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Item 8. Financial Statements and Supplementary Data

2022-02-15 compared with 2021-03-01 · 144 added, 225 removed, 934 unchanged (28% of the section changed)

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

R eport of Independent Registered Public Accounting Firm ( PCAOB ID No 34 )

Consolidated Balance Sheets

13 unchanged sentences

Commitments and Contingencies

Business Combinations

Segment Financial Information

4 unchanged sentences

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2021 expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 15, 2022 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

10 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit and finance committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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These estimates are referred to as incurred but not reported (IBNR) claim liabilities.

At December 31, 2021 the Company’s IBNR balance was $17 billion.

The Company develops IBNR estimates using an actuarial model that requires management to exercise certain judgments in developing its estimates.

Judgments made by management include medical cost per member per month trend factors and completion factors, which include assumptions over the time from date of service to claim receipt, the impact of claim levels, and processing cycles.

We identified the IBNR claim liability as a critical audit matter because of the significant assumptions made by management in estimating the liability.

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Our audit procedures included the following, among others:

• We tested the effectiveness of controls over management’s estimate of the IBNR claim liability balance, including controls over the judgments in both the completion factors and the medical cost per member per month trend factors.

• We tested the underlying claims and membership data and other information that served as the basis for the actuarial analysis, to test that the inputs to the actuarial estimate were complete and accurate.

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The market-based method requires determination of an appropriate group of peer companies whose securities are traded on an active market.

The fair values of the reporting units exceeded the carrying values as of the impairment testing date, therefore no impairment was recognized.

The annual impairment test indicated that the fair values of the reporting units exceeded the carrying values as of the impairment testing date;

therefore, no impairment was recognized.

We identified a critical audit matter related to the quantitative analysis performed for such reporting units because of the significant assumptions made by management to estimate the fair value of the reporting unit.

14 unchanged sentences

Minneapolis, Minnesota

March 1, 2021

February 15, 2022

We have served as the Company's auditor since 2002.

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Other current receivables, net of allowances of $ 993 and $ 1,047

13,866 12,534

Assets under management 4,449 4,076

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Other comprehensive (loss) income:

Gross unrealized gains (losses) on investment securities during the period

1,058 1,212 ( 294 )

Gross unrealized (losses) gains on investment securities during the period ( 1,028 ) 1,058 1,212

Income tax effect 248 ( 253 ) ( 279 )

Total unrealized gains (losses), net of tax

805 933 ( 227 )

Total unrealized (losses) gains, net of tax ( 780 ) 805 933

Gross reclassification adjustment for net realized gains included in net earnings

21 unchanged sentences

13,839 285 14,124

Other comprehensive loss

( 275 ) ( 1,242 ) ( 1,517 )

Other comprehensive income (loss) 853 ( 271 ) 582

Issuances of common stock, and related tax effects

7 unchanged sentences

Acquisition and other adjustments of nonredeemable noncontrolling interests

( 109 ) 196 87

Distributions to nonredeemable noncontrolling interest

3 unchanged sentences

15,403 254 15,657

13,839 285 14,124

Other comprehensive income (loss)

1 unchanged sentence

Issuances of common stock, and related tax effects

12 1 1,119 1,120

Share-based compensation

5 unchanged sentences

Acquisition and other adjustments of nonredeemable noncontrolling interests

( 109 ) 196 87

Distributions to nonredeemable noncontrolling interest

2 unchanged sentences

17,285 360 17,645

Adjustment to adopt ASU 2016-13

( 28 ) ( 28 )

15,403 254 15,657

Other comprehensive income (loss) 747 ( 983 ) ( 236 )

Other comprehensive loss ( 913 ) ( 657 ) ( 1,570 )

Issuances of common stock, and related tax effects

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Balance at December 31, 2021 941 $ 10 $ — $ 77,134 $ 423 $ ( 5,807 ) $ 3,285 $ 75,045

946 $ 10 $ — $ 69,295 $ 1,336 $ ( 5,150 ) $ 2,837 $ 68,328

See Notes to the Consolidated Financial Statements

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Repayments of long-term debt ( 3,150 ) ( 3,150 ) ( 1,750 )

Proceeds from (repayments of) short-term borrowings, net 872 300 ( 201 )

(Repayments of) proceeds from short-term borrowings, net ( 1,302 ) 872 300

Proceeds from issuance of long-term debt 6,933 4,864 5,444

Customer funds administered 622 1,677 13

Purchases of redeemable noncontrolling interests ( 1,338 ) — ( 618 )

Other, net ( 295 ) ( 459 ) ( 619 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 62 ) ( 116 ) ( 20 )

Increase (decrease) in cash and cash equivalents 5,936 119 ( 1,115 )

Increase in cash and cash equivalents 4,454 5,936 119

Cash and cash equivalents, beginning of period 16,921 10,985 10,866

7 unchanged sentences

Description of Business

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 businesses — 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.

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 we are privileged to serve.

Basis of Presentation, Use of Estimates and Significant Accounting Policies

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Premium revenues are recognized based on the estimated premiums earned, net of projected rebates, because the Company is able to reasonably estimate the ultimate premiums of these contracts.

The Company also records premium revenues for certain risk-based arrangements at its OptumHealth care delivery businesses.

The Company also records premium revenues for certain value-based arrangements at its Optum Health care delivery businesses.

Under these value-based arrangements, the Company enters into agreements with health plans to stand ready to deliver, integrate, direct and control certain health care services for the individuals enrolled.

In exchange, the Company receives a premium that is typically paid on a per-member per-month basis.

The Company considers these value-based arrangements to represent a single performance obligation where premium revenues are recognized in the period in which health care services are made available.

The Company’s Medicare Advantage and Medicare Part D premium revenues are subject to periodic adjustment under CMS’ risk adjustment payment methodology.

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Products and Services

For the Company’s OptumRx pharmacy care services business, the majority of revenues are derived from products sold through a contracted network of retail pharmacies or home delivery, specialty and community health pharmacies.

Product revenues include the cost of pharmaceuticals (net of rebates), a negotiated dispensing fee and customer co-payments for drugs dispensed

through the Company’s home delivery, specialty and community pharmacies.

For the year ended December 31, 2020, the Company recognized revenue and cost of products sold for retail pharmacy co-payments related to its OptumRx business.

For the Company’s Optum Rx pharmacy care services business, the majority of revenues are derived from products sold through a contracted network of retail pharmacies or home delivery, specialty and community health pharmacies.

Product revenues include the cost of pharmaceuticals (net of rebates), a negotiated dispensing fee and customer co-payments for drugs dispensed through the Company’s home delivery, specialty and community pharmacies.

For the years ended December 31, 2021 and 2020, the Company recognized revenue and cost of products sold for retail pharmacy co-payments related to its Optum Rx business.

Revenue recognized in prior periods related to retail pharmacy transactions excludes the member’s applicable co-payment.

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The Company is also involved in establishing the prices charged by retail pharmacies, determining which drugs will be included in formulary listings and selecting which retail pharmacies will be included in the network offered to plan sponsors’ members and accordingly, are reported on a gross basis.

Services revenue consists of fees derived from services performed for customers who self-insure the health care costs of their employees and employees’ dependents.

Services revenue are comprised of a number of services and products sold through Optum.

Optum Health’s service revenues include net patient service revenues recorded based upon established billing rates, less allowances for contractual adjustments, and are recognized as services are provided.

For its financial services offerings, Optum Health charges fees and earns investment income on managed funds.

Optum Insight provides software and information products, advisory consulting arrangements and managed services outsourcing contracts, which may be delivered over several years.

Optum Insight revenues are generally recognized over time and measured each period based on the progress to date as services are performed or made available to customers.

Services revenue also consists of fees derived from services performed for customers who self-insure the health care costs of their employees and employees’ dependents.

Under service fee contracts, the Company receives monthly, a fixed fee per employee, which is recognized as revenue as the Company performs, or makes available, the applicable services to the customer.

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These services are performed throughout the contract period.

Revenues are also comprised of a number of services and products sold through Optum.

OptumHealth’s service revenues include net patient service revenues recorded based upon established billing rates, less allowances for contractual adjustments, and are recognized as services are provided.

For its financial services offerings, OptumHealth charges fees and earns investment income on managed funds.

OptumInsight provides software and information products, advisory consulting arrangements and managed services outsourcing contracts, which may be delivered over several years.

OptumInsight revenues are generally recognized over time and measured each period based on the progress to date as services are performed or made available to customers.

As of December 31, 2021 and 2020, accounts receivables related to products and services were $ 5.4 billion and $ 5.3 billion, respectively.

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Approximately 90 % of claims related to medical care services are known and settled within 90 days from the date of service and substantially all within twelve months.

Medical costs and medical costs payable include estimates of the Company’s obligations for medical care services rendered on behalf of insured consumers, but for which claims have either not yet been received, processed, or paid.

Medical costs and medical costs payable include estimates of the Company’s obligations for medical care services rendered on behalf of consumers, but for which claims have either not yet been received, processed, or paid.

The Company develops estimates for medical care services incurred but not reported (IBNR), which includes estimates for claims which have not been received or fully processed, using an actuarial process consistently applied, centrally controlled and automated.

The actuarial models consider factors such as time from date of service to claim processing, seasonal variances in medical care consumption, health care professional contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, the introduction of new technologies, benefit plan changes, and business mix changes related to products, customers and geography.

Judgments related to these factors contemplated the impact of COVID-19 in 2020.

The actuarial

models consider factors such as time from date of service to claim processing, seasonal variances in medical care consumption, health care professional contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, the introduction of new technologies, benefit plan changes, and business mix changes related to products, customers and geography.

Judgments related to these factors contemplated the impact of COVID-19.

In developing its medical costs payable estimates, the Company applies different estimation methods depending on which incurred claims are being estimated.

3 unchanged sentences

The Company’s cost of products sold includes the cost of pharmaceuticals dispensed to unaffiliated customers either directly at its home delivery, specialty and community pharmacy locations, or indirectly through its nationwide network of participating pharmacies.

Rebates attributable to non-affiliated clients are accrued as rebates receivable and a reduction of cost of products sold, with a corresponding payable for the amounts of the rebates to be remitted to those non-affiliated clients in accordance with their contracts and recorded in the Consolidated Statements of Operations as a reduction of product revenue.

Rebates attributable to unaffiliated clients are accrued as rebates receivable and a reduction of cost of products sold, with a corresponding payable for the amounts of the rebates to be remitted to those unaffiliated clients in accordance with their contracts and recorded in the Consolidated Statements of Operations as a reduction of product revenue.

Cost of products sold also includes the cost of personnel to support the Company’s transaction processing services, system sales, maintenance and professional services.

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Other current receivables include amounts due from pharmaceutical manufacturers for rebates and Medicare Part D drug discounts, accrued interest and other miscellaneous amounts due to the Company.

The Company’s pharmacy care services businesses contract with pharmaceutical manufacturers, some of which provide rebates based on use of the manufacturers’ products by its affiliated and non-affiliated clients.

The Company accrues rebates as they are earned by its clients on a monthly basis based on the terms of the applicable contracts, historical data and current estimates.

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If the fair value is less than the carrying value of the reporting unit, an impairment is recognized for the difference, up to the carrying amount of goodwill.

There was no impairment of goodwill during the year ended December 31, 2020.

There was no impairment of goodwill during the years ended December 31, 2021, 2020 and 2019.

Intangible Assets

1 unchanged sentence

The Company’s indefinite-lived intangible assets are also tested for impairment annually.

There was no impairment of intangible assets during the year ended December 31, 2020.

There was no impairment of intangible assets during the years ended December 31, 2021, 2020 and 2019.

Other Current Liabilities

Other current liabilities include health savings account deposits ($ 10.2 billion and $ 8.3 billion as of December 31, 2020 and 2019, respectively), the RSF associated with the AARP Program, accruals for premium rebates payable, the current portion of future policy benefits and customer balances.

Other current liabilities include health savings account deposits ($ 11.4 billion and $ 10.2 billion as of December 31, 2021 and 2020, respectively), accruals for premium rebates payable, the RSF associated with the AARP Program, the current portion of future policy benefits and customer balances.

Policy Acquisition Costs

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The difference between the number of shares assumed issued and number of shares assumed purchased represents the dilutive shares.

The ACA included an annual, nondeductible insurance industry tax (Health Insurance Industry Tax) to be levied proportionally across the insurance industry for risk-based health insurance products.

After a moratorium in 2019, the industry wide amount of the Health Insurance Industry Tax for 2020, which was primarily borne by the customer, was $15.5 billion, of which the Company’s portion was approximately $ 3.0 billion.

The Health Insurance Industry Tax was permanently repealed by Congress, effective January 1, 2021.

Recently Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.

2016-13, “Financial Instruments - Credit Losses (Topic 326)” (ASU 2016-13).

ASU 2016-13 requires the use of the current expected credit loss impairment model to develop an estimate of expected credit losses for certain financial assets.

ASU 2016-13 also requires expected credit losses on available-for-sale debt securities to be recognized through an allowance for credit losses and revises certain disclosure requirements.

The Company adopted ASU 2016-13 on January 1, 2020 using a cumulative effect upon adoption approach.

The adoption of ASU 2016-13 was immaterial to the Company’s consolidated balance sheet, results of operations, equity and cash flows.

The Company has determined there have been no other recently adopted or issued accounting standards which had, or will have, a material impact on its Consolidated Financial Statements.

The Health Insurance Tax was permanently repealed by Congress, effective January 1, 2021.

The permanent repeal of the tax impacts year-over-year comparability of our financial statements, including revenues, operating costs, medical care ratio (MCR), operating cost ratio, effective tax rate and cash flows from operations.

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

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Nearly all of the Company’s investments in mortgage-backed securities were rated “Triple A” as of December 31, 2021.

The Company held $ 2.3 billion and $ 2.0 billion of equity securities as of December 31, 2020 and December 31, 2019, respectively.

The Company’s investments in equity securities primarily consist of employee savings plan related investments and shares of Brazilian real denominated fixed-income funds with readily determinable fair values.

Additionally, the Company’s investments included $ 1.3 billion and $ 1.4 billion of equity method investments in operating businesses in the

health care sector, as of December 31, 2020 and 2019, respectively.

The allowance for credit losses on held-to-maturity securities at December 31, 2020 was not material.

The Company held $ 3.5 billion and $ 2.3 billion of equity securities as of December 31, 2021 and 2020, 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 $ 1.3 billion of equity method investments in operating businesses in the health care sector, as of both December 31, 2021 and 2020.

The allowance for credit losses on held-to-maturity securities as of December 31, 2021 and 2020 was not material.

The amortized cost and fair value of debt securities as of December 31, 2021, by contractual maturity, were as follows:

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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 )

6 unchanged sentences

government and agency obligations $ 346 $ ( 3 ) $ — $ — $ 346 $ ( 3 )

State and municipal obligations 440 ( 5 ) — — 440 ( 5 )

Corporate obligations 1,273 ( 9 ) 456 ( 3 ) 1,729 ( 12 )

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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, and the potential economic impacts of COVID-19 on the issuers, noting no significant credit deterioration since purchase.

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 December 31, 2021, the Company did not have the intent to sell any of the 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 December 31, 2020 was not material.

The allowance for credit losses on available-for-sale debt securities as of December 31, 2021 and 2020 was not material.

Certain assets and liabilities are measured at fair value in the Consolidated Financial Statements or have fair values disclosed in the Notes to the Consolidated Financial Statements.

These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.

In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety based on the lowest level input which is significant to

the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

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Nonfinancial assets and liabilities or financial assets and liabilities 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 years ended December 31, 2020 or 2019.

For the year ended December 31, 2021, the Company recognized $ 840 million of unrealized gains in investment and other income related to fair value adjustments on equity securities primarily in our venture portfolio, based on transactions of the same or similar security.

There were no other significant fair value adjustments for these assets and liabilities recorded during the years ended December 31, 2021 or 2020.

The following methods and assumptions were used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument included in the tables below:

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Changes in the carrying amount of goodwill, by reportable segment, were as follows:

(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Consolidated

(in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Consolidated

Balance at January 1, 2020 $ 27,228 $ 15,342 $ 8,292 $ 14,797 $ 65,659

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(in millions)

Amortization expense relating to intangible assets for the years ended December 31, 2020, 2019 and 2018 was $ 1.1 billion, $ 1.0 billion and $ 898 million, respectively.

Amortization expense relating to intangible assets for the years ended December 31, 2021, 2020 and 2019 was $ 1.2 billion, $ 1.1 billion and $ 1.0 billion, respectively.

Medical Costs Payable

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For the years ended December 31, 2021, 2020 and 2019 medical cost reserve development was primarily driven by lower than expected health system utilization levels.

For the year ended December 31, 2018, no individual factors significantly impacted medical cost reserve development.

Additionally, medical cost reserve development in the year ended December 31, 2021 was driven by the uncertainty of care patterns due to the disruption of the health care system caused by COVID-19.

Medical costs payable included IBNR of $ 17.1 billion and $ 14.8 billion at December 31, 2021 and 2020, respectively.

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Short-term borrowings and senior unsecured long-term debt consisted of the following:

December 31, 2020 December 31, 2019

(in millions, except percentages) Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value

Carrying Value As of December 31,

(in millions, except percentages) 2021 2020

Commercial paper $ — $ 1,296

2.700 % notes due July 2020

— — — 1,500 1,499 1,506

Floating rate notes due October 2020 — — — 300 300 300

3.875 % notes due October 2020

— — — 450 450 455

1.950 % notes due October 2020

— — — 900 899 900

4.700 % notes due February 2021

400 400 401 400 403 410

2.125 % notes due March 2021

750 750 753 750 749 753

Floating rate notes due June 2021

350 350 350 350 349 350

3.150 % notes due June 2021

400 400 405 400 399 407

3.375 % notes due November 2021

500 507 509 500 501 512

2.875 % notes due December 2021

750 762 768 750 753 765

2.875 % notes due March 2022

1,100 1,113 1,127 1,100 1,087 1,121

3.350 % notes due July 2022

1,000 999 1,048 1,000 998 1,036

2.375 % notes due October 2022

900 897 935 900 896 911

0.000 % notes due November 2022

15 14 14 15 13 14

2.750 % notes due February 2023

625 644 654 625 624 638

2.875 % notes due March 2023

750 789 793 750 770 770

3.500 % notes due June 2023

750 748 809 750 747 786

3.500 % notes due February 2024

750 747 821 750 746 792

2.375 % notes due August 2024

750 747 799 750 747 760

3.750 % notes due July 2025

2,000 1,992 2,279 2,000 1,990 2,161

3.700 % notes due December 2025

300 298 344 300 298 325

1.250 % notes due January 2026

500 496 515 — — —

3.100 % notes due March 2026

1,000 997 1,121 1,000 996 1,048

3.450 % notes due January 2027

750 747 859 750 746 804

3.375 % notes due April 2027

625 620 714 625 620 667

2.950 % notes due October 2027

950 940 1,067 950 939 988

3.850 % notes due June 2028

1,150 1,143 1,367 1,150 1,142 1,269

3.875 % notes due December 2028

850 844 1,019 850 843 941

2.875 % notes due August 2029

1,000 1,086 1,137 1,000 993 1,029

2.000 % notes due May 2030

1,250 1,234 1,326 — — —

4.625 % notes due July 2035

1,000 992 1,340 1,000 992 1,215

5.800 % notes due March 2036

850 839 1,271 850 838 1,129

6.500 % notes due June 2037

500 492 800 500 492 712

6.625 % notes due November 2037

650 641 1,044 650 641 940

6.875 % notes due February 2038

1,100 1,077 1,802 1,100 1,076 1,631

3.500 % notes due August 2039

1,250 1,241 1,487 1,250 1,241 1,313

2.750 % notes due May 2040

1,000 964 1,085 — — —

5.700 % notes due October 2040

300 296 451 300 296 396

5.950 % notes due February 2041

350 346 540 350 345 475

4.625 % notes due November 2041

600 589 820 600 589 716

4.375 % notes due March 2042

502 485 661 502 484 580

3.950 % notes due October 2042

625 608 790 625 607 688

4.250 % notes due March 2043

750 735 982 750 735 856

4.750 % notes due July 2045

2,000 1,974 2,814 2,000 1,973 2,463

4.200 % notes due January 2047

750 738 991 750 738 861

4.250 % notes due April 2047

725 717 963 725 717 839

3.750 % notes due October 2047

950 934 1,180 950 934 1,023

4.250 % notes due June 2048

1,350 1,330 1,803 1,350 1,330 1,569

4.450 % notes due December 2048

1,100 1,086 1,517 1,100 1,086 1,316

3.700 % notes due August 2049

1,250 1,235 1,567 1,250 1,235 1,344

2.900 % notes due May 2050

1,250 1,208 1,384 — — —

3.875 % notes due August 2059

1,250 1,228 1,618 1,250 1,228 1,350

3.125 % notes due May 2060

1,000 965 1,161 — — —

$ 400 million 4.700 % notes due February 2021

$ 750 million 2.125 % notes due March 2021

$ 350 million Floating rate notes due June 2021

$ 400 million 3.150 % notes due June 2021

$ 500 million 3.375 % notes due November 2021

$ 750 million 2.875 % notes due December 2021

$ 1,100 million 2.875 % notes due March 2022

$ 1,000 million 3.350 % notes due July 2022

$ 900 million 2.375 % notes due October 2022

$ 15 million 0.000 % notes due November 2022

$ 625 million 2.750 % notes due February 2023

$ 750 million 2.875 % notes due March 2023

$ 750 million 3.500 % notes due June 2023

$ 750 million 3.500 % notes due February 2024

$ 1,000 million 0.550 % notes due May 2024

$ 750 million 2.375 % notes due August 2024

$ 2,000 million 3.750 % notes due July 2025

$ 300 million 3.700 % notes due December 2025

$ 500 million 1.250 % notes due January 2026

$ 1,000 million 3.100 % notes due March 2026

$ 1,000 million 1.150 % notes due May 2026

$ 750 million 3.450 % notes due January 2027

$ 625 million 3.375 % notes due April 2027

$ 950 million 2.950 % notes due October 2027

$ 1,150 million 3.850 % notes due June 2028

$ 850 million 3.875 % notes due December 2028

$ 1,000 million 2.875 % notes due August 2029

$ 1,250 million 2.000 % notes due May 2030

$ 1,500 million 2.300 % notes due May 2031

$ 1,000 million 4.625 % notes due July 2035

$ 850 million 5.800 % notes due March 2036

$ 500 million 6.500 % notes due June 2037

$ 650 million 6.625 % notes due November 2037

$ 1,100 million 6.875 % notes due February 2038

$ 1,250 million 3.500 % notes due August 2039

$ 1,000 million 2.750 % notes due May 2040

$ 300 million 5.700 % notes due October 2040

$ 350 million 5.950 % notes due February 2041

$ 1,500 million 3.050 % notes due May 2041

$ 600 million 4.625 % notes due November 2041

$ 502 million 4.375 % notes due March 2042

$ 625 million 3.950 % notes due October 2042

$ 750 million 4.250 % notes due March 2043

$ 2,000 million 4.750 % notes due July 2045

$ 750 million 4.200 % notes due January 2047

$ 725 million 4.250 % notes due April 2047

$ 950 million 3.750 % notes due October 2047

$ 1,350 million 4.250 % notes due June 2048

$ 1,100 million 4.450 % notes due December 2048

$ 1,250 million 3.700 % notes due August 2049

$ 1,250 million 2.900 % notes due May 2050

$ 2,000 million 3.250 % notes due May 2051

$ 1,250 million 3.875 % notes due August 2059

$ 1,000 million 3.125 % notes due May 2060

Total short-term borrowings and long-term debt $ 44,632 $ 42,280

The Company’s long-term debt obligations also included $ 1.2 billion of other financing obligations as of both December 31, 2020 and 2019, of which $ 354 million and $ 322 million were current as of December 31, 2020 and 2019, respectively.

The Company’s long-term debt obligations also included $ 1.4 billion and $ 1.2 billion of other financing obligations, of which $ 611 million and $ 354 million were current as of December 31, 2021 and 2020, respectively.

Maturities of short-term borrowings and long-term debt for the years ending December 31 are as follows:

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Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers.

As of December 31, 2020, the Company’s outstanding commercial paper had a weighted-average annual interest rate of 0.2 %.

The Company has $ 5.6 billion five-year, $ 5.6 billion three-year and $ 3.8 billion 364-day revolving bank credit facilities with 24 banks, which mature in December 2026, December 2024 and December 2022, respectively.

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As of December 31, 2021, no amounts had been drawn on any of the bank credit facilities.

The annual interest rates, which are variable based on term, are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings.

The annual interest rates, which are variable based on term, are calculated based on one-month Term Secured Overnight Financing Rate (SOFR) plus a SOFR Adjustment of 10 basis points plus a credit spread based on the Company’s senior unsecured credit ratings.

If amounts had been drawn on the bank credit facilities as of December 31, 2021, annual interest rates would have ranged from 0.8 % to 0.9 %.

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Total current provision 4,448 4,981 3,512

Deferred (benefit) provision ( 8 ) 230 42

Deferred provision (benefit) 130 ( 8 ) 230

Total provision for income taxes $ 4,578 $ 4,973 $ 3,742

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The Company believes it is reasonably possible its liability for unrecognized tax benefits will decrease in the next twelve months by $ 42 million as a result of audit settlements and the expiration of statutes of limitations.

The Company classifies interest and penalties associated with uncertain income tax positions as income taxes within its Consolidated Statements of Operations.

During the years ended December 31, 2020, 2019 and 2018, the Company recognized $ 52 million, $ 19 million and $ 6 million of interest and penalties, respectively.

The Company classifies net interest and penalties associated with uncertain income tax positions as income taxes within its Consolidated Statements of Operations.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 66 million, $ 52 million and $ 19 million of net interest and penalties, respectively.

The Company had $ 194 million and $ 128 million of accrued interest and penalties for uncertain tax positions as of December 31, 2021 and 2020, respectively.

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The Company’s outstanding share-based awards consist mainly of non-qualified stock options and restricted shares.

In June 2020, the Company’s Board of Directors approved 48 million additional shares under the Plan.

As of December 31, 2020, the Company had 71 million shares available for future grants of share-based awards under the Plan.

As of December 31, 2020, there were also 4 million shares of common stock available for issuance under the ESPP.

As of December 31, 2021, the Company had 64 million shares available for future grants of share-based awards under the 2020 Stock Incentive Plan.

In June 2021, the Company’s shareholders approved 15 million additional shares under the ESPP.

As of December 31, 2021, there were 18 million shares of common stock available for issuance under the ESPP.

Stock Options

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Commitments and Contingencies

Operating lease costs were $ 1.1 billion, $ 1.0 billion and $ 751 million for the years ended December 31, 2020, 2019 and 2018, respectively, and included immaterial variable and short-term lease costs for the year ended December 31, 2020 and 2019.

Cash payments made on the Company’s operating lease liabilities were $ 865 million and $ 746 million for the years ended December 31, 2020 and 2019, respectively, which were classified within operating activities in the Consolidated Statements of Cash Flows.

Operating lease costs were $ 1.2 billion, $ 1.1 billion and $ 1.0 billion for the years ended December 31, 2021, 2020 and 2019, respectively, and included immaterial variable and short-term lease costs for the year ended December 31, 2021, 2020 and 2019.

Cash payments made on the Company’s operating lease liabilities were $ 921 million, $ 865 million and $ 746 million for the years ended December 31, 2021, 2020 and 2019, respectively, which were classified within operating activities in the Consolidated Statements of Cash Flows.

As of December 31, 2021, the Company’s weighted-average remaining lease term and weighted-average discount rate for its operating leases were 8.7 years and 2.9 %, respectively.

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Pending Acquisitions

In the fourth quarter of 2020, the Company entered into agreements to acquire multiple companies in the health care sector, which are expected to close in the first half of 2021, subject to regulatory approval and other customary closing conditions.

Additionally, in January 2021, the Company entered into agreements to purchase multiple companies in the health care sector, most notably, Change Healthcare (NASDAQ:

This acquisition is expected to close in the second half of 2021, subject to Change Healthcare shareholders’ approval, regulatory approvals and other customary closing conditions.

In 2021, we entered into agreements to acquire multiple companies in the health care sector, most notably, Change Healthcare (NASDAQ:

CHNG), subject to regulatory approval and other customary closing conditions.

Additionally, in January 2022, we entered into agreements to acquire multiple companies in the health care sector, subject to regulatory approval and other customary closing conditions.

The total anticipated capital required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $ 12 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.

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.

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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 a loss may be incurred.

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 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 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.

Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S.

Congressional committees, the U.S.

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The Company cannot reasonably estimate the outcome which may result from this matter given its procedural status.

Business Combinations

During the year ended December 31, 2020, the Company completed several business combinations for total cash consideration of $ 7.9 billion.

The total consideration exceeded the fair value of the net tangible assets acquired by $ 8.1 billion, of which $ 1.7 billion has been allocated to finite-lived intangible assets and $ 6.4 billion to goodwill.

The majority of goodwill is not deductible for income tax purposes.

Acquired tangible assets (liabilities) at acquisition date were:

(in millions)

Cash and cash equivalents $ 715

Accounts receivable and other current assets 735

Property, equipment and other long-term assets 816

Medical costs payable ( 316 )

Accounts payable and other current liabilities ( 861 )

Other long-term liabilities ( 817 )

Total net tangible assets $ 272

The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent and tax liabilities, are finalized.

See Note 6 for a summary of the acquisition date fair values and weighted-average useful lives assigned to acquired finite-lived intangible assets.

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 date of acquisition.

Through December 31, 2020, acquired entities impact on revenue and net earnings was not material.

Unaudited pro forma revenues for the years ended December 31, 2020 and 2019 as if the acquisitions had occurred on January 1, 2019 were immaterial for both periods.

The pro forma effects of the acquisitions on net earnings were immaterial for both years.

Segment Financial Information

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businesses share significant common assets, including a contracted network of physicians, health care professionals, hospitals and other facilities, information technology and consumer engagement infrastructure and other resources.

UnitedHealthcare Employer & Individual offers an array of consumer-oriented health benefit plans and services for large national employers, public sector employers, mid-sized employers, small businesses and individuals nationwide.

UnitedHealthcare Medicare & Retirement provides health care coverage and health and well-being services to individuals age 50 and older, addressing their unique needs for preventive and acute health care services as well as services dealing with chronic disease and other specialized issues for older individuals.

UnitedHealthcare Community & State provides diversified health care benefits products and services to state programs caring for the economically disadvantaged and the medically underserved.

UnitedHealthcare Community & State provides diversified health care benefits products and services to state programs caring for the economically disadvantaged, the medically underserved and those without the benefit of employer-funded health care coverage.

UnitedHealthcare Community & State’s primary customers oversee Medicaid plans, the Children’s Health Insurance Program and other federal, state and community health care programs.

UnitedHealthcare Global provides health and dental benefits and hospital and clinical services to employer groups and individuals in South America, and other diversified global health businesses.

• OptumHealth focuses on care delivery, care management, wellness and consumer engagement, and health financial services.

OptumHealth is building a comprehensive, connected health care delivery and engagement platform by directly providing high-quality care, helping people manage chronic and complex health needs, and proactively engaging consumers in managing their health through in-person, virtual and digital clinical platforms.

OptumHealth offers access to networks of care provider specialists, health management services, care delivery, consumer engagement and financial services.

• OptumInsight brings together advanced analytics, technology and health care expertise to deliver integrated services and solutions.

Hospital systems, physicians, health plans, governments, life sciences companies and other organizations comprising the health care industry depend on OptumInsight to help them improve performance, achieve efficiency, reduce costs, meet compliance mandates and modernize their core operating systems to meet the changing needs of the health system.

• OptumRx offers pharmacy care services and programs, including retail network contracting, home delivery, specialty and community health pharmacy services, purchasing and clinical capabilities, and develops programs in areas such as step therapy, formulary management, drug adherence and disease/drug therapy management.

OptumRx integrates pharmacy and medical care and is positioned to serve patients with complex clinical needs and consumers looking for a better digital pharmacy experience with transparent pricing.

• Optum Health focuses on care delivery, care management, wellness and consumer engagement, and health financial services.

Optum Health is building a comprehensive, connected health care delivery and engagement platform by directly providing high-quality care, helping people manage chronic and complex health needs, and proactively engaging consumers in managing their health through in-person, in-home, virtual and digital clinical platforms.

Optum Health offers access to networks of care provider specialists, health management services, care delivery, consumer engagement and financial services.

• Optum Insight brings together advanced analytics, technology and health care expertise to deliver integrated services and solutions.

Hospital systems, physicians, health plans, governments, life sciences companies and other organizations comprising the health care industry depend on Optum Insight to help them improve performance, achieve efficiency, reduce costs, meet compliance mandates and modernize their core operating systems to meet the changing needs of the health system.

• Optum Rx offers pharmacy care services and programs, including retail network contracting, home delivery, specialty and community health pharmacy services, purchasing and clinical capabilities, and develops programs in areas such as step therapy, formulary management, drug adherence and disease/drug therapy management.

Optum Rx integrates

pharmacy and medical care and is positioned to serve patients with complex clinical needs and consumers looking for a better digital pharmacy experience with transparent pricing.

The Company’s accounting policies for reportable segment operations are consistent with those described in the Summary of Significant Accounting Policies (see Note 2 ).

Transactions between reportable segments principally consist of sales of pharmacy care products and services to UnitedHealthcare customers by OptumRx, certain product offerings and care management and local care delivery services sold to UnitedHealthcare by OptumHealth, and health information and technology solutions, consulting and other services sold to UnitedHealthcare by OptumInsight.

Transactions between reportable segments principally consist of sales of pharmacy care products and services to UnitedHealthcare customers by Optum Rx, certain product offerings and care management and local and in-home care delivery services sold to UnitedHealthcare by Optum Health, and health information and technology solutions, consulting and other services sold to UnitedHealthcare by Optum Insight.

These transactions are recorded at management’s estimate of fair value.

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The following table presents the reportable segment financial information:

(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Optum Eliminations Optum Corporate and

(in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Optum Eliminations Optum Corporate and

Eliminations Consolidated

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data