more importantly, maybe just some early thoughts on what sort of growth assumptions you have included in those bids, both your assumption for the market as well as any potential market share gains.

Question: Stephen Baxter - Wells Fargo Securities, LLC - Analyst : Yes, hi, thanks. Can you speak in a little greater detail about your expectation that the Medicaid pressure starts to subside in the second half of the year? I guess, specifically, can you maybe speak to what you actually know about rates today, either draft or finalized versus perhaps speaking to a general reliance on actuarially sound rates playing out over a reasonable period of time? Just trying to understand a little bit of visibility that you have a bit better. Thank you.

Question: Justin Lake - Wolfe Research, LLC - Analyst : Thanks, good morning. Just a quick clarification and then a question about second-half MLR. So first, a clarification. On the MLR, it sounded like, John, you're guiding to a core MLR of the -- at the high end of the range or 84.5%. And then I would add 30 basis points of the one-timers for the full year that you've seen in the first half. That would leave GAAP MLR at 84.8%. Is this correct? And to be clear, is there any expectation for further one-timers in the second half of the year? Or should the third and fourth quarter kind of be clean? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 16, 2024 / 12:45PM, UNH.N - Q2 2024 Unitedhealth Group Inc Earnings Call And then my question is just around core MLR in the first quarter, ex the one-timers was 84.2%. It sounds like it will be 84.8% in the second half. So maybe you could help us think about 3Q versus 4Q just to make sure our expectations are set correctly given of how much focus there is here. Thanks.

Question: Scott Fidel - Stephens Inc. - Analyst : Hi. Thanks, good morning.. Actually, I was hoping we could maybe do a similar exercise as Justin just asked about what MLR for OptumHealth margins. And maybe first, if you can talk about how the OH margins came in at 2Q relative to your expectations and then how you're thinking about OH margins progressing in 3Q and 4Q, and then how comfortable you are with getting into that -- the full-year target range that you had provided. And John, I thought it might be helpful to -- as we think about the sort of pacing in the back half of the year, in particular, how you're thinking about an exit rate for OptumHealth margins as we're exiting 2024 would be helpful. Thanks.

Question: Kevin Fischbeck - BofA Securities - Analyst : Great, thanks. Just wanted to clarify, I guess, something and ask the question. It wasn't clear to me what you were saying about no favorable reserve development. Does that mean the $800 million that you mentioned previously is still somehow in the numbers? Or has that kind of worked its way through at the end of Q2? And then I guess just trying to understand better where the outperformance is because, obviously, you guys have assumed $0.60 to $0.70 of Change costs in your guidance but reaffirm the numbers. And it doesn't sound like Medicare is the answer, it doesn't sound like Medicaid is the answer. Change isn't the answer. So where has the outperformance coming that allowed you to maintain guidance? Thanks.

Question: Andrew Mok - Barclays - Analyst : Hi, good morning. The OptumInsight backlog was down about $200 million sequentially. Can you give us color on the drivers of that and the nature of conversations you're having with providers following the cyberattack? Do you expect further declines in the backlog this year? Thanks.

Question: Nathan Rich - Goldman Sachs Group, Inc. - Analyst : Hi, good morning. Thanks for the question. I wanted to go back to the provider coding activity that you called out and ask maybe what you saw kind of change in the quarter and what actions you're taking to address this change. And is this pressure something that you accounted for in bids for next year? And then if I could just ask a very quick clarification on the Change impact on EPS. You talked about the return to baseline performance in 2025. Does that mean you would expect to recover the $0.60 to $0.70 of it is in earnings this year? Thank you.

Question: Erin Wright Wright - Morgan Stanley - Analyst : Thanks. So on the earlier topic of potential offsets, I wanted to ask on Optum Rx and with the recent level of industry attention kind of on the PBM business as well as kind of specialty pharmacy, how should we think about how those drivers are playing out relative to your expectations, whether it's biosimilars or GLP-1s in terms of that therapeutic category? How should we think about those near-term drivers across Optum Rx? Thanks.

Question: Lance Wilkes - Sanford C. Bernstein & Co., LLC. - Analyst : Great, thanks. For OptumHealth, could you talk a little bit about what pricing has been like there? And in Investor Day, it seemed like you may have seen some improved pricing as far as global cap rates. And likewise, given higher global cap rates out of the MA business, I was wondering if '25, we should be expecting continued improvement in that or whether there needs to be a retrenchment or retracing of that to kind of make up for what was given. And also, are you starting to exclude things from global cap as you look at 2025? Thanks.