UNITEDHEALTH GROUP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS UnitedHealth Group Condensed Consolidated Balance Sheets (Unaudited) (in millions, except per share data) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 24,612 $ 21,375 Short-term investments 3,352 2,532 Accounts receivable, net 18,718 14,216 Other current receivables, net 12,439 13,866 Assets under management 4,017 4,449 Prepaid expenses and other current assets 5,218 5,320 Total current assets 68,356 61,758 Long-term investments 42,427 43,114 Property, equipment and capitalized software, net 9,421 8,969 Goodwill 84,159 75,795 Other intangible assets, net 11,285 10,044 Other assets 14,524 12,526 Total assets $ 230,172 $ 212,206 Liabilities, redeemable noncontrolling interests and equity Current liabilities: Medical costs payable $ 28,978 $ 24,483 Accounts payable and accrued liabilities 25,145 24,643 Short-term borrowings and current maturities of long-term debt 5,592 3,620 Unearned revenues 2,212 2,571 Other current liabilities 26,771 22,975 Total current liabilities 88,698 78,292 Long-term debt, less current maturities 45,799 42,383 Deferred income taxes 2,581 3,265 Other liabilities 11,967 11,787 Total liabilities 149,045 135,727 Commitments and contingencies (Note 7) Redeemable noncontrolling interests 4,922 1,434 Equity: Preferred stock, $ 0.001 par value - 10 shares authorized; no shares issued or outstanding — — Common stock, $ 0.01 par value - 3,000 shares authorized; 935 and 941 issued and outstanding 10 10 Retained earnings 80,540 77,134 Accumulated other comprehensive loss ( 7,730 ) ( 5,384 ) Nonredeemable noncontrolling interests 3,385 3,285 Total equity 76,205 75,045 Total liabilities, redeemable noncontrolling interests and equity $ 230,172 $ 212,206 See Notes to the Condensed Consolidated Financial Statements 1 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share data) 2022 2021 2022 2021 Revenues: Premiums $ 63,896 $ 56,233 $ 127,966 $ 111,719 Products 9,496 8,433 18,836 16,773 Services 6,645 6,099 13,017 12,017 Investment and other income 295 556 662 1,008 Total revenues 80,332 71,321 160,481 141,517 Operating costs: Medical costs 52,093 46,546 104,616 91,450 Operating costs 11,709 10,359 23,110 20,582 Cost of products sold 8,596 7,660 17,083 15,232 Depreciation and amortization 802 778 1,590 1,536 Total operating costs 73,200 65,343 146,399 128,800 Earnings from operations 7,132 5,978 14,082 12,717 Interest expense ( 467 ) ( 410 ) ( 900 ) ( 807 ) Earnings before income taxes 6,665 5,568 13,182 11,910 Provision for income taxes ( 1,466 ) ( 1,196 ) ( 2,835 ) ( 2,560 ) Net earnings 5,199 4,372 10,347 9,350 Earnings attributable to noncontrolling interests ( 129 ) ( 106 ) ( 250 ) ( 222 ) Net earnings attributable to UnitedHealth Group common shareholders $ 5,070 $ 4,266 $ 10,097 $ 9,128 Earnings per share attributable to UnitedHealth Group common shareholders: Basic $ 5.41 $ 4.52 $ 10.75 $ 9.66 Diluted $ 5.34 $ 4.46 $ 10.61 $ 9.55 Basic weighted-average number of common shares outstanding 937 944 939 945 Dilutive effect of common share equivalents 13 12 13 11 Diluted weighted-average number of common shares outstanding 950 956 952 956 Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 3 1 3 2 See Notes to the Condensed Consolidated Financial Statements 2 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in millions) 2022 2021 2022 2021 Net earnings $ 5,199 $ 4,372 $ 10,347 $ 9,350 Other comprehensive (loss) income: Gross unrealized (losses) gains on investment securities during the period ( 1,331 ) 251 ( 3,354 ) ( 513 ) Income tax effect 304 ( 58 ) 769 116 Total unrealized (losses) gains, net of tax ( 1,027 ) 193 ( 2,585 ) ( 397 ) Gross reclassification adjustment for net realized gains included in net earnings ( 1 ) ( 9 ) ( 4 ) ( 16 ) Income tax effect — 2 1 4 Total reclassification adjustment, net of tax ( 1 ) ( 7 ) ( 3 ) ( 12 ) Total foreign currency translation (losses) gains ( 676 ) 554 242 137 Other comprehensive (loss) income ( 1,704 ) 740 ( 2,346 ) ( 272 ) Comprehensive income 3,495 5,112 8,001 9,078 Comprehensive income attributable to noncontrolling interests ( 129 ) ( 106 ) ( 250 ) ( 222 ) Comprehensive income attributable to UnitedHealth Group common shareholders $ 3,366 $ 5,006 $ 7,751 $ 8,856 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 (Loss) Income Nonredeemable Noncontrolling Interests Total Equity Three months ended June 30, (in millions) Shares Amount Net Unrealized (Losses) Gains on Investments Foreign Currency Translation (Losses) Gains Balance at March 31, 2022 939 $ 10 $ — $ 78,782 $ ( 1,137 ) $ ( 4,889 ) $ 3,362 $ 76,128 Net earnings 5,070 94 5,164 Other comprehensive loss ( 1,028 ) ( 676 ) ( 1,704 ) Issuances of common stock, and related tax effects 1 — 174 174 Share-based compensation 194 194 Common share repurchases ( 5 ) — ( 733 ) ( 1,767 ) ( 2,500 ) Cash dividends paid on common shares ($ 1.65 per share) ( 1,545 ) ( 1,545 ) Redeemable noncontrolling interests fair value and other adjustments 365 365 Acquisition and other adjustments of nonredeemable noncontrolling interests 12 12 Distribution to nonredeemable noncontrolling interests ( 83 ) ( 83 ) Balance at June 30, 2022 935 $ 10 $ — $ 80,540 $ ( 2,165 ) $ ( 5,565 ) $ 3,385 $ 76,205 Balance at March 31, 2021 944 $ 10 $ — $ 71,220 $ 741 $ ( 5,567 ) $ 2,909 $ 69,313 Net earnings 4,266 88 4,354 Other comprehensive income 186 554 740 Issuances of common stock, and related tax effects 2 — 292 292 Share-based compensation 158 158 Common share repurchases ( 3 ) — ( 221 ) ( 1,029 ) ( 1,250 ) Cash dividends paid on common shares ($ 1.45 per share) ( 1,367 ) ( 1,367 ) Redeemable noncontrolling interests fair value and other adjustments ( 229 ) ( 229 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 85 85 Distribution to nonredeemable noncontrolling interests ( 74 ) ( 74 ) Balance at June 30, 2021 943 $ 10 $ — $ 73,090 $ 927 $ ( 5,013 ) $ 3,008 $ 72,022 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 Six months ended June 30, (in millions) Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation (Losses) Gains Balance at January 1, 2022 941 $ 10 $ — $ 77,134 $ 423 $ ( 5,807 ) $ 3,285 $ 75,045 Net earnings 10,097 182 10,279 Other comprehensive (loss) income ( 2,588 ) 242 ( 2,346 ) Issuances of common stock, and related tax effects 4 — 507 507 Share-based compensation 476 476 Common share repurchases ( 10 ) — ( 1,217 ) ( 3,783 ) ( 5,000 ) Cash dividends paid on common shares ($ 3.10 per share) ( 2,908 ) ( 2,908 ) Redeemable noncontrolling interests fair value and other adjustments 234 234 Acquisition and other adjustments of nonredeemable noncontrolling interests 103 103 Distribution to nonredeemable noncontrolling interests ( 185 ) ( 185 ) Balance at June 30, 2022 935 $ 10 $ — $ 80,540 $ ( 2,165 ) $ ( 5,565 ) $ 3,385 $ 76,205 Balance at January 1, 2021 946 $ 10 $ — $ 69,295 $ 1,336 $ ( 5,150 ) $ 2,837 $ 68,328 Net earnings 9,128 168 9,296 Other comprehensive (loss) income ( 409 ) 137 ( 272 ) Issuances of common stock, and related tax effects 5 — 548 548 Share-based compensation 400 400 Common share repurchases ( 8 ) — ( 221 ) ( 2,679 ) ( 2,900 ) Cash dividends paid on common shares ($ 2.70 per share) ( 2,548 ) ( 2,548 ) Redeemable noncontrolling interests fair value and other adjustments ( 727 ) ( 106 ) ( 833 ) Acquisitions and other adjustments of nonredeemable noncontrolling interests 151 151 Distribution to nonredeemable noncontrolling interests ( 148 ) ( 148 ) Balance at June 30, 2021 943 $ 10 $ — $ 73,090 $ 927 $ ( 5,013 ) $ 3,008 $ 72,022 See Notes to the Condensed Consolidated Financial Statements 5 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, (in millions) 2022 2021 Operating activities Net earnings $ 10,347 $ 9,350 Noncash items: Depreciation and amortization 1,590 1,536 Deferred income taxes ( 15 ) 327 Share-based compensation 504 426 Other, net 215 ( 214 ) Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable ( 4,204 ) ( 1,218 ) Other assets ( 643 ) ( 1,523 ) Medical costs payable 4,029 3,086 Accounts payable and other liabilities 807 298 Unearned revenues ( 440 ) ( 523 ) Cash flows from operating activities 12,190 11,545 Investing activities Purchases of investments ( 8,903 ) ( 8,847 ) Sales of investments 2,348 1,408 Maturities of investments 3,189 4,650 Cash paid for acquisitions, net of cash assumed ( 7,150 ) ( 4,642 ) Purchases of property, equipment and capitalized software ( 1,212 ) ( 1,130 ) Other, net ( 532 ) ( 648 ) Cash flows used for investing activities ( 12,260 ) ( 9,209 ) Financing activities Common share repurchases ( 5,000 ) ( 2,900 ) Cash dividends paid ( 2,908 ) ( 2,548 ) Proceeds from common stock issuances 756 764 Repayments of long-term debt ( 1,100 ) ( 1,900 ) Proceeds from (repayments of) short-term borrowings, net 1,340 ( 176 ) Proceeds from issuance of long-term debt 5,922 6,934 Customer funds administered 5,786 2,395 Purchases of redeemable noncontrolling interests ( 97 ) ( 1,338 ) Other, net ( 1,449 ) ( 662 ) Cash flows from financing activities 3,250 569 Effect of exchange rate changes on cash and cash equivalents 57 6 Increase in cash and cash equivalents 3,237 2,911 Cash and cash equivalents, beginning of period 21,375 16,921 Cash and cash equivalents, end of period $ 24,612 $ 19,832 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 health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two distinct, yet complementary business platforms — Optum and UnitedHealthcare — are working to help build a modern, high-performing health system through improved access, affordability, outcomes and experiences for the individuals and organizations the Company is privileged to serve. The Company has prepared the Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, these Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and the Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC (2021 10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly. Use of Estimates These Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates relate to estimates and judgments for medical costs payable and goodwill. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the period in which the estimate is adjusted. 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 June 30, 2022 Debt securities - available-for-sale: U.S. government and agency obligations $ 3,808 $ 1 $ ( 209 ) $ 3,600 State and municipal obligations 7,725 25 ( 381 ) 7,369 Corporate obligations 22,080 5 ( 1,515 ) 20,570 U.S. agency mortgage-backed securities 6,275 2 ( 537 ) 5,740 Non-U.S. agency mortgage-backed securities 2,926 — ( 201 ) 2,725 Total debt securities - available-for-sale 42,814 33 ( 2,843 ) 40,004 Debt securities - held-to-maturity: U.S. government and agency obligations 544 — ( 11 ) 533 State and municipal obligations 29 — ( 2 ) 27 Corporate obligations 141 — — 141 Total debt securities - held-to-maturity 714 — ( 13 ) 701 Total debt securities $ 43,528 $ 33 $ ( 2,856 ) $ 40,705 December 31, 2021 Debt securities - available-for-sale: U.S. government and agency obligations $ 3,206 $ 23 $ ( 31 ) $ 3,198 State and municipal obligations 6,829 297 ( 20 ) 7,106 Corporate obligations 20,947 372 ( 145 ) 21,174 U.S. agency mortgage-backed securities 5,868 88 ( 55 ) 5,901 Non-U.S. agency mortgage-backed securities 2,819 42 ( 23 ) 2,838 Total debt securities - available-for-sale 39,669 822 ( 274 ) 40,217 Debt securities - held-to-maturity: U.S. government and agency obligations 511 2 ( 2 ) 511 State and municipal obligations 30 2 — 32 Corporate obligations 100 — — 100 Total debt securities - held-to-maturity 641 4 ( 2 ) 643 Total debt securities $ 40,310 $ 826 $ ( 276 ) $ 40,860 The Company held $ 3.4 billion and $ 3.5 billion of equity securities as of June 30, 2022 and December 31, 2021, respectively. The Company’s investments in equity securities primarily consist of employee savings plan related investments, other venture investments and shares of Brazilian real denominated fixed-income funds with readily determinable fair values. Additionally, the Company’s investments included $ 1.7 billion and $ 1.3 billion of equity method investments in operating businesses in the health care sector as of June 30, 2022 and December 31, 2021, respectively. The allowance for credit losses on held-to-maturity securities at June 30, 2022 and December 31, 2021 was not material. 8 Table of Contents The amortized cost and fair value of debt securities as of June 30, 2022, by contractual maturity, were as follows: Available-for-Sale Held-to-Maturity (in millions) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 3,439 $ 3,422 $ 385 $ 381 Due after one year through five years 13,237 12,672 295 288 Due after five years through ten years 12,332 11,213 14 13 Due after ten years 4,605 4,232 20 19 U.S. agency mortgage-backed securities 6,275 5,740 — — Non-U.S. agency mortgage-backed securities 2,926 2,725 — — Total debt securities $ 42,814 $ 40,004 $ 714 $ 701 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 June 30, 2022 Debt securities - available-for-sale: U.S. government and agency obligations $ 2,921 $ ( 152 ) $ 474 $ ( 57 ) $ 3,395 $ ( 209 ) State and municipal obligations 4,807 ( 355 ) 209 ( 26 ) 5,016 ( 381 ) Corporate obligations 16,894 ( 1,200 ) 2,261 ( 315 ) 19,155 ( 1,515 ) U.S. agency mortgage-backed securities 4,323 ( 356 ) 1,201 ( 181 ) 5,524 ( 537 ) Non-U.S. agency mortgage-backed securities 2,354 ( 151 ) 354 ( 50 ) 2,708 ( 201 ) Total debt securities - available-for-sale $ 31,299 $ ( 2,214 ) $ 4,499 $ ( 629 ) $ 35,798 $ ( 2,843 ) December 31, 2021 Debt securities - available-for-sale: U.S. government and agency obligations $ 1,976 $ ( 18 ) $ 249 $ ( 13 ) $ 2,225 $ ( 31 ) State and municipal obligations 1,386 ( 19 ) 31 ( 1 ) 1,417 ( 20 ) Corporate obligations 9,357 ( 130 ) 376 ( 15 ) 9,733 ( 145 ) U.S. agency mortgage-backed securities 3,078 ( 52 ) 116 ( 3 ) 3,194 ( 55 ) Non-U.S. agency mortgage-backed securities 1,321 ( 18 ) 114 ( 5 ) 1,435 ( 23 ) Total debt securities - available-for-sale $ 17,118 $ ( 237 ) $ 886 $ ( 37 ) $ 18,004 $ ( 274 ) The Company’s unrealized losses from debt securities as of June 30, 2022 were generated from approximately 33,000 positions out of a total of 40,000 positions. The Company believes that it will collect the timely principal and interest due on its debt securities that have an amortized cost in excess of fair value. The unrealized losses were caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities that impacted the Company’s assessment on collectability of principal and interest. At each reporting period, the Company evaluates available-for-sale debt securities for any credit-related impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the expected cash flows, the underlying credit quality and credit ratings of the issuers noting no significant credit deterioration since purchase. As of June 30, 2022, the Company did not have the intent to sell any of the available-for-sale debt securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary. The allowance for credit losses on available-for-sale debt securities at June 30, 2022 and December 31, 2021 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 included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 10-K. The following table presents a summary of fair value measurements by level and carrying values for items measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets: (in millions) Quoted Prices in Active Markets (Level 1) Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Total Fair and Carrying Value June 30, 2022 Cash and cash equivalents $ 24,546 $ 66 $ — $ 24,612 Debt securities - available-for-sale: U.S. government and agency obligations 3,432 168 — 3,600 State and municipal obligations — 7,369 — 7,369 Corporate obligations 35 20,342 193 20,570 U.S. agency mortgage-backed securities — 5,740 — 5,740 Non-U.S. agency mortgage-backed securities — 2,725 — 2,725 Total debt securities - available-for-sale 3,467 36,344 193 40,004 Equity securities 1,894 18 68 1,980 Assets under management 1,655 2,268 94 4,017 Total assets at fair value $ 31,562 $ 38,696 $ 355 $ 70,613 Percentage of total assets at fair value 45 % 54 % 1 % 100 % December 31, 2021 Cash and cash equivalents $ 21,359 $ 16 $ — $ 21,375 Debt securities - available-for-sale: U.S. government and agency obligations 3,017 181 — 3,198 State and municipal obligations — 7,106 — 7,106 Corporate obligations 40 20,916 218 21,174 U.S. agency mortgage-backed securities — 5,901 — 5,901 Non-U.S. agency mortgage-backed securities — 2,838 — 2,838 Total debt securities - available-for-sale 3,057 36,942 218 40,217 Equity securities 2,090 23 64 2,177 Assets under management 1,972 2,376 101 4,449 Total assets at fair value $ 28,478 $ 39,357 $ 383 $ 68,218 Percentage of total assets at fair value 42 % 57 % 1 % 100 % There were no transfers in or out of Level 3 financial assets or liabilities during the six months ended June 30, 2022 or 2021. 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 June 30, 2022 Debt securities - held-to-maturity $ 597 $ 104 $ — $ 701 $ 714 Long-term debt and other financing obligations $ — $ 48,549 $ — $ 48,549 $ 50,041 December 31, 2021 Debt securities - held-to-maturity $ 534 $ 102 $ 7 $ 643 $ 641 Long-term debt and other financing obligations $ — $ 52,583 $ — $ 52,583 $ 46,003 Nonfinancial assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded during either the six months ended June 30, 2022 or 2021. 4. Medical Costs Payable The following table shows the components of the change in medical costs payable for the six months ended June 30: (in millions) 2022 2021 Medical costs payable, beginning of period $ 24,483 $ 21,872 Acquisitions 171 46 Reported medical costs: Current year 104,936 92,570 Prior years ( 320 ) ( 1,120 ) Total reported medical costs 104,616 91,450 Medical payments: Payments for current year ( 78,937 ) ( 69,808 ) Payments for prior years ( 21,355 ) ( 18,429 ) Total medical payments ( 100,292 ) ( 88,237 ) Medical costs payable, end of period $ 28,978 $ 25,131 For the six months ended June 30, 2022, prior years’ medical cost reserve development included no individual factors that were significant. For the six months ended June 30, 2021, prior years’ medical cost reserve development was primarily driven by lower than expected health system utilization and the uncertainty of care patterns due to the disruption of the health care system caused by COVID-19. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of $ 20.3 billion and $ 17.1 billion at June 30, 2022 and December 31, 2021, respectively. 5. Short-Term Borrowings and Long-Term Debt In May 2022, the Company issued $6.0 billion of senior unsecured notes consisting of the following: (in millions, except percentages) Par Value 3.700 % notes due May 2027 $ 600 4.000 % notes due May 2029 900 4.200 % notes due May 2032 1,500 4.750 % notes due May 2052 2,000 4.950 % notes due May 2062 1,000 11 Table of Contents For more information on the Company’s short-term borrowings, debt covenants and long-term debt, see Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 10-K. 6. Dividends In June 2022, the Company’s Board of Directors increased the Company’s quarterly cash dividend to shareholders to an annual rate of $6.60 compared to $5.80 per share, which the Company had paid since June 2021. Declaration and payment of future quarterly dividends is at the discretion of the Board of Directors and may be adjusted as business needs or market conditions change. The following table provides details of the Company’s 2022 dividend payments: Payment Date Amount per Share Total Amount Paid (in millions) March 22 $ 1.45 $ 1,363 June 28 1.65 1,545 7. Commitments and Contingencies Pending Business Combinations As of June 30, 2022, the Company has entered into agreements to acquire companies in the health care sector, most notably Change Healthcare (NASDAQ: CHNG) and LHC Group, Inc (NASDAQ: LHCG), subject to regulatory approval and other customary closing conditions. The total anticipated capital required for these business combinations, excluding associated disposition proceeds and the payoff of acquired indebtedness, is approximately $ 14 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 for Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the DOJ, the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau (CFPB), the Defense Contract Audit Agency and other governmental authorities. Similarly, our international businesses are also subject to investigations, audits and reviews by applicable foreign governments, including South American and other non-U.S. governmental authorities. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS has selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans. On February 14, 2017, the DOJ announced its decision to pursue certain claims within a lawsuit initially asserted against the Company and filed under seal by a whistleblower in 2011. The whistleblower’s complaint, which was unsealed on February 15, 2017, alleges that the Company made improper Medicare risk adjustment submissions and violated the False Claims Act. On 12 Table of Contents February 12, 2018, the court granted in part and denied in part the Company’s motion to dismiss. In May 2018, the DOJ moved to dismiss the Company’s counterclaims, which were filed in March 2018, and moved for partial summary judgment. In March 2019, the court denied the government’s motion for partial summary judgment and dismissed the Company’s counterclaims without prejudice. The Company cannot reasonably estimate the outcome that may result from this matter given its procedural status. 8. Business Combinations During the six months ended June 30, 2022, the Company completed several business combinations for total consideration of $ 8.1 billion. Acquired assets (liabilities) at acquisition date were: (in millions) Cash and cash equivalents $ 457 Accounts receivable and other current assets 585 Property, equipment and other long-term assets 1,494 Intangible assets 1,810 Total identifiable assets acquired 4,346 Medical costs payable ( 171 ) Accounts payable and other current liabilities ( 590 ) Other long-term liabilities ( 605 ) Total identifiable liabilities acquired ( 1,366 ) Total net identifiable assets 2,980 Goodwill 8,309 Redeemable noncontrolling interests ( 3,101 ) Nonredeemable noncontrolling interests ( 103 ) Net assets acquired $ 8,085 The majority of goodwill is not deductible for income tax purposes. The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent liabilities, are finalized. The acquisition date fair values and weighted-average useful lives assigned to finite-lived intangible assets were: (in millions, except years) Fair Value Weighted-Average Useful Life Customer-related $ 915 9 years Trademarks and technology 800 9 years Other 80 11 years Total acquired finite-lived intangible assets $ 1,795 9 years The results of operations and financial condition of acquired entities have been included in the Company’s consolidated results and the results of the corresponding operating segment as of the date of acquisition. Through June 30, 2022, acquired entities impact on revenues and net earnings was not material. Unaudited pro forma revenues and net earnings for the six months ended June 30, 2022 and 2021 as if the business combinations had occurred on January 1, 2021 were immaterial for both periods. 9. Segment Financial Information The Company’s four reportable segments are UnitedHealthcare, Optum Health, Optum Insight and Optum Rx. For more information on the Company’s segments, see Part I, Item I, “Business” and Note 13 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 10-K. Total assets at Optum Health and Optum Rx increased to $ 67.9 billion and $ 46.2 billion as of June 30, 2022 compared to $ 60.5 billion and $ 40.2 billion as of December 31, 2021, respectively. The increase in total assets at Optum Health and Optum Rx was primarily due to goodwill from business combinations of $ 4.5 billion and $ 3.8 billion, respectively. 13 Table of Contents On January 1, 2022, the Company realigned its operating segments to combine UnitedHealthcare Global and UnitedHealthcare Employer & Individual. The realignment had no impact on the Company’s reportable segments. The following tables present reportable segment financial information: Optum (in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Optum Eliminations Optum Corporate and Eliminations Consolidated Three Months Ended June 30, 2022 Revenues - unaffiliated customers: Premiums $ 59,368 $ 4,528 $ — $ — $ — $ 4,528 $ — $ 63,896 Products — 6 58 9,432 — 9,496 — 9,496 Services 2,542 2,740 1,034 329 — 4,103 — 6,645 Total revenues - unaffiliated customers 61,910 7,274 1,092 9,761 — 18,127 — 80,037 Total revenues - affiliated customers — 10,224 2,181 15,038 ( 588 ) 26,855 ( 26,855 ) — Investment and other income 195 85 9 6 — 100 — 295 Total revenues $ 62,105 $ 17,583 $ 3,282 $ 24,805 $ ( 588 ) $ 45,082 $ ( 26,855 ) $ 80,332 Earnings from operations $ 3,850 $ 1,399 $ 839 $ 1,044 $ — $ 3,282 $ — $ 7,132 Interest expense — — — — — — ( 467 ) ( 467 ) Earnings before income taxes $ 3,850 $ 1,399 $ 839 $ 1,044 $ — $ 3,282 $ ( 467 ) $ 6,665 Three Months Ended June 30, 2021 Revenues - unaffiliated customers: Premiums $ 52,858 $ 3,375 $ — $ — $ — $ 3,375 $ — $ 56,233 Products — 9 33 8,391 — 8,433 — 8,433 Services 2,440 2,461 930 268 — 3,659 — 6,099 Total revenues - unaffiliated customers 55,298 5,845 963 8,659 — 15,467 — 70,765 Total revenues - affiliated customers — 7,221 1,921 13,792 ( 478 ) 22,456 ( 22,456 ) — Investment and other income 176 234 73 73 — 380 — 556 Total revenues $ 55,474 $ 13,300 $ 2,957 $ 22,524 $ ( 478 ) $ 38,303 $ ( 22,456 ) $ 71,321 Earnings from operations $ 3,095 $ 1,128 $ 762 $ 993 $ — $ 2,883 $ — $ 5,978 Interest expense — — — — — — ( 410 ) ( 410 ) Earnings before income taxes $ 3,095 $ 1,128 $ 762 $ 993 $ — $ 2,883 $ ( 410 ) $ 5,568 14 Table of Contents Optum (in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Optum Eliminations Optum Corporate and Eliminations Consolidated Six Months Ended June 30, 2022 Revenues - unaffiliated customers: Premiums $ 119,305 $ 8,661 $ — $ — $ — $ 8,661 $ — $ 127,966 Products — 12 98 18,726 — 18,836 — 18,836 Services 5,057 5,298 2,008 654 — 7,960 — 13,017 Total revenues - unaffiliated customers 124,362 13,971 2,106 19,380 — 35,457 — 159,819 Total revenues - affiliated customers — 20,053 4,319 29,329 ( 1,141 ) 52,560 ( 52,560 ) — Investment and other income 338 241 76 7 — 324 — 662 Total revenues $ 124,700 $ 34,265 $ 6,501 $ 48,716 $ ( 1,141 ) $ 88,341 $ ( 52,560 ) $ 160,481 Earnings from operations $ 7,648 $ 2,765 $ 1,686 $ 1,983 $ — $ 6,434 $ — $ 14,082 Interest expense — — — — — — ( 900 ) ( 900 ) Earnings before income taxes $ 7,648 $ 2,765 $ 1,686 $ 1,983 $ — $ 6,434 $ ( 900 ) $ 13,182 Six Months Ended June 30, 2021 Revenues - unaffiliated customers: Premiums $ 105,416 $ 6,303 $ — $ — $ — $ 6,303 $ — $ 111,719 Products — 17 70 16,686 — 16,773 — 16,773 Services 4,790 4,797 1,891 539 — 7,227 — 12,017 Total revenues - unaffiliated customers 110,206 11,117 1,961 17,225 — 30,303 — 140,509 Total revenues - affiliated customers — 14,173 3,742 26,796 ( 953 ) 43,758 ( 43,758 ) — Investment and other income 382 413 106 107 — 626 — 1,008 Total revenues $ 110,588 $ 25,703 $ 5,809 $ 44,128 $ ( 953 ) $ 74,687 $ ( 43,758 ) $ 141,517 Earnings from operations $ 7,203 $ 2,090 $ 1,541 $ 1,883 $ — $ 5,514 $ — $ 12,717 Interest expense — — — — — — ( 807 ) ( 807 ) Earnings before income taxes $ 7,203 $ 2,090 $ 1,541 $ 1,883 $ — $ 5,514 $ ( 807 ) $ 11,910 15 Table of Contents