UNITEDHEALTH GROUP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS UnitedHealth Group Condensed Consolidated Balance Sheets (Unaudited) (in millions, except per share data) September 30, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 21,085 $ 16,921 Short-term investments 2,786 2,860 Accounts receivable, net 14,152 12,870 Other current receivables, net 14,080 12,534 Assets under management 4,304 4,076 Prepaid expenses and other current assets 5,203 4,457 Total current assets 61,610 53,718 Long-term investments 44,777 41,242 Property, equipment and capitalized software, net 8,730 8,626 Goodwill 75,435 71,337 Other intangible assets, net 10,436 10,856 Other assets 12,057 11,510 Total assets $ 213,045 $ 197,289 Liabilities, redeemable noncontrolling interests and equity Current liabilities: Medical costs payable $ 25,918 $ 21,872 Accounts payable and accrued liabilities 24,292 22,495 Short-term borrowings and current maturities of long-term debt 3,620 4,819 Unearned revenues 2,556 2,842 Other current liabilities 23,189 20,392 Total current liabilities 79,575 72,420 Long-term debt, less current maturities 43,345 38,648 Deferred income taxes 3,649 3,367 Other liabilities 11,844 12,315 Total liabilities 138,413 126,750 Commitments and contingencies (Note 7) Redeemable noncontrolling interests 1,373 2,211 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; 942 and 946 issued and outstanding 10 10 Additional paid-in capital — — Retained earnings 75,124 69,295 Accumulated other comprehensive loss ( 4,856 ) ( 3,814 ) Nonredeemable noncontrolling interests 2,981 2,837 Total equity 73,259 68,328 Total liabilities, redeemable noncontrolling interests and equity $ 213,045 $ 197,289 See Notes to the Condensed Consolidated Financial Statements 1 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) 2021 2020 2021 2020 Revenues: Premiums $ 56,967 $ 50,863 $ 168,686 $ 150,897 Products 8,703 8,777 25,476 25,455 Services 6,164 5,124 18,181 14,265 Investment and other income 503 351 1,511 1,057 Total revenues 72,337 65,115 213,854 191,674 Operating costs: Medical costs 47,302 41,636 138,752 117,314 Operating costs 10,725 10,174 31,307 30,190 Cost of products sold 7,802 7,935 23,034 23,123 Depreciation and amortization 796 719 2,332 2,159 Total operating costs 66,625 60,464 195,425 172,786 Earnings from operations 5,712 4,651 18,429 18,888 Interest expense ( 422 ) ( 395 ) ( 1,229 ) ( 1,262 ) Earnings before income taxes 5,290 4,256 17,200 17,626 Provision for income taxes ( 1,099 ) ( 1,000 ) ( 3,659 ) ( 4,209 ) Net earnings 4,191 3,256 13,541 13,417 Earnings attributable to noncontrolling interests ( 105 ) ( 84 ) ( 327 ) ( 226 ) Net earnings attributable to UnitedHealth Group common shareholders $ 4,086 $ 3,172 $ 13,214 $ 13,191 Earnings per share attributable to UnitedHealth Group common shareholders: Basic $ 4.33 $ 3.34 $ 14.00 $ 13.90 Diluted $ 4.28 $ 3.30 $ 13.82 $ 13.73 Basic weighted-average number of common shares outstanding 943 950 944 949 Dilutive effect of common share equivalents 12 12 12 12 Diluted weighted-average number of common shares outstanding 955 962 956 961 Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 1 6 2 9 See Notes to the Condensed Consolidated Financial Statements 2 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2021 2020 2021 2020 Net earnings $ 4,191 $ 3,256 $ 13,541 $ 13,417 Other comprehensive (loss) income: Gross unrealized (losses) gains on investment securities during the period ( 192 ) 148 ( 705 ) 919 Income tax effect 59 ( 37 ) 175 ( 214 ) Total unrealized (losses) gains, net of tax ( 133 ) 111 ( 530 ) 705 Gross reclassification adjustment for net realized gains included in net earnings ( 20 ) ( 21 ) ( 36 ) ( 50 ) Income tax effect 4 5 8 12 Total reclassification adjustment, net of tax ( 16 ) ( 16 ) ( 28 ) ( 38 ) Total foreign currency translation losses ( 621 ) ( 39 ) ( 484 ) ( 1,583 ) Other comprehensive (loss) income ( 770 ) 56 ( 1,042 ) ( 916 ) Comprehensive income 3,421 3,312 12,499 12,501 Comprehensive income attributable to noncontrolling interests ( 105 ) ( 84 ) ( 327 ) ( 226 ) Comprehensive income attributable to UnitedHealth Group common shareholders $ 3,316 $ 3,228 $ 12,172 $ 12,275 See Notes to the Condensed Consolidated Financial Statements 3 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 Three months ended September 30, (in millions) Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation Losses 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 Balance at June 30, 2020 950 $ 10 $ 388 $ 67,776 $ 1,161 $ ( 5,711 ) $ 2,891 $ 66,515 Net earnings 3,172 62 3,234 Other comprehensive income (loss) 95 ( 39 ) 56 Issuances of common stock, and related tax effects 2 — 321 321 Share-based compensation 131 131 Common share repurchases ( 3 ) — ( 805 ) ( 45 ) ( 850 ) Cash dividends paid on common shares ($ 1.25 per share) ( 1,188 ) ( 1,188 ) Redeemable noncontrolling interests fair value and other adjustments ( 35 ) ( 35 ) Acquisition and other adjustments of nonredeemable noncontrolling interests ( 8 ) ( 8 ) Distribution to nonredeemable noncontrolling interests ( 72 ) ( 72 ) Balance at September 30, 2020 949 $ 10 $ — $ 69,715 $ 1,256 $ ( 5,750 ) $ 2,873 $ 68,104 See Notes to the Condensed Consolidated Financial Statements 4 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, 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 ) Acquisition 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 Balance at January 1, 2020 948 $ 9 $ 7 $ 61,178 $ 589 $ ( 4,167 ) $ 2,820 $ 60,436 Adjustment to Adopt ASU 2016-13 ( 28 ) ( 28 ) Net earnings 13,191 159 13,350 Other comprehensive income (loss) 667 ( 1,583 ) ( 916 ) Issuances of common stock, and related tax effects 10 1 928 929 Share-based compensation 509 509 Common share repurchases ( 9 ) — ( 1,315 ) ( 1,226 ) ( 2,541 ) Cash dividends paid on common shares ($ 3.58 per share) ( 3,400 ) ( 3,400 ) Redeemable noncontrolling interests fair value and other adjustments ( 129 ) ( 129 ) Acquisitions and other adjustments of nonredeemable noncontrolling interests 42 42 Distribution to nonredeemable noncontrolling interests ( 148 ) ( 148 ) Balance at September 30, 2020 949 $ 10 $ — $ 69,715 $ 1,256 $ ( 5,750 ) $ 2,873 $ 68,104 See Notes to the Condensed Consolidated Financial Statements 5 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, (in millions) 2021 2020 Operating activities Net earnings $ 13,541 $ 13,417 Noncash items: Depreciation and amortization 2,332 2,159 Deferred income taxes 373 119 Share-based compensation 591 527 Other, net ( 195 ) 48 Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable ( 847 ) ( 194 ) Other assets ( 1,435 ) ( 2,697 ) Medical costs payable 3,925 ( 615 ) Accounts payable and other liabilities 1,171 3,441 Unearned revenues ( 331 ) ( 132 ) Cash flows from operating activities 19,125 16,073 Investing activities Purchases of investments ( 12,827 ) ( 11,570 ) Sales of investments 2,569 4,887 Maturities of investments 6,556 5,297 Cash paid for acquisitions, net of cash assumed ( 4,727 ) ( 4,326 ) Purchases of property, equipment and capitalized software ( 1,759 ) ( 1,477 ) Other, net ( 900 ) ( 165 ) Cash flows used for investing activities ( 11,088 ) ( 7,354 ) Financing activities Common share repurchases ( 3,950 ) ( 2,541 ) Cash dividends paid ( 3,915 ) ( 3,400 ) Proceeds from common stock issuances 1,077 1,206 Repayments of long-term debt ( 1,900 ) ( 1,500 ) Repayments of short-term borrowings, net ( 1,301 ) ( 423 ) Proceeds from issuance of long-term debt 6,934 4,864 Customer funds administered 1,402 249 Purchases of redeemable noncontrolling interests ( 1,338 ) — Other, net ( 837 ) ( 449 ) Cash flows used for financing activities ( 3,828 ) ( 1,994 ) Effect of exchange rate changes on cash and cash equivalents ( 45 ) ( 160 ) Increase in cash and cash equivalents 4,164 6,565 Cash and cash equivalents, beginning of period 16,921 10,985 Cash and cash equivalents, end of period $ 21,085 $ 17,550 See Notes to the Condensed Consolidated Financial Statements 6 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 diversified health care company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two complementary business platforms — Optum and UnitedHealthcare — are driven by this unified mission and vision to improve health care access, affordability, experiences and outcomes for the individuals and organizations we are 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” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC (2020 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. 7 Table of Contents 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, 2021 Debt securities - available-for-sale: U.S. government and agency obligations $ 3,625 $ 70 $ ( 23 ) $ 3,672 State and municipal obligations 7,093 341 ( 15 ) 7,419 Corporate obligations 21,987 547 ( 84 ) 22,450 U.S. agency mortgage-backed securities 6,281 156 ( 34 ) 6,403 Non-U.S. agency mortgage-backed securities 2,763 63 ( 13 ) 2,813 Total debt securities - available-for-sale 41,749 1,177 ( 169 ) 42,757 Debt securities - held-to-maturity: U.S. government and agency obligations 506 3 ( 1 ) 508 State and municipal obligations 30 2 — 32 Corporate obligations 80 — — 80 Total debt securities - held-to-maturity 616 5 ( 1 ) 620 Total debt securities $ 42,365 $ 1,182 $ ( 170 ) $ 43,377 December 31, 2020 Debt securities - available-for-sale: U.S. government and agency obligations $ 3,335 $ 133 $ ( 3 ) $ 3,465 State and municipal obligations 6,893 435 — 7,328 Corporate obligations 18,886 863 ( 12 ) 19,737 U.S. agency mortgage-backed securities 6,849 245 ( 3 ) 7,091 Non-U.S. agency mortgage-backed securities 2,116 95 ( 4 ) 2,207 Total debt securities - available-for-sale 38,079 1,771 ( 22 ) 39,828 Debt securities - held-to-maturity: U.S. government and agency obligations 420 6 — 426 State and municipal obligations 31 2 — 33 Corporate obligations 187 1 — 188 Total debt securities - held-to-maturity 638 9 — 647 Total debt securities $ 38,717 $ 1,780 $ ( 22 ) $ 40,475 The Company held $ 2.9 billion and $ 2.3 billion of equity securities as of September 30, 2021 and December 31, 2020, respectively. The Company’s investments in equity securities primarily consist of employee savings plan related investments, shares of Brazilian real denominated fixed-income funds with readily determinable fair values and other venture investments. Additionally, the Company’s investments included $ 1.3 billion of equity method investments in operating businesses in the health care sector as of September 30, 2021 and December 31, 2020. The allowance for credit losses on held-to-maturity securities at September 30, 2021 and December 31, 2020 was not material. 8 Table of Contents The amortized cost and fair value of debt securities as of September 30, 2021, 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 $ 2,871 $ 2,886 $ 234 $ 235 Due after one year through five years 13,492 13,826 333 334 Due after five years through ten years 12,062 12,406 26 27 Due after ten years 4,280 4,423 23 24 U.S. agency mortgage-backed securities 6,281 6,403 — — Non-U.S. agency mortgage-backed securities 2,763 2,813 — — Total debt securities $ 41,749 $ 42,757 $ 616 $ 620 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, 2021 Debt securities - available-for-sale: U.S. government and agency obligations $ 1,499 $ ( 16 ) $ 117 $ ( 7 ) $ 1,616 $ ( 23 ) State and municipal obligations 1,226 ( 15 ) — — 1,226 ( 15 ) Corporate obligations 6,471 ( 75 ) 326 ( 9 ) 6,797 ( 84 ) U.S. agency mortgage-backed securities 2,537 ( 34 ) — — 2,537 ( 34 ) Non-U.S. agency mortgage-backed securities 830 ( 9 ) 92 ( 4 ) 922 ( 13 ) Total debt securities - available-for-sale $ 12,563 $ ( 149 ) $ 535 $ ( 20 ) $ 13,098 $ ( 169 ) December 31, 2020 Debt securities - available-for-sale: U.S. government and agency obligations $ 346 $ ( 3 ) $ — $ — $ 346 $ ( 3 ) Corporate obligations 1,273 ( 9 ) 456 ( 3 ) 1,729 ( 12 ) U.S. agency mortgage-backed securities 601 ( 3 ) — — 601 ( 3 ) Non-U.S. agency mortgage-backed securities 195 ( 1 ) 93 ( 3 ) 288 ( 4 ) Total debt securities - available-for-sale $ 2,415 $ ( 16 ) $ 549 $ ( 6 ) $ 2,964 $ ( 22 ) The Company’s unrealized losses from debt securities as of September 30, 2021 were generated from approximately 9,000 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 primarily caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities that impacted our 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, 2021, 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, 2021 and December 31, 2020 was not material. 9 Table of Contents 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 in Part II, Item 8, “Financial Statements” in the 2020 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, 2021 Cash and cash equivalents $ 20,944 $ 141 $ — $ 21,085 Debt securities - available-for-sale: U.S. government and agency obligations 3,446 226 — 3,672 State and municipal obligations — 7,419 — 7,419 Corporate obligations 62 22,165 223 22,450 U.S. agency mortgage-backed securities — 6,403 — 6,403 Non-U.S. agency mortgage-backed securities — 2,813 — 2,813 Total debt securities - available-for-sale 3,508 39,026 223 42,757 Equity securities 1,972 22 64 2,058 Assets under management 1,930 2,271 103 4,304 Total assets at fair value $ 28,354 $ 41,460 $ 390 $ 70,204 Percentage of total assets at fair value 40 % 59 % 1 % 100 % December 31, 2020 Cash and cash equivalents $ 16,841 $ 80 $ — $ 16,921 Debt securities - available-for-sale: U.S. government and agency obligations 3,241 224 — 3,465 State and municipal obligations — 7,328 — 7,328 Corporate obligations 25 19,424 288 19,737 U.S. agency mortgage-backed securities — 7,091 — 7,091 Non-U.S. agency mortgage-backed securities — 2,207 — 2,207 Total debt securities - available-for-sale 3,266 36,274 288 39,828 Equity securities 1,795 33 — 1,828 Assets under management 1,774 2,250 52 4,076 Total assets at fair value $ 23,676 $ 38,637 $ 340 $ 62,653 Percentage of total assets at fair value 38 % 61 % 1 % 100 % There were no transfers in or out of Level 3 financial assets or liabilities during the nine months ended September 30, 2021 or 2020. 10 Table of Contents 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, 2021 Debt securities - held-to-maturity $ 525 $ 88 $ 7 $ 620 $ 616 Long-term debt and other financing obligations $ — $ 53,425 $ — $ 53,425 $ 46,965 December 31, 2020 Debt securities - held-to-maturity $ 466 $ 108 $ 73 $ 647 $ 638 Long-term debt and other financing obligations $ — $ 51,254 $ — $ 51,254 $ 42,171 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 either the nine months ended September 30, 2021 or 2020. 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) 2021 2020 Medical costs payable, beginning of period $ 21,872 $ 21,690 Acquisitions 88 186 Reported medical costs: Current year 140,052 118,114 Prior years ( 1,300 ) ( 800 ) Total reported medical costs 138,752 117,314 Medical payments: Payments for current year ( 116,135 ) ( 98,548 ) Payments for prior years ( 18,659 ) ( 19,475 ) Total medical payments ( 134,794 ) ( 118,023 ) Medical costs payable, end of period $ 25,918 $ 21,167 For the nine months ended September 30, 2021 and September 30, 2020, prior years medical cost reserve development was primarily driven by lower than expected health system utilization. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of $ 17.6 billion and $ 14.8 billion at September 30, 2021 and December 31, 2020, respectively. 5. Short-Term Borrowings and Long-Term Debt In May 2021, the Company issued $ 7.0 billion of senior unsecured notes consisting of the following: (in millions, except percentages) Par Value 0.550 % notes due May 2024 $ 1,000 1.150 % notes due May 2026 1,000 2.300 % notes due May 2031 1,500 3.050 % notes due May 2041 1,500 3.250 % notes due May 2051 2,000 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 in Part II, Item 8, “Financial Statements” in the 2020 10-K. 11 Table of Contents 6. Dividends In June 2021, the Company’s Board of Directors increased the Company’s quarterly cash dividend to shareholders to an annual rate of $5.80 compared to $5.00 per share, which the Company had paid since June 2020. Declaration and payment of future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions change. The following table provides details of the Company’s 2021 dividend payments: Payment Date Amount per Share Total Amount Paid (in millions) March 23 $ 1.25 $ 1,181 June 29 1.45 1,367 September 21 1.45 1,367 7. Commitments and Contingencies Pending Acquisitions The Company has entered into agreements to purchase companies in the health care sector, most notably Change Healthcare (NASDAQ: CHNG), subject to regulatory approvals and other customary closing conditions. The total anticipated capital required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $ 9 billion. 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. 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 of Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the U.S. 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 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 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, 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. 12 Table of Contents 8. Segment Financial Information The Company’s four reportable segments are UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. For more information on the Company’s segments see Part I, Item I, “Business” and Note 14 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements” in the 2020 10-K. The following tables present reportable segment financial information: Optum (in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Optum Eliminations Optum Corporate and Eliminations Consolidated 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 Three Months Ended September 30, 2020 Revenues - unaffiliated customers: Premiums $ 48,121 $ 2,742 $ — $ — $ — $ 2,742 $ — $ 50,863 Products — 10 34 8,733 — 8,777 — 8,777 Services 2,075 1,834 974 241 — 3,049 — 5,124 Total revenues - unaffiliated customers 50,196 4,586 1,008 8,974 — 14,568 — 64,764 Total revenues - affiliated customers — 5,748 1,755 13,102 ( 424 ) 20,181 ( 20,181 ) — Investment and other income 177 165 4 5 — 174 — 351 Total revenues $ 50,373 $ 10,499 $ 2,767 $ 22,081 $ ( 424 ) $ 34,923 $ ( 20,181 ) $ 65,115 Earnings from operations $ 2,068 $ 835 $ 785 $ 963 $ — $ 2,583 $ — $ 4,651 Interest expense — — — — — — ( 395 ) ( 395 ) Earnings before income taxes $ 2,068 $ 835 $ 785 $ 963 $ — $ 2,583 $ ( 395 ) $ 4,256 13 Table of Contents Optum (in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Optum Eliminations Optum Corporate and Eliminations Consolidated 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 Nine Months Ended September 30, 2020 Revenues - unaffiliated customers: Premiums $ 143,753 $ 7,144 $ — $ — $ — $ 7,144 $ — $ 150,897 Products — 26 90 25,339 — 25,455 — 25,455 Services 6,248 4,607 2,629 781 — 8,017 — 14,265 Total revenues - unaffiliated customers 150,001 11,777 2,719 26,120 — 40,616 — 190,617 Total revenues - affiliated customers — 16,623 5,140 38,843 ( 1,275 ) 59,331 ( 59,331 ) — Investment and other income 547 430 34 46 — 510 — 1,057 Total revenues $ 150,548 $ 28,830 $ 7,893 $ 65,009 $ ( 1,275 ) $ 100,457 $ ( 59,331 ) $ 191,674 Earnings from operations $ 11,963 $ 2,388 $ 1,882 $ 2,655 $ — $ 6,925 $ — $ 18,888 Interest expense — — — — — — ( 1,262 ) ( 1,262 ) Earnings before income taxes $ 11,963 $ 2,388 $ 1,882 $ 2,655 $ — $ 6,925 $ ( 1,262 ) $ 17,626 14 Table of Contents