UNITEDHEALTH GROUP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS UnitedHealth Group Condensed Consolidated Balance Sheets (Unaudited) (in millions, except per share data) June 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 41,813 $ 23,365 Short-term investments 4,466 4,546 Accounts receivable, net 17,952 17,681 Other current receivables, net 16,131 12,769 Assets under management 3,623 4,087 Prepaid expenses and other current assets 5,884 6,621 Total current assets 89,869 69,069 Long-term investments 45,988 43,728 Property, equipment and capitalized software, net 10,926 10,128 Goodwill 101,669 93,352 Other intangible assets, net 15,643 14,401 Other assets 16,069 15,027 Total assets $ 280,164 $ 245,705 Liabilities, redeemable noncontrolling interests and equity Current liabilities: Medical costs payable $ 31,947 $ 29,056 Accounts payable and accrued liabilities 29,516 27,715 Short-term borrowings and current maturities of long-term debt 6,321 3,110 Unearned revenues 14,852 3,075 Other current liabilities 30,345 26,281 Total current liabilities 112,981 89,237 Long-term debt, less current maturities 59,268 54,513 Deferred income taxes 2,498 2,769 Other liabilities 13,261 12,839 Total liabilities 188,008 159,358 Commitments and contingencies (Note 7) Redeemable noncontrolling interests 4,788 4,897 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; 927 and 934 issued and outstanding 9 9 Retained earnings 89,994 86,156 Accumulated other comprehensive loss ( 7,650 ) ( 8,393 ) Nonredeemable noncontrolling interests 5,015 3,678 Total equity 87,368 81,450 Total liabilities, redeemable noncontrolling interests and equity $ 280,164 $ 245,705 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) 2023 2022 2023 2022 Revenues: Premiums $ 72,474 $ 63,896 $ 145,260 $ 127,966 Products 10,651 9,496 20,918 18,836 Services 8,663 6,645 16,743 13,017 Investment and other income 1,115 295 1,913 662 Total revenues 92,903 80,332 184,834 160,481 Operating costs: Medical costs 60,268 52,093 120,113 104,616 Operating costs 13,809 11,709 27,434 23,110 Cost of products sold 9,748 8,596 19,153 17,083 Depreciation and amortization 1,021 802 1,991 1,590 Total operating costs 84,846 73,200 168,691 146,399 Earnings from operations 8,057 7,132 16,143 14,082 Interest expense ( 828 ) ( 467 ) ( 1,582 ) ( 900 ) Earnings before income taxes 7,229 6,665 14,561 13,182 Provision for income taxes ( 1,572 ) ( 1,466 ) ( 3,130 ) ( 2,835 ) Net earnings 5,657 5,199 11,431 10,347 Earnings attributable to noncontrolling interests ( 183 ) ( 129 ) ( 346 ) ( 250 ) Net earnings attributable to UnitedHealth Group common shareholders $ 5,474 $ 5,070 11,085 $ 10,097 Earnings per share attributable to UnitedHealth Group common shareholders: Basic $ 5.89 $ 5.41 $ 11.91 $ 10.75 Diluted $ 5.82 $ 5.34 $ 11.77 $ 10.61 Basic weighted-average number of common shares outstanding 930 937 931 939 Dilutive effect of common share equivalents 10 13 11 13 Diluted weighted-average number of common shares outstanding 940 950 942 952 Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 7 3 6 3 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) 2023 2022 2023 2022 Net earnings $ 5,657 $ 5,199 $ 11,431 $ 10,347 Other comprehensive (loss) income: Gross unrealized (losses) gains on investment securities during the period ( 431 ) ( 1,331 ) 209 ( 3,354 ) Income tax effect 99 304 ( 48 ) 769 Total unrealized (losses) gains, net of tax ( 332 ) ( 1,027 ) 161 ( 2,585 ) Gross reclassification adjustment for net realized gains included in net earnings ( 47 ) ( 1 ) ( 34 ) ( 4 ) Income tax effect 11 — 8 1 Total reclassification adjustment, net of tax ( 36 ) ( 1 ) ( 26 ) ( 3 ) Total foreign currency translation gains (losses) 267 ( 676 ) 608 242 Other comprehensive (loss) income ( 101 ) ( 1,704 ) 743 ( 2,346 ) Comprehensive income 5,556 3,495 12,174 8,001 Comprehensive income attributable to noncontrolling interests ( 183 ) ( 129 ) ( 346 ) ( 250 ) Comprehensive income attributable to UnitedHealth Group common shareholders $ 5,373 $ 3,366 $ 11,828 $ 7,751 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, 2023 932 $ 9 $ — $ 88,852 $ ( 2,275 ) $ ( 5,274 ) $ 4,509 $ 85,821 Net earnings 5,474 139 5,613 Other comprehensive (loss) income ( 368 ) 267 ( 101 ) Issuances of common stock, and related tax effects 1 — 218 218 Share-based compensation 232 232 Common share repurchases ( 6 ) — ( 442 ) ( 2,585 ) ( 3,027 ) Cash dividends paid on common shares ($ 1.88 per share) ( 1,747 ) ( 1,747 ) Redeemable noncontrolling interests fair value and other adjustments ( 8 ) ( 8 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 478 478 Distribution to nonredeemable noncontrolling interests ( 111 ) ( 111 ) Balance at June 30, 2023 927 $ 9 $ — $ 89,994 $ ( 2,643 ) $ ( 5,007 ) $ 5,015 $ 87,368 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 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 (Loss) Income Nonredeemable Noncontrolling Interests Total Equity Six months ended March 31, (in millions) Shares Amount Net Unrealized (Losses) Gains on Investments Foreign Currency Translation (Losses) Gains Balance at January 1, 2023 934 $ 9 $ — $ 86,156 $ ( 2,778 ) $ ( 5,615 ) $ 3,678 $ 81,450 Net earnings 11,085 252 11,337 Other comprehensive income 135 608 743 Issuances of common stock, and related tax effects 3 — 568 568 Share-based compensation 598 598 Common share repurchases ( 10 ) — ( 1,075 ) ( 3,963 ) ( 5,038 ) Cash dividends paid on common shares ($ 3.53 per share) ( 3,284 ) ( 3,284 ) Redeemable noncontrolling interests fair value and other adjustments ( 91 ) ( 91 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 1,297 1,297 Distribution to nonredeemable noncontrolling interests ( 212 ) ( 212 ) Balance at June 30, 2023 927 $ 9 $ — $ 89,994 $ ( 2,643 ) $ ( 5,007 ) $ 5,015 $ 87,368 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 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) 2023 2022 Operating activities Net earnings $ 11,431 $ 10,347 Noncash items: Depreciation and amortization 1,991 1,590 Deferred income taxes ( 482 ) ( 15 ) Share-based compensation 604 504 Other, net ( 91 ) 215 Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable 197 ( 4,204 ) Other assets ( 2,001 ) ( 643 ) Medical costs payable 2,408 4,029 Accounts payable and other liabilities 1,547 807 Unearned revenues 11,755 ( 440 ) Cash flows from operating activities 27,359 12,190 Investing activities Purchases of investments ( 9,225 ) ( 8,903 ) Sales of investments 3,188 2,348 Maturities of investments 4,463 3,189 Cash paid for acquisitions, net of cash assumed ( 8,161 ) ( 7,150 ) Purchases of property, equipment and capitalized software ( 1,589 ) ( 1,212 ) Other, net ( 424 ) ( 532 ) Cash flows used for investing activities ( 11,748 ) ( 12,260 ) Financing activities Common share repurchases ( 5,000 ) ( 5,000 ) Cash dividends paid ( 3,284 ) ( 2,908 ) Proceeds from common stock issuances 628 756 Repayments of long-term debt ( 2,125 ) ( 1,100 ) Proceeds from short-term borrowings, net 3,426 1,340 Proceeds from issuance of long-term debt 6,394 5,922 Customer funds administered 4,069 5,786 Other, net ( 1,377 ) ( 1,546 ) Cash flows from financing activities 2,731 3,250 Effect of exchange rate changes on cash and cash equivalents 106 57 Increase in cash and cash equivalents 18,448 3,237 Cash and cash equivalents, beginning of period 23,365 21,375 Cash and cash equivalents, end of period $ 41,813 $ 24,612 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, 2022 as filed with the SEC (2022 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. Revenues - Products and Services As of June 30, 2023 and December 31, 2022, accounts receivable related to products and services were $ 7.7 billion and $ 7.1 billion, respectively. As of June 30, 2023, revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts having an original expected duration of one year or less, contracts where revenue recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, was $ 12.2 billion, of which approximately half is expected to be recognized in the next three years . 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, 2023 Debt securities - available-for-sale: U.S. government and agency obligations $ 4,990 $ — $ ( 283 ) $ 4,707 State and municipal obligations 7,334 10 ( 427 ) 6,917 Corporate obligations 23,582 11 ( 1,643 ) 21,950 U.S. agency mortgage-backed securities 8,504 5 ( 799 ) 7,710 Non-U.S. agency mortgage-backed securities 3,148 — ( 304 ) 2,844 Total debt securities - available-for-sale 47,558 26 ( 3,456 ) 44,128 Debt securities - held-to-maturity: U.S. government and agency obligations 466 — ( 11 ) 455 State and municipal obligations 28 — ( 3 ) 25 Corporate obligations 246 — — 246 Total debt securities - held-to-maturity 740 — ( 14 ) 726 Total debt securities $ 48,298 $ 26 $ ( 3,470 ) $ 44,854 December 31, 2022 Debt securities - available-for-sale: U.S. government and agency obligations $ 4,093 $ 1 $ ( 285 ) $ 3,809 State and municipal obligations 7,702 25 ( 479 ) 7,248 Corporate obligations 23,675 17 ( 1,798 ) 21,894 U.S. agency mortgage-backed securities 7,379 15 ( 808 ) 6,586 Non-U.S. agency mortgage-backed securities 3,077 1 ( 294 ) 2,784 Total debt securities - available-for-sale 45,926 59 ( 3,664 ) 42,321 Debt securities - held-to-maturity: U.S. government and agency obligations 578 — ( 14 ) 564 State and municipal obligations 29 — ( 3 ) 26 Corporate obligations 89 — — 89 Total debt securities - held-to-maturity 696 — ( 17 ) 679 Total debt securities $ 46,622 $ 59 $ ( 3,681 ) $ 43,000 The Company held $ 4.2 billion and $ 3.7 billion of equity securities as of June 30, 2023 and December 31, 2022, respectively. The Company’s investments in equity securities primarily consist of employee savings plan related investments, venture investments and shares of Brazilian real denominated fixed-income funds with readily determinable fair values. Additionally, the Company’s investments included $ 1.4 billion and $ 1.5 billion of equity method investments in operating businesses in the health care sector as of June 30, 2023 and December 31, 2022, respectively. The allowance for credit losses on held-to-maturity securities at June 30, 2023 and December 31, 2022 was not material. 8 Table of Contents The amortized cost and fair value of debt securities as of June 30, 2023, 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 $ 4,646 $ 4,613 $ 466 $ 461 Due after one year through five years 14,748 13,935 225 219 Due after five years through ten years 11,332 10,206 31 30 Due after ten years 5,180 4,820 18 16 U.S. agency mortgage-backed securities 8,504 7,710 — — Non-U.S. agency mortgage-backed securities 3,148 2,844 — — Total debt securities $ 47,558 $ 44,128 $ 740 $ 726 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, 2023 Debt securities - available-for-sale: U.S. government and agency obligations $ 2,300 $ ( 28 ) $ 1,902 $ ( 255 ) $ 4,202 $ ( 283 ) State and municipal obligations 2,769 ( 46 ) 3,324 ( 381 ) 6,093 ( 427 ) Corporate obligations 6,346 ( 122 ) 13,974 ( 1,521 ) 20,320 ( 1,643 ) U.S. agency mortgage-backed securities 3,111 ( 79 ) 4,314 ( 720 ) 7,425 ( 799 ) Non-U.S. agency mortgage-backed securities 577 ( 15 ) 2,239 ( 289 ) 2,816 ( 304 ) Total debt securities - available-for-sale $ 15,103 $ ( 290 ) $ 25,753 $ ( 3,166 ) $ 40,856 $ ( 3,456 ) December 31, 2022 Debt securities - available-for-sale: U.S. government and agency obligations $ 2,007 $ ( 96 ) $ 1,290 $ ( 189 ) $ 3,297 $ ( 285 ) State and municipal obligations 4,630 ( 288 ) 1,178 ( 191 ) 5,808 ( 479 ) Corporate obligations 13,003 ( 893 ) 6,637 ( 905 ) 19,640 ( 1,798 ) U.S. agency mortgage-backed securities 3,561 ( 345 ) 2,239 ( 463 ) 5,800 ( 808 ) Non-U.S. agency mortgage-backed securities 1,698 ( 128 ) 976 ( 166 ) 2,674 ( 294 ) Total debt securities - available-for-sale $ 24,899 $ ( 1,750 ) $ 12,320 $ ( 1,914 ) $ 37,219 $ ( 3,664 ) The Company’s unrealized losses from debt securities as of June 30, 2023 were generated from approximately 35,000 positions out of a total of 41,000 positions. The Company believes that it will timely collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities which 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, 2023, 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, 2023 and December 31, 2022 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 2022 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, 2023 Cash and cash equivalents $ 41,763 $ 50 $ — $ 41,813 Debt securities - available-for-sale: U.S. government and agency obligations 4,318 389 — 4,707 State and municipal obligations — 6,917 — 6,917 Corporate obligations 36 21,732 182 21,950 U.S. agency mortgage-backed securities — 7,710 — 7,710 Non-U.S. agency mortgage-backed securities — 2,844 — 2,844 Total debt securities - available-for-sale 4,354 39,592 182 44,128 Equity securities 2,270 37 70 2,377 Assets under management 1,332 2,190 101 3,623 Total assets at fair value $ 49,719 $ 41,869 $ 353 $ 91,941 Percentage of total assets at fair value 54 % 45 % 1 % 100 % December 31, 2022 Cash and cash equivalents $ 23,202 $ 163 $ — $ 23,365 Debt securities - available-for-sale: U.S. government and agency obligations 3,505 304 — 3,809 State and municipal obligations — 7,248 — 7,248 Corporate obligations 7 21,695 192 21,894 U.S. agency mortgage-backed securities — 6,586 — 6,586 Non-U.S. agency mortgage-backed securities — 2,784 — 2,784 Total debt securities - available-for-sale 3,512 38,617 192 42,321 Equity securities 2,043 35 70 2,148 Assets under management 1,788 2,203 96 4,087 Total assets at fair value $ 30,545 $ 41,018 $ 358 $ 71,921 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, 2023 or 2022. 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, 2023 Debt securities - held-to-maturity $ 651 $ 75 $ — $ 726 $ 740 Long-term debt and other financing obligations $ — $ 58,644 $ — $ 58,644 $ 61,217 December 31, 2022 Debt securities - held-to-maturity $ 577 $ 102 $ — $ 679 $ 696 Long-term debt and other financing obligations $ — $ 53,626 $ — $ 53,626 $ 56,823 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 six months ended June 30, 2023 or 2022. 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) 2023 2022 Medical costs payable, beginning of period $ 29,056 $ 24,483 Acquisitions 1 171 Reported medical costs: Current year 120,773 104,936 Prior years ( 660 ) ( 320 ) Total reported medical costs 120,113 104,616 Medical payments: Payments for current year ( 91,621 ) ( 78,937 ) Payments for prior years ( 25,602 ) ( 21,355 ) Total medical payments ( 117,223 ) ( 100,292 ) Medical costs payable, end of period $ 31,947 $ 28,978 For the six months ended June 30, 2023 and 2022, prior years’ medical cost reserve development included no individual factors that were significant. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of $ 22.0 billion and $ 20.0 billion at June 30, 2023 and December 31, 2022, respectively. 5. Short-Term Borrowings and Long-Term Debt In March 2023, the Company issued $ 6.5 billion of senior unsecured notes consisting of the following: (in millions, except percentages) Par Value 4.250 % notes due January 2029 $ 1,250 4.500 % notes due April 2033 1,500 5.050 % notes due April 2053 2,000 5.200 % notes due April 2063 1,750 As of June 30, 2023, the Company had $ 4.4 billion of commercial paper outstanding, with a weighted-average annual interest rate of 5.1 %. 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 2022 10-K. 11 Table of Contents 6. Dividends In June 2023, the Company’s Board of Directors increased the Company’s quarterly cash dividend to shareholders to an annual rate of $7.52 compared to $6.60 per share, which the Company had paid since June 2022. 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 dividend payments during the six months ended June 30, 2023: Payment Date Amount per Share Total Amount Paid (in millions) March 21 $ 1.65 $ 1,537 June 27 1.88 1,747 7. Commitments and Contingencies Pending Acquisitions As of June 30, 2023, the Company has entered into agreements to acquire companies in the health care sector, subject to regulatory approval and other customary closing conditions. The total anticipated consideration required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $ 5 billion. Legal Matters 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 a loss may be incurred. Government Investigations, Audits and Reviews The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services (CMS), state insurance and health and welfare departments, state attorneys general, the Office of the Inspector General, the Office of Personnel Management, the Office of Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the U.S. Department of Justice (DOJ), the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the 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 the Company made improper risk adjustment submissions and violated the False Claims Act. On February 12, 2018, the court granted in part and denied in part the Company’s motion to dismiss. In May 2018, 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 which may result from this matter given its procedural status. 12 Table of Contents 8. Business Combinations During the six months ended June 30, 2023, 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 $ 104 Accounts receivable and other current assets 550 Property, equipment and other long-term assets 542 Other intangible assets 1,795 Total identifiable assets acquired 2,991 Medical costs payable ( 1 ) Accounts payable and other current liabilities ( 473 ) Other long-term liabilities ( 617 ) Total identifiable liabilities acquired ( 1,091 ) Total net identifiable assets 1,900 Goodwill 7,734 Redeemable noncontrolling interests ( 113 ) Nonredeemable noncontrolling interests ( 1,297 ) Net assets acquired $ 8,224 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 intangible assets were: (in millions, except years) Fair Value Weighted-Average Useful Life Acquired finite-lived intangible assets: Customer-related $ 223 12 years Trademarks and technology 171 5 years Other 38 6 years Total acquired finite-lived intangible assets 432 9 years Total acquired indefinite-lived intangible assets - operating licenses and certificates 1,363 Total acquired intangible assets $ 1,795 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, 2023, 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, 2023 and 2022, as if the business combinations had occurred on January 1, 2022, were immaterial for both periods. 13 Table of Contents 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 14 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2022 10-K. Total assets at Optum Health increased to $ 80.8 billion as of June 30, 2023 compared to $ 69.0 billion as of December 31, 2022, primarily due to goodwill from business combinations of $ 7.0 billion. 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, 2023 Revenues - unaffiliated customers: Premiums $ 67,047 $ 5,427 $ — $ — $ — $ 5,427 $ — $ 72,474 Products — 51 39 10,561 — 10,651 — 10,651 Services 2,584 3,541 1,995 543 — 6,079 — 8,663 Total revenues - unaffiliated customers 69,631 9,019 2,034 11,104 — 22,157 — 91,788 Total revenues - affiliated customers — 14,454 2,615 17,496 ( 893 ) 33,672 ( 33,672 ) — Investment and other income 600 444 25 46 — 515 — 1,115 Total revenues $ 70,231 $ 23,917 $ 4,674 $ 28,646 $ ( 893 ) $ 56,344 $ ( 33,672 ) $ 92,903 Earnings from operations $ 4,358 $ 1,525 $ 968 $ 1,206 $ — $ 3,699 $ — $ 8,057 Interest expense — — — — — — ( 828 ) ( 828 ) Earnings before income taxes $ 4,358 $ 1,525 $ 968 $ 1,206 $ — $ 3,699 $ ( 828 ) $ 7,229 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 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, 2023 Revenues - unaffiliated customers: Premiums $ 134,505 $ 10,755 $ — $ — $ — $ 10,755 $ — $ 145,260 Products — 95 79 20,744 — 20,918 — 20,918 Services 5,139 6,630 3,921 1,053 — 11,604 — 16,743 Total revenues - unaffiliated customers 139,644 17,480 4,000 21,797 — 43,277 — 182,921 Total revenues - affiliated customers — 28,720 5,125 34,175 ( 1,752 ) 66,268 ( 66,268 ) — Investment and other income 1,055 721 45 92 — 858 — 1,913 Total revenues $ 140,699 $ 46,921 $ 9,170 $ 56,064 $ ( 1,752 ) $ 110,403 $ ( 66,268 ) $ 184,834 Earnings from operations $ 8,701 $ 3,301 $ 1,875 $ 2,266 $ — $ 7,442 $ — $ 16,143 Interest expense — — — — — — ( 1,582 ) ( 1,582 ) Earnings before income taxes $ 8,701 $ 3,301 $ 1,875 $ 2,266 $ — $ 7,442 $ ( 1,582 ) $ 14,561 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 15 Table of Contents