UNITEDHEALTH GROUP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS UnitedHealth Group Condensed Consolidated Balance Sheets (Unaudited) (in millions, except per share data) September 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 38,845 $ 21,375 Short-term investments 3,682 2,532 Accounts receivable, net 17,047 14,216 Other current receivables, net 13,684 13,866 Assets under management 4,022 4,449 Prepaid expenses and other current assets 5,657 5,320 Total current assets 82,937 61,758 Long-term investments 41,557 43,114 Property, equipment and capitalized software, net 9,469 8,969 Goodwill 83,904 75,795 Other intangible assets, net 10,785 10,044 Other assets 14,412 12,526 Total assets $ 243,064 $ 212,206 Liabilities, redeemable noncontrolling interests and equity Current liabilities: Medical costs payable $ 29,064 $ 24,483 Accounts payable and accrued liabilities 27,232 24,643 Short-term borrowings and current maturities of long-term debt 3,229 3,620 Unearned revenues 12,847 2,571 Other current liabilities 28,563 22,975 Total current liabilities 100,935 78,292 Long-term debt, less current maturities 45,438 42,383 Deferred income taxes 1,659 3,265 Other liabilities 12,111 11,787 Total liabilities 160,143 135,727 Commitments and contingencies (Note 7) Redeemable noncontrolling interests 4,857 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 83,722 77,134 Accumulated other comprehensive loss ( 9,086 ) ( 5,384 ) Nonredeemable noncontrolling interests 3,418 3,285 Total equity 78,064 75,045 Total liabilities, redeemable noncontrolling interests and equity $ 243,064 $ 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 September 30, Nine Months Ended September 30, (in millions, except per share data) 2022 2021 2022 2021 Revenues: Premiums $ 64,491 $ 56,967 $ 192,457 $ 168,686 Products 9,190 8,703 28,026 25,476 Services 6,700 6,164 19,717 18,181 Investment and other income 513 503 1,175 1,511 Total revenues 80,894 72,337 241,375 213,854 Operating costs: Medical costs 52,635 47,302 157,251 138,752 Operating costs 11,663 10,725 34,773 31,307 Cost of products sold 8,306 7,802 25,389 23,034 Depreciation and amortization 828 796 2,418 2,332 Total operating costs 73,432 66,625 219,831 195,425 Earnings from operations 7,462 5,712 21,544 18,429 Interest expense ( 516 ) ( 422 ) ( 1,416 ) ( 1,229 ) Earnings before income taxes 6,946 5,290 20,128 17,200 Provision for income taxes ( 1,562 ) ( 1,099 ) ( 4,397 ) ( 3,659 ) Net earnings 5,384 4,191 15,731 13,541 Earnings attributable to noncontrolling interests ( 122 ) ( 105 ) ( 372 ) ( 327 ) Net earnings attributable to UnitedHealth Group common shareholders $ 5,262 $ 4,086 $ 15,359 $ 13,214 Earnings per share attributable to UnitedHealth Group common shareholders: Basic $ 5.63 $ 4.33 $ 16.37 $ 14.00 Diluted $ 5.55 $ 4.28 $ 16.15 $ 13.82 Basic weighted-average number of common shares outstanding 935 943 938 944 Dilutive effect of common share equivalents 13 12 13 12 Diluted weighted-average number of common shares outstanding 948 955 951 956 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 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: 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, 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 Total reclassification adjustment, net of tax 106 ( 16 ) 103 ( 28 ) 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 Comprehensive income attributable to noncontrolling interests ( 122 ) ( 105 ) ( 372 ) ( 327 ) Comprehensive income attributable to UnitedHealth Group common shareholders $ 3,906 $ 3,316 $ 11,657 $ 12,172 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 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 Net earnings 5,262 99 5,361 Other comprehensive loss ( 1,025 ) ( 331 ) ( 1,356 ) Issuances of common stock, and related tax effects 2 — 294 294 Share-based compensation 163 163 Common share repurchases ( 2 ) — ( 462 ) ( 538 ) ( 1,000 ) Cash dividends paid on common shares ($ 1.65 per share) ( 1,542 ) ( 1,542 ) Redeemable noncontrolling interests fair value and other adjustments 5 5 Acquisition and other adjustments of nonredeemable noncontrolling interests 32 32 Distribution to nonredeemable noncontrolling interests ( 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 Net earnings 4,086 86 4,172 Other comprehensive loss ( 149 ) ( 621 ) ( 770 ) Issuances of common stock, and related tax effects 1 — 291 291 Share-based compensation 159 159 Common share repurchases ( 2 ) — ( 365 ) ( 685 ) ( 1,050 ) Cash dividends paid on common shares ($ 1.45 per share) ( 1,367 ) ( 1,367 ) Redeemable noncontrolling interests fair value and other adjustments ( 85 ) ( 85 ) Acquisition and other adjustments of nonredeemable noncontrolling interests ( 26 ) ( 26 ) Distribution to nonredeemable noncontrolling interests ( 87 ) ( 87 ) Balance at September 30, 2021 942 $ 10 $ — $ 75,124 $ 778 $ ( 5,634 ) $ 2,981 $ 73,259 See Notes to the Condensed Consolidated Financial Statements 4 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Changes in Equity (Unaudited) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Nonredeemable Noncontrolling Interests Total Equity Nine months ended September 30, (in millions) Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation Losses Balance at January 1, 2022 941 $ 10 $ — $ 77,134 $ 423 $ ( 5,807 ) $ 3,285 $ 75,045 Net earnings 15,359 281 15,640 Other comprehensive loss ( 3,613 ) ( 89 ) ( 3,702 ) Issuances of common stock, and related tax effects 6 — 801 801 Share-based compensation 639 639 Common share repurchases ( 12 ) — ( 1,679 ) ( 4,321 ) ( 6,000 ) Cash dividends paid on common shares ($ 4.75 per share) ( 4,450 ) ( 4,450 ) Redeemable noncontrolling interests fair value and other adjustments 239 239 Acquisition and other adjustments of nonredeemable noncontrolling interests 135 135 Distribution to nonredeemable noncontrolling interests ( 283 ) ( 283 ) 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 Net earnings 13,214 254 13,468 Other comprehensive loss ( 558 ) ( 484 ) ( 1,042 ) Issuances of common stock, and related tax effects 6 — 839 839 Share-based compensation 559 559 Common share repurchases ( 10 ) — ( 586 ) ( 3,364 ) ( 3,950 ) Cash dividends paid on common shares ($ 4.15 per share) ( 3,915 ) ( 3,915 ) Redeemable noncontrolling interests fair value and other adjustments ( 812 ) ( 106 ) ( 918 ) Acquisitions and other adjustments of nonredeemable noncontrolling interests 125 125 Distribution to nonredeemable noncontrolling interests ( 235 ) ( 235 ) Balance at September 30, 2021 942 $ 10 $ — $ 75,124 $ 778 $ ( 5,634 ) $ 2,981 $ 73,259 See Notes to the Condensed Consolidated Financial Statements 5 Table of Contents UnitedHealth Group Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, (in millions) 2022 2021 Operating activities Net earnings $ 15,731 $ 13,541 Noncash items: Depreciation and amortization 2,418 2,332 Deferred income taxes ( 590 ) 373 Share-based compensation 675 591 Other, net — ( 195 ) Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable ( 2,563 ) ( 847 ) Other assets ( 741 ) ( 1,435 ) Medical costs payable 4,192 3,925 Accounts payable and other liabilities 1,416 1,171 Unearned revenues 10,201 ( 331 ) Cash flows from operating activities 30,739 19,125 Investing activities Purchases of investments ( 14,183 ) ( 12,827 ) Sales of investments 5,376 2,569 Maturities of investments 4,740 6,556 Cash paid for acquisitions, net of cash assumed ( 7,154 ) ( 4,727 ) Purchases of property, equipment and capitalized software ( 1,936 ) ( 1,759 ) Other, net 50 ( 900 ) Cash flows used for investing activities ( 13,107 ) ( 11,088 ) Financing activities Common share repurchases ( 6,000 ) ( 3,950 ) Cash dividends paid ( 4,450 ) ( 3,915 ) Proceeds from common stock issuances 1,084 1,077 Repayments of long-term debt ( 2,100 ) ( 1,900 ) Repayments of short-term borrowings, net ( 16 ) ( 1,301 ) Proceeds from issuance of long-term debt 5,922 6,934 Customer funds administered 7,028 1,402 Purchases of redeemable noncontrolling interests ( 176 ) ( 1,338 ) Other, net ( 1,458 ) ( 837 ) Cash flows used for financing activities ( 166 ) ( 3,828 ) Effect of exchange rate changes on cash and cash equivalents 4 ( 45 ) Increase in cash and cash equivalents 17,470 4,164 Cash and cash equivalents, beginning of period 21,375 16,921 Cash and cash equivalents, end of period $ 38,845 $ 21,085 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 September 30, 2022 Debt securities - available-for-sale: U.S. government and agency obligations $ 3,752 $ — $ ( 299 ) $ 3,453 State and municipal obligations 7,380 2 ( 621 ) 6,761 Corporate obligations 22,533 1 ( 2,057 ) 20,477 U.S. agency mortgage-backed securities 6,868 1 ( 875 ) 5,994 Non-U.S. agency mortgage-backed securities 3,164 — ( 295 ) 2,869 Total debt securities - available-for-sale 43,697 4 ( 4,147 ) 39,554 Debt securities - held-to-maturity: U.S. government and agency obligations 538 — ( 16 ) 522 State and municipal obligations 29 — ( 4 ) 25 Corporate obligations 74 — — 74 Total debt securities - held-to-maturity 641 — ( 20 ) 621 Total debt securities $ 44,338 $ 4 $ ( 4,167 ) $ 40,175 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 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 $ 1.6 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. 8 Table of Contents 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 (in millions) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 3,840 $ 3,809 $ 330 $ 326 Due after one year through five years 12,565 11,755 257 246 Due after five years through ten years 12,172 10,608 34 32 Due after ten years 5,088 4,519 20 17 U.S. agency mortgage-backed securities 6,868 5,994 — — Non-U.S. agency mortgage-backed securities 3,164 2,869 — — Total debt securities $ 43,697 $ 39,554 $ 641 $ 621 The fair value of available-for-sale debt securities with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows: Less Than 12 Months 12 Months or Greater Total (in millions) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses September 30, 2022 Debt securities - available-for-sale: U.S. government and agency obligations $ 2,484 $ ( 170 ) $ 866 $ ( 129 ) $ 3,350 $ ( 299 ) State and municipal obligations 5,811 ( 470 ) 833 ( 151 ) 6,644 ( 621 ) Corporate obligations 15,374 ( 1,292 ) 4,364 ( 765 ) 19,738 ( 2,057 ) U.S. agency mortgage-backed securities 4,201 ( 517 ) 1,609 ( 358 ) 5,810 ( 875 ) Non-U.S. agency mortgage-backed securities 2,182 ( 172 ) 670 ( 123 ) 2,852 ( 295 ) Total debt securities - available-for-sale $ 30,052 $ ( 2,621 ) $ 8,342 $ ( 1,526 ) $ 38,394 $ ( 4,147 ) 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 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. 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 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 September 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 September 30, 2022 Cash and cash equivalents $ 38,671 $ 174 $ — $ 38,845 Debt securities - available-for-sale: U.S. government and agency obligations 3,302 151 — 3,453 State and municipal obligations — 6,761 — 6,761 Corporate obligations 85 20,213 179 20,477 U.S. agency mortgage-backed securities — 5,994 — 5,994 Non-U.S. agency mortgage-backed securities — 2,869 — 2,869 Total debt securities - available-for-sale 3,387 35,988 179 39,554 Equity securities 1,901 17 68 1,986 Assets under management 1,727 2,207 88 4,022 Total assets at fair value $ 45,686 $ 38,386 $ 335 $ 84,407 Percentage of total assets at fair value 54 % 45 % 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 nine months ended September 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 September 30, 2022 Debt securities - held-to-maturity $ 534 $ 87 $ — $ 621 $ 641 Long-term debt and other financing obligations $ — $ 43,705 $ — $ 43,705 $ 48,667 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 the nine months ended September 30, 2022 or 2021. 4. Medical Costs Payable The following table shows the components of the change in medical costs payable for the nine months ended September 30: (in millions) 2022 2021 Medical costs payable, beginning of period $ 24,483 $ 21,872 Acquisitions 177 88 Reported medical costs: Current year 157,601 140,052 Prior years ( 350 ) ( 1,300 ) Total reported medical costs 157,251 138,752 Medical payments: Payments for current year ( 130,788 ) ( 116,135 ) Payments for prior years ( 22,059 ) ( 18,659 ) Total medical payments ( 152,847 ) ( 134,794 ) Medical costs payable, end of period $ 29,064 $ 25,918 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. 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 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 $ 500 5.150 % notes due October 2025 750 5.250 % notes due February 2028 1,000 5.300 % notes due February 2030 1,250 5.350 % notes due February 2033 2,000 5.875 % notes due February 2053 2,000 6.050 % notes due February 2063 1,500 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 September 20 1.65 1,542 7. Commitments and Contingencies Pending Business Combinations 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. 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 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. 12 Table of Contents 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 Department of Justice (DOJ), the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the 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 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 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: (in millions) Cash and cash equivalents $ 517 Accounts receivable and other current assets 550 Property, equipment and other long-term assets 1,529 Other intangible assets 1,815 Total identifiable assets acquired 4,411 Medical costs payable ( 177 ) Accounts payable and other current liabilities ( 660 ) Other long-term liabilities ( 580 ) Total identifiable liabilities acquired ( 1,417 ) Total net identifiable assets 2,994 Goodwill 8,393 Redeemable noncontrolling interests ( 3,104 ) Nonredeemable noncontrolling interests ( 133 ) Net assets acquired $ 8,150 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. 13 Table of Contents 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 802 9 years Other 83 11 years Total acquired finite-lived intangible assets $ 1,800 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 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. 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 $ 67.8 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. 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. 14 Table of Contents 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 September 30, 2022 Revenues - unaffiliated customers: Premiums $ 59,375 $ 5,116 $ — $ — $ — $ 5,116 $ — $ 64,491 Products — 2 37 9,151 — 9,190 — 9,190 Services 2,435 2,756 1,067 442 — 4,265 — 6,700 Total revenues - unaffiliated customers 61,810 7,874 1,104 9,593 — 18,571 — 80,381 Total revenues - affiliated customers — 10,302 2,566 15,592 ( 800 ) 27,660 ( 27,660 ) — Investment and other income 185 287 23 18 — 328 — 513 Total revenues $ 61,995 $ 18,463 $ 3,693 $ 25,203 $ ( 800 ) $ 46,559 $ ( 27,660 ) $ 80,894 Earnings from operations $ 3,799 $ 1,575 $ 1,007 $ 1,081 $ — $ 3,663 $ — $ 7,462 Interest expense — — — — — — ( 516 ) ( 516 ) Earnings before income taxes $ 3,799 $ 1,575 $ 1,007 $ 1,081 $ — $ 3,663 $ ( 516 ) $ 6,946 Three Months Ended September 30, 2021 Revenues - unaffiliated customers: Premiums $ 53,345 $ 3,622 $ — $ — $ — $ 3,622 $ — $ 56,967 Products — 8 37 8,658 — 8,703 — 8,703 Services 2,407 2,515 970 272 — 3,757 — 6,164 Total revenues - unaffiliated customers 55,752 6,145 1,007 8,930 — 16,082 — 71,834 Total revenues - affiliated customers — 7,441 2,037 14,400 ( 503 ) 23,375 ( 23,375 ) — Investment and other income 175 226 95 7 — 328 — 503 Total revenues $ 55,927 $ 13,812 $ 3,139 $ 23,337 $ ( 503 ) $ 39,785 $ ( 23,375 ) $ 72,337 Earnings from operations $ 2,651 $ 1,143 $ 906 $ 1,012 $ — $ 3,061 $ — $ 5,712 Interest expense — — — — — — ( 422 ) ( 422 ) Earnings before income taxes $ 2,651 $ 1,143 $ 906 $ 1,012 $ — $ 3,061 $ ( 422 ) $ 5,290 15 Table of Contents Optum (in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Optum Eliminations Optum Corporate and Eliminations Consolidated Nine Months Ended September 30, 2022 Revenues - unaffiliated customers: Premiums $ 178,680 $ 13,777 $ — $ — $ — $ 13,777 $ — $ 192,457 Products — 14 135 27,877 — 28,026 — 28,026 Services 7,492 8,054 3,075 1,096 — 12,225 — 19,717 Total revenues - unaffiliated customers 186,172 21,845 3,210 28,973 — 54,028 — 240,200 Total revenues - affiliated customers — 30,355 6,885 44,921 ( 1,941 ) 80,220 ( 80,220 ) — Investment and other income 523 528 99 25 — 652 — 1,175 Total revenues $ 186,695 $ 52,728 $ 10,194 $ 73,919 $ ( 1,941 ) $ 134,900 $ ( 80,220 ) $ 241,375 Earnings from operations $ 11,447 $ 4,340 $ 2,693 $ 3,064 $ — $ 10,097 $ — $ 21,544 Interest expense — — — — — — ( 1,416 ) ( 1,416 ) Earnings before income taxes $ 11,447 $ 4,340 $ 2,693 $ 3,064 $ — $ 10,097 $ ( 1,416 ) $ 20,128 Nine Months Ended September 30, 2021 Revenues - unaffiliated customers: Premiums $ 158,761 $ 9,925 $ — $ — $ — $ 9,925 $ — $ 168,686 Products — 25 107 25,344 — 25,476 — 25,476 Services 7,197 7,312 2,861 811 — 10,984 — 18,181 Total revenues - unaffiliated customers 165,958 17,262 2,968 26,155 — 46,385 — 212,343 Total revenues - affiliated customers — 21,614 5,779 41,196 ( 1,456 ) 67,133 ( 67,133 ) — Investment and other income 557 639 201 114 — 954 — 1,511 Total revenues $ 166,515 $ 39,515 $ 8,948 $ 67,465 $ ( 1,456 ) $ 114,472 $ ( 67,133 ) $ 213,854 Earnings from operations $ 9,854 $ 3,233 $ 2,447 $ 2,895 $ — $ 8,575 $ — $ 18,429 Interest expense — — — — — — ( 1,229 ) ( 1,229 ) Earnings before income taxes $ 9,854 $ 3,233 $ 2,447 $ 2,895 $ — $ 8,575 $ ( 1,229 ) $ 17,200 16 Table of Contents