UNITEDHEALTH GROUP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS UnitedHealth Group Condensed Consolidated Balance Sheets (Unaudited) (in millions, except per share data) September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 38,915 $ 23,365 Short-term investments 5,182 4,546 Accounts receivable, net 20,673 17,681 Other current receivables, net 17,752 12,769 Assets under management 3,616 4,087 Prepaid expenses and other current assets 5,767 6,621 Total current assets 91,905 69,069 Long-term investments 45,474 43,728 Property, equipment and capitalized software, net 11,070 10,128 Goodwill 101,703 93,352 Other intangible assets, net 15,200 14,401 Other assets 16,711 15,027 Total assets $ 282,063 $ 245,705 Liabilities, redeemable noncontrolling interests and equity Current liabilities: Medical costs payable $ 32,792 $ 29,056 Accounts payable and accrued liabilities 31,164 27,715 Short-term borrowings and current maturities of long-term debt 5,290 3,110 Unearned revenues 15,311 3,075 Other current liabilities 29,622 26,281 Total current liabilities 114,179 89,237 Long-term debt, less current maturities 58,079 54,513 Deferred income taxes 2,210 2,769 Other liabilities 13,615 12,839 Total liabilities 188,083 159,358 Commitments and contingencies (Note 7) Redeemable noncontrolling interests 4,416 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; 925 and 934 issued and outstanding 9 9 Retained earnings 93,173 86,156 Accumulated other comprehensive loss ( 8,688 ) ( 8,393 ) Nonredeemable noncontrolling interests 5,070 3,678 Total equity 89,564 81,450 Total liabilities, redeemable noncontrolling interests and equity $ 282,063 $ 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 September 30, Nine Months Ended September 30, (in millions, except per share data) 2023 2022 2023 2022 Revenues: Premiums $ 72,339 $ 64,491 $ 217,599 $ 192,457 Products 10,354 9,190 31,272 28,026 Services 8,671 6,700 25,414 19,717 Investment and other income 997 513 2,910 1,175 Total revenues 92,361 80,894 277,195 241,375 Operating costs: Medical costs 59,550 52,635 179,663 157,251 Operating costs 13,855 11,663 41,289 34,773 Cost of products sold 9,423 8,306 28,576 25,389 Depreciation and amortization 1,007 828 2,998 2,418 Total operating costs 83,835 73,432 252,526 219,831 Earnings from operations 8,526 7,462 24,669 21,544 Interest expense ( 834 ) ( 516 ) ( 2,416 ) ( 1,416 ) Earnings before income taxes 7,692 6,946 22,253 20,128 Provision for income taxes ( 1,654 ) ( 1,562 ) ( 4,784 ) ( 4,397 ) Net earnings 6,038 5,384 17,469 15,731 Earnings attributable to noncontrolling interests ( 197 ) ( 122 ) ( 543 ) ( 372 ) Net earnings attributable to UnitedHealth Group common shareholders $ 5,841 $ 5,262 16,926 $ 15,359 Earnings per share attributable to UnitedHealth Group common shareholders: Basic $ 6.31 $ 5.63 $ 18.20 $ 16.37 Diluted $ 6.24 $ 5.55 $ 18.01 $ 16.15 Basic weighted-average number of common shares outstanding 926 935 930 938 Dilutive effect of common share equivalents 10 13 10 13 Diluted weighted-average number of common shares outstanding 936 948 940 951 Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 6 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 September 30, Nine Months Ended September 30, (in millions) 2023 2022 2023 2022 Net earnings $ 6,038 $ 5,384 $ 17,469 $ 15,731 Other comprehensive loss: Gross unrealized losses on investment securities during the period ( 893 ) ( 1,471 ) ( 684 ) ( 4,825 ) Income tax effect 204 340 156 1,109 Total unrealized losses, net of tax ( 689 ) ( 1,131 ) ( 528 ) ( 3,716 ) Gross reclassification adjustment for net realized losses (gains) included in net earnings 7 138 ( 27 ) 134 Income tax effect ( 2 ) ( 32 ) 6 ( 31 ) Total reclassification adjustment, net of tax 5 106 ( 21 ) 103 Total foreign currency translation (losses) gains ( 354 ) ( 331 ) 254 ( 89 ) Other comprehensive loss ( 1,038 ) ( 1,356 ) ( 295 ) ( 3,702 ) Comprehensive income 5,000 4,028 17,174 12,029 Comprehensive income attributable to noncontrolling interests ( 197 ) ( 122 ) ( 543 ) ( 372 ) Comprehensive income attributable to UnitedHealth Group common shareholders $ 4,803 $ 3,906 $ 16,631 $ 11,657 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 Nonredeemable Noncontrolling Interests Total Equity Three months ended September 30, (in millions) Shares Amount Net Unrealized Losses on Investments Foreign Currency Translation Losses Balance at June 30, 2023 927 $ 9 $ — $ 89,994 $ ( 2,643 ) $ ( 5,007 ) $ 5,015 $ 87,368 Net earnings 5,841 149 5,990 Other comprehensive loss ( 684 ) ( 354 ) ( 1,038 ) Issuances of common stock, and related tax effects 1 — 395 395 Share-based compensation 235 235 Common share repurchases ( 3 ) — ( 588 ) ( 923 ) ( 1,511 ) Cash dividends paid on common shares ($ 1.88 per share) ( 1,739 ) ( 1,739 ) Redeemable noncontrolling interests fair value and other adjustments ( 42 ) ( 42 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 42 42 Distribution to nonredeemable noncontrolling interests ( 136 ) ( 136 ) Balance at September 30, 2023 925 $ 9 $ — $ 93,173 $ ( 3,327 ) $ ( 5,361 ) $ 5,070 $ 89,564 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 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 Nine months ended September 30, (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 16,926 401 17,327 Other comprehensive (loss) income ( 549 ) 254 ( 295 ) Issuances of common stock, and related tax effects 4 — 963 963 Share-based compensation 833 833 Common share repurchases ( 13 ) — ( 1,663 ) ( 4,886 ) ( 6,549 ) Cash dividends paid on common shares ($ 5.41 per share) ( 5,023 ) ( 5,023 ) Redeemable noncontrolling interests fair value and other adjustments ( 133 ) ( 133 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 1,339 1,339 Distribution to nonredeemable noncontrolling interests ( 348 ) ( 348 ) Balance at September 30, 2023 925 $ 9 $ — $ 93,173 $ ( 3,327 ) $ ( 5,361 ) $ 5,070 $ 89,564 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 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) 2023 2022 Operating activities Net earnings $ 17,469 $ 15,731 Noncash items: Depreciation and amortization 2,998 2,418 Deferred income taxes ( 494 ) ( 590 ) Share-based compensation 851 675 Other, net ( 59 ) — Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable ( 2,574 ) ( 2,563 ) Other assets ( 2,358 ) ( 741 ) Medical costs payable 3,837 4,192 Accounts payable and other liabilities 2,370 1,416 Unearned revenues 12,221 10,201 Cash flows from operating activities 34,261 30,739 Investing activities Purchases of investments ( 12,998 ) ( 14,183 ) Sales of investments 3,674 5,376 Maturities of investments 6,474 4,740 Cash paid for acquisitions, net of cash assumed ( 8,389 ) ( 7,154 ) Purchases of property, equipment and capitalized software ( 2,427 ) ( 1,936 ) Other, net ( 721 ) 50 Cash flows used for investing activities ( 14,387 ) ( 13,107 ) Financing activities Common share repurchases ( 6,500 ) ( 6,000 ) Cash dividends paid ( 5,023 ) ( 4,450 ) Proceeds from common stock issuances 1,039 1,084 Repayments of long-term debt ( 2,125 ) ( 2,100 ) Proceeds from (repayments of) short-term borrowings, net 1,579 ( 16 ) Proceeds from issuance of long-term debt 6,394 5,922 Customer funds administered 2,037 7,028 Other, net ( 1,774 ) ( 1,634 ) Cash flows used for financing activities ( 4,373 ) ( 166 ) Effect of exchange rate changes on cash and cash equivalents 49 4 Increase in cash and cash equivalents 15,550 17,470 Cash and cash equivalents, beginning of period 23,365 21,375 Cash and cash equivalents, end of period $ 38,915 $ 38,845 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 September 30, 2023 and December 31, 2022, accounts receivable related to products and services were $ 8.0 billion and $ 7.1 billion, respectively. As of September 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 is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, was $ 11.8 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 September 30, 2023 Debt securities - available-for-sale: U.S. government and agency obligations $ 5,739 $ — $ ( 340 ) $ 5,399 State and municipal obligations 7,695 1 ( 643 ) 7,053 Corporate obligations 23,511 5 ( 1,857 ) 21,659 U.S. agency mortgage-backed securities 8,632 — ( 1,158 ) 7,474 Non-U.S. agency mortgage-backed securities 3,091 — ( 324 ) 2,767 Total debt securities - available-for-sale 48,668 6 ( 4,322 ) 44,352 Debt securities - held-to-maturity: U.S. government and agency obligations 466 — ( 10 ) 456 State and municipal obligations 28 — ( 5 ) 23 Corporate obligations 188 — — 188 Total debt securities - held-to-maturity 682 — ( 15 ) 667 Total debt securities $ 49,350 $ 6 $ ( 4,337 ) $ 45,019 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 September 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 September 30, 2023 and December 31, 2022, respectively. The allowance for credit losses on held-to-maturity securities at September 30, 2023 and December 31, 2022 was not material. 8 Table of Contents The amortized cost and fair value of debt securities as of September 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 $ 5,372 $ 5,340 $ 375 $ 372 Due after one year through five years 15,098 14,183 262 255 Due after five years through ten years 11,256 9,898 25 24 Due after ten years 5,219 4,690 20 16 U.S. agency mortgage-backed securities 8,632 7,474 — — Non-U.S. agency mortgage-backed securities 3,091 2,767 — — Total debt securities $ 48,668 $ 44,352 $ 682 $ 667 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, 2023 Debt securities - available-for-sale: U.S. government and agency obligations $ 2,023 $ ( 34 ) $ 2,081 $ ( 306 ) $ 4,104 $ ( 340 ) State and municipal obligations 2,872 ( 124 ) 4,042 ( 519 ) 6,914 ( 643 ) Corporate obligations 5,563 ( 149 ) 14,821 ( 1,708 ) 20,384 ( 1,857 ) U.S. agency mortgage-backed securities 2,562 ( 140 ) 4,867 ( 1,018 ) 7,429 ( 1,158 ) Non-U.S. agency mortgage-backed securities 480 ( 21 ) 2,249 ( 303 ) 2,729 ( 324 ) Total debt securities - available-for-sale $ 13,500 $ ( 468 ) $ 28,060 $ ( 3,854 ) $ 41,560 $ ( 4,322 ) 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 September 30, 2023 were generated from approximately 37,000 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 September 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 September 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 September 30, 2023 Cash and cash equivalents $ 38,880 $ 35 $ — $ 38,915 Debt securities - available-for-sale: U.S. government and agency obligations 5,050 349 — 5,399 State and municipal obligations — 7,053 — 7,053 Corporate obligations 15 21,462 182 21,659 U.S. agency mortgage-backed securities — 7,474 — 7,474 Non-U.S. agency mortgage-backed securities — 2,767 — 2,767 Total debt securities - available-for-sale 5,065 39,105 182 44,352 Equity securities 2,231 31 70 2,332 Assets under management 1,420 2,094 102 3,616 Total assets at fair value $ 47,596 $ 41,265 $ 354 $ 89,215 Percentage of total assets at fair value 53 % 46 % 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 nine months ended September 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 September 30, 2023 Debt securities - held-to-maturity $ 593 $ 74 $ — $ 667 $ 682 Long-term debt and other financing obligations $ — $ 55,137 $ — $ 55,137 $ 60,769 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 nine months ended September 30, 2023 or 2022. 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) 2023 2022 Medical costs payable, beginning of period $ 29,056 $ 24,483 Acquisitions 1 177 Reported medical costs: Current year 180,423 157,601 Prior years ( 760 ) ( 350 ) Total reported medical costs 179,663 157,251 Medical payments: Payments for current year ( 149,671 ) ( 130,788 ) Payments for prior years ( 26,257 ) ( 22,059 ) Total medical payments ( 175,928 ) ( 152,847 ) Medical costs payable, end of period $ 32,792 $ 29,064 For the nine months ended September 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 consumers but not yet reported to the Company of $ 22.7 billion and $ 20.0 billion at September 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 September 30, 2023, the Company had $ 2.6 billion of commercial paper outstanding, with a weighted-average annual interest rate of 5.3 %. 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 nine months ended September 30, 2023: Payment Date Amount per Share Total Amount Paid (in millions) March 21 $ 1.65 $ 1,537 June 27 1.88 1,747 September 19 1.88 1,739 7. Commitments and Contingencies Pending Acquisitions As of September 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, the Company’s 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 nine months ended September 30, 2023, the Company completed several business combinations for total consideration of $ 8.4 billion. Acquired assets (liabilities) at acquisition date were: (in millions) Cash and cash equivalents $ 104 Accounts receivable and other current assets 587 Property, equipment and other long-term assets 573 Other intangible assets 1,800 Total identifiable assets acquired 3,064 Medical costs payable ( 1 ) Accounts payable and other current liabilities ( 551 ) Other long-term liabilities ( 661 ) Total identifiable liabilities acquired ( 1,213 ) Total net identifiable assets 1,851 Goodwill 8,073 Redeemable noncontrolling interests ( 121 ) Nonredeemable noncontrolling interests ( 1,339 ) Net assets acquired $ 8,464 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 42 6 years Total acquired finite-lived intangible assets 436 9 years Total acquired indefinite-lived intangible assets - operating licenses and certificates 1,364 Total acquired intangible assets $ 1,800 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, 2023, 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, 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 $ 86.9 billion as of September 30, 2023 compared to $ 69.0 billion as of December 31, 2022, including an increase to goodwill from business combinations of $ 7.3 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 September 30, 2023 Revenues - unaffiliated customers: Premiums $ 66,709 $ 5,630 $ — $ — $ — $ 5,630 $ — $ 72,339 Products — 61 40 10,253 — 10,354 — 10,354 Services 2,550 3,629 1,938 554 — 6,121 — 8,671 Total revenues - unaffiliated customers 69,259 9,320 1,978 10,807 — 22,105 — 91,364 Total revenues - affiliated customers — 14,227 2,964 17,999 ( 961 ) 34,229 ( 34,229 ) — Investment and other income 594 317 35 51 — 403 — 997 Total revenues $ 69,853 $ 23,864 $ 4,977 $ 28,857 $ ( 961 ) $ 56,737 $ ( 34,229 ) $ 92,361 Earnings from operations $ 4,592 $ 1,568 $ 1,109 $ 1,257 $ — $ 3,934 $ — $ 8,526 Interest expense — — — — — — ( 834 ) ( 834 ) Earnings before income taxes $ 4,592 $ 1,568 $ 1,109 $ 1,257 $ — $ 3,934 $ ( 834 ) $ 7,692 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 14 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, 2023 Revenues - unaffiliated customers: Premiums $ 201,214 $ 16,385 $ — $ — $ — $ 16,385 $ — $ 217,599 Products — 156 119 30,997 — 31,272 — 31,272 Services 7,689 10,259 5,859 1,607 — 17,725 — 25,414 Total revenues - unaffiliated customers 208,903 26,800 5,978 32,604 — 65,382 — 274,285 Total revenues - affiliated customers — 42,947 8,089 52,174 ( 2,713 ) 100,497 ( 100,497 ) — Investment and other income 1,649 1,038 80 143 — 1,261 — 2,910 Total revenues $ 210,552 $ 70,785 $ 14,147 $ 84,921 $ ( 2,713 ) $ 167,140 $ ( 100,497 ) $ 277,195 Earnings from operations $ 13,293 $ 4,869 $ 2,984 $ 3,523 $ — $ 11,376 $ — $ 24,669 Interest expense — — — — — — ( 2,416 ) ( 2,416 ) Earnings before income taxes $ 13,293 $ 4,869 $ 2,984 $ 3,523 $ — $ 11,376 $ ( 2,416 ) $ 22,253 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 15 Table of Contents