What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-02 compared with 2022-08-03 · 65 added, 54 removed, 464 unchanged (20% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except per share data) June 30,

(in millions, except per share data) September 30,

2022 December 31,

39 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions, except per share data) 2022 2021 2022 2021

27 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2022 2021 2022 2021

Net earnings $ 5,384 $ 4,191 $ 15,731 $ 13,541

Other comprehensive (loss) income:

Gross unrealized (losses) gains on investment securities during the period ( 1,331 ) 251 ( 3,354 ) ( 513 )

Other comprehensive loss:

Gross unrealized losses on investment securities during the period ( 1,471 ) ( 192 ) ( 4,825 ) ( 705 )

Income tax effect 340 59 1,109 175

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 )

Total unrealized losses, net of tax ( 1,131 ) ( 133 ) ( 3,716 ) ( 530 )

Gross reclassification adjustment for net realized losses (gains) included in net earnings 138 ( 20 ) 134 ( 36 )

Income tax effect ( 32 ) 4 ( 31 ) 8

1 unchanged sentence

106 ( 16 ) 103 ( 28 )

Total foreign currency translation (losses) gains ( 676 ) 554 242 137

Other comprehensive (loss) income ( 1,704 ) 740 ( 2,346 ) ( 272 )

Total foreign currency translation losses ( 331 ) ( 621 ) ( 89 ) ( 484 )

Other comprehensive loss ( 1,356 ) ( 770 ) ( 3,702 ) ( 1,042 )

Comprehensive income 4,028 3,421 12,029 12,499

7 unchanged sentences

(Loss) Income Nonredeemable Noncontrolling Interests Total

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

Three months ended September 30,

(in millions) Shares Amount Net Unrealized (Losses) Gains on Investments Foreign Currency Translation Losses

Balance at June 30, 2022 935 $ 10 $ — $ 80,540 $ ( 2,165 ) $ ( 5,565 ) $ 3,385 $ 76,205

5,262 99 5,361

9 unchanged sentences

( 98 ) ( 98 )

Balance at September 30, 2022 935 $ 10 $ — $ 83,722 $ ( 3,190 ) $ ( 5,896 ) $ 3,418 $ 78,064

Balance at June 30, 2021 943 $ 10 $ — $ 73,090 $ 927 $ ( 5,013 ) $ 3,008 $ 72,022

Balance at March 31, 2021 944 $ 10 $ — $ 71,220 $ 741 $ ( 5,567 ) $ 2,909 $ 69,313

4,086 86 4,172

Other comprehensive income 186 554 740

Other comprehensive loss ( 149 ) ( 621 ) ( 770 )

Issuances of common stock, and related tax effects

8 unchanged sentences

( 87 ) ( 87 )

Balance at June 30, 2021 943 $ 10 $ — $ 73,090 $ 927 $ ( 5,013 ) $ 3,008 $ 72,022

Balance at September 30, 2021 942 $ 10 $ — $ 75,124 $ 778 $ ( 5,634 ) $ 2,981 $ 73,259

See Notes to the Condensed Consolidated Financial Statements

3 unchanged sentences

Income (Loss) Nonredeemable Noncontrolling Interests Total

Six months ended June 30,

(in millions) Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation (Losses) Gains

Nine months ended September 30,

(in millions) Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation Losses

Balance at January 1, 2022 941 $ 10 $ — $ 77,134 $ 423 $ ( 5,807 ) $ 3,285 $ 75,045

15,359 281 15,640

Other comprehensive (loss) income ( 2,588 ) 242 ( 2,346 )

Other comprehensive loss ( 3,613 ) ( 89 ) ( 3,702 )

Issuances of common stock, and related tax effects

7 unchanged sentences

( 283 ) ( 283 )

Balance at June 30, 2022 935 $ 10 $ — $ 80,540 $ ( 2,165 ) $ ( 5,565 ) $ 3,385 $ 76,205

Balance at September 30, 2022 935 $ 10 $ — $ 83,722 $ ( 3,190 ) $ ( 5,896 ) $ 3,418 $ 78,064

Balance at January 1, 2021 946 $ 10 $ — $ 69,295 $ 1,336 $ ( 5,150 ) $ 2,837 $ 68,328

13,214 254 13,468

Other comprehensive (loss) income ( 409 ) 137 ( 272 )

Other comprehensive loss ( 558 ) ( 484 ) ( 1,042 )

Issuances of common stock, and related tax effects

8 unchanged sentences

( 235 ) ( 235 )

Balance at June 30, 2021 943 $ 10 $ — $ 73,090 $ 927 $ ( 5,013 ) $ 3,008 $ 72,022

Balance at September 30, 2021 942 $ 10 $ — $ 75,124 $ 778 $ ( 5,634 ) $ 2,981 $ 73,259

See Notes to the Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2022 2021

26 unchanged sentences

Repayments of long-term debt ( 2,100 ) ( 1,900 )

Proceeds from (repayments of) short-term borrowings, net 1,340 ( 176 )

Repayments of short-term borrowings, net ( 16 ) ( 1,301 )

Proceeds from issuance of long-term debt 5,922 6,934

2 unchanged sentences

Other, net ( 1,458 ) ( 837 )

Cash flows from financing activities 3,250 569

Cash flows used for financing activities ( 166 ) ( 3,828 )

Effect of exchange rate changes on cash and cash equivalents 4 ( 45 )

22 unchanged sentences

(in millions) Amortized

June 30, 2022

September 30, 2022

Debt securities - available-for-sale:

25 unchanged sentences

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 held $ 3.4 billion and $ 3.5 billion of equity securities as of September 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.

The amortized cost and fair value of debt securities as of June 30, 2022, by contractual maturity, were as follows:

Additionally, the Company’s investments included $ 1.6 billion and $ 1.3 billion of equity method investments in operating businesses in the health care sector as of September 30, 2022 and December 31, 2021, respectively.

The allowance for credit losses on held-to-maturity securities at September 30, 2022 and December 31, 2021 was not material.

The amortized cost and fair value of debt securities as of September 30, 2022, by contractual maturity, were as follows:

Available-for-Sale Held-to-Maturity

11 unchanged sentences

(in millions) Fair

June 30, 2022

September 30, 2022

Debt securities - available-for-sale:

17 unchanged sentences

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’s unrealized losses from debt securities as of September 30, 2022 were generated from approximately 36,000 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.

2 unchanged sentences

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.

As of September 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.

The allowance for credit losses on available-for-sale debt securities at September 30, 2022 and December 31, 2021 was not material.

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.

7 unchanged sentences

Fair and Carrying

June 30, 2022

September 30, 2022

Cash and cash equivalents $ 38,671 $ 174 $ — $ 38,845

23 unchanged sentences

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.

There were no transfers in or out of Level 3 financial assets or liabilities during the nine months ended September 30, 2022 or 2021.

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:

4 unchanged sentences

Value Total Carrying Value

June 30, 2022

September 30, 2022

Debt securities - held-to-maturity $ 534 $ 87 $ — $ 621 $ 641

4 unchanged sentences

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.

There were no significant fair value adjustments for these assets and liabilities recorded during the nine months ended September 30, 2022 or 2021.

Medical Costs Payable

The following table shows the components of the change in medical costs payable for the six months ended June 30:

The following table shows the components of the change in medical costs payable for the nine months ended September 30:

(in millions) 2022 2021

11 unchanged sentences

Medical costs payable, end of period $ 29,064 $ 25,918

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.

For the nine months ended September 30, 2022, prior years’ medical cost reserve development included no individual factors that were significant.

For the nine months ended September 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 $ 20.0 billion and $ 17.1 billion at September 30, 2022 and December 31, 2021, respectively.

Short-Term Borrowings and Long-Term Debt

6 unchanged sentences

4.950 % notes due May 2062

In October 2022, the Company issued $ 9.0 billion of senior unsecured notes consisting of the following:

(in millions, except percentages) Par Value

5.000 % notes due October 2024

5.150 % notes due October 2025

5.250 % notes due February 2028

5.300 % notes due February 2030

5.350 % notes due February 2033

5.875 % notes due February 2053

6.050 % notes due February 2063

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 unchanged sentences

June 28 1.65 1,545

September 20 1.65 1,542

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:

As of September 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.

As of that date, the total anticipated capital required for these business combinations, excluding associated disposition proceeds and the payoff of acquired indebtedness, was approximately $ 14 billion.

The Company completed the acquisition of Change Healthcare on October 3, 2022.

Legal Matters

12 unchanged sentences

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.

Congressional committees, the Department of Justice (DOJ), the SEC, the Internal Revenue Service, the U.S.

Drug Enforcement Administration, the U.S.

6 unchanged sentences

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.

February 12, 2018, the court granted in part and denied in part the Company’s motion to dismiss.

On 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.

2 unchanged sentences

Business Combinations

During the six months ended June 30, 2022, the Company completed several business combinations for total consideration of $ 8.1 billion.

During the nine months ended September 30, 2022, the Company completed several business combinations for total consideration of $ 8.2 billion.

Acquired assets (liabilities) at acquisition date were:

3 unchanged sentences

Property, equipment and other long-term assets 1,529

Intangible assets 1,810

Other intangible assets 1,815

Total identifiable assets acquired 4,411

17 unchanged sentences

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.

Through September 30, 2022, acquired entities impact on revenues and net earnings was not material.

Unaudited pro forma revenues and net earnings for the nine months ended September 30, 2022 and 2021 as if the business combinations had occurred on January 1, 2021 were immaterial for both periods.

Segment Financial Information

1 unchanged sentence

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.

Total assets at Optum Health and Optum Rx increased to $ 67.8 billion and $ 47.2 billion as of September 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.

4 unchanged sentences

Eliminations Consolidated

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Revenues - unaffiliated customers:

13 unchanged sentences

$ 3,799 $ 1,575 $ 1,007 $ 1,081 $ — $ 3,663 $ ( 516 ) $ 6,946

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Revenues - unaffiliated customers:

15 unchanged sentences

Eliminations Consolidated

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Revenues - unaffiliated customers:

13 unchanged sentences

$ 11,447 $ 4,340 $ 2,693 $ 3,064 $ — $ 10,097 $ ( 1,416 ) $ 20,128

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Revenues - unaffiliated customers:

14 unchanged sentences

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-Q

Item 1. Financial Statements