UNITEDHEALTH GROUP INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Report of Independent Registered Public Accounting Firm ( PCAOB ID No 34 ) 36 Consolidated Balance Sheets 38 Consolidated Statements of Operations 39 Consolidated Statements of Comprehensive Income 40 Consolidated Statements of Changes in Equity 41 Consolidated Statements of Cash Flows 42 Notes to the Consolidated Financial Statements 43 1. Description of Business 43 2. Basis of Presentation, Use of Estimates and Significant Accounting Policies 43 3. Investments 48 4. Fair Value 49 5. Property, Equipment and Capitalized Software 52 6. Goodwill and Other Intangible Assets 52 7. Medical Costs Payable 53 8. Short-Term Borrowings and Long-Term Debt 55 9. Income Taxes 57 10. Shareholders’ Equity 59 11. Share-Based Compensation 60 12. Commitments and Contingencies 62 13. Business Combinations 63 14. Segment Financial Information 64 35 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of UnitedHealth Group Incorporated and Subsidiaries: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of UnitedHealth Group Incorporated and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2024 expressed an unqualified opinion on the Company’s internal control over financial reporting . Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit and Finance Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Medical Care Services Incurred but not Reported (IBNR) - Refer to Notes 2 and 7 to the financial statements. Critical Audit Matter Description Medical costs payable includes estimates of the Company’s obligations for medical care services rendered on behalf of insured consumers, for which claims have either not yet been received or processed. The Company develops estimates for medical care services incurred but not reported (IBNR) using an actuarial model that requires management to exercise certain judgments in developing its estimates. Judgments made by management include medical cost per member per month trend factors and completion factors, which include assumptions over the time from date of service to claim receipt, the impact of actual care activity, and processing cycles. We identified medical care services IBNR as a critical audit matter because it requires significant management assumptions in estimating the liability. This required complex auditor judgment, and an increased extent of effort, including the involvement of actuarial specialists in performing procedures to evaluate the reasonableness of management’s methods, assumptions, and judgments in developing estimates for medical care services IBNR. 36 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to medical care services IBNR included the following, among others: • We tested the effectiveness of controls over management’s estimate of the IBNR for these services, including controls over the judgments in both the completion factors and the medical cost per member per month trend factors, as well as controls over the claims and membership data used in the estimation process. • We tested the underlying claims and membership data and other information that served as the basis for the actuarial analysis, to test that the inputs to the actuarial estimate were complete and accurate. • With the assistance of actuarial specialists, we evaluated the reasonableness of the actuarial methods and assumptions used by management to estimate IBNR for these services by: – Performing an overlay of the historical claims data used in management’s current year model to the data used in prior periods to validate that there were no material changes to the claims data tested in prior periods. – Developing an independent estimate of the IBNR for these services and comparing our estimate to management’s estimate. – Performing a retrospective review comparing management’s prior year estimate of IBNR to claims processed in 2023 with dates of service in 2022 or prior. / S / DELOITTE & TOUCHE LLP Minneapolis, Minnesota February 28, 2024 We have served as the Company's auditor since 2002. 37 Table of Contents UnitedHealth Group Consolidated Balance Sheets (in millions, except per share data) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 25,427 $ 23,365 Short-term investments 4,201 4,546 Accounts receivable, net of allowances of $ 1,000 and $ 877 21,276 17,681 Other current receivables, net of allowances of $ 2,084 and $ 1,433 17,694 12,769 Assets under management 3,755 4,087 Prepaid expenses and other current assets 6,084 6,621 Total current assets 78,437 69,069 Long-term investments 47,609 43,728 Property, equipment and capitalized software, net of accumulated depreciation and amortization of $ 7,039 and $ 6,930 11,450 10,128 Goodwill 103,732 93,352 Other intangible assets, net of accumulated amortization of $ 7,279 and $ 6,137 15,194 14,401 Other assets 17,298 15,027 Total assets $ 273,720 $ 245,705 Liabilities, redeemable noncontrolling interests and equity Current liabilities: Medical costs payable $ 32,395 $ 29,056 Accounts payable and accrued liabilities 31,958 27,715 Short-term borrowings and current maturities of long-term debt 4,274 3,110 Unearned revenues 3,355 3,075 Other current liabilities 27,072 26,281 Total current liabilities 99,054 89,237 Long-term debt, less current maturities 58,263 54,513 Deferred income taxes 3,021 2,769 Other liabilities 14,463 12,839 Total liabilities 174,801 159,358 Commitments and contingencies (Note 12) Redeemable noncontrolling interests 4,498 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; 924 and 934 issued and outstanding 9 9 Retained earnings 95,774 86,156 Accumulated other comprehensive loss ( 7,027 ) ( 8,393 ) Nonredeemable noncontrolling interests 5,665 3,678 Total equity 94,421 81,450 Total liabilities, redeemable noncontrolling interests and equity $ 273,720 $ 245,705 See Notes to the Consolidated Financial Statements 38 Table of Contents UnitedHealth Group Consolidated Statements of Operations For the Years Ended December 31, (in millions, except per share data) 2023 2022 2021 Revenues: Premiums $ 290,827 $ 257,157 $ 226,233 Products 42,583 37,424 34,437 Services 34,123 27,551 24,603 Investment and other income 4,089 2,030 2,324 Total revenues 371,622 324,162 287,597 Operating costs: Medical costs 241,894 210,842 186,911 Operating costs 54,628 47,782 42,579 Cost of products sold 38,770 33,703 31,034 Depreciation and amortization 3,972 3,400 3,103 Total operating costs 339,264 295,727 263,627 Earnings from operations 32,358 28,435 23,970 Interest expense ( 3,246 ) ( 2,092 ) ( 1,660 ) Earnings before income taxes 29,112 26,343 22,310 Provision for income taxes ( 5,968 ) ( 5,704 ) ( 4,578 ) Net earnings 23,144 20,639 17,732 Earnings attributable to noncontrolling interests ( 763 ) ( 519 ) ( 447 ) Net earnings attributable to UnitedHealth Group common shareholders $ 22,381 $ 20,120 $ 17,285 Earnings per share attributable to UnitedHealth Group common shareholders: Basic $ 24.12 $ 21.47 $ 18.33 Diluted $ 23.86 $ 21.18 $ 18.08 Basic weighted-average number of common shares outstanding 928 937 943 Dilutive effect of common share equivalents 10 13 13 Diluted weighted-average number of common shares outstanding 938 950 956 Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 6 3 1 See Notes to the Consolidated Financial Statements 39 Table of Contents UnitedHealth Group Consolidated Statements of Comprehensive Income For the Years Ended December 31, (in millions) 2023 2022 2021 Net earnings $ 23,144 $ 20,639 $ 17,732 Other comprehensive income (loss): Gross unrealized gains (losses) on investment securities during the period 1,139 ( 4,292 ) ( 1,028 ) Income tax effect ( 263 ) 984 248 Total unrealized gains (losses), net of tax 876 ( 3,308 ) ( 780 ) Gross reclassification adjustment for net realized (gains) losses included in net earnings ( 90 ) 139 ( 173 ) Income tax effect 21 ( 32 ) 40 Total reclassification adjustment, net of tax ( 69 ) 107 ( 133 ) Total foreign currency translation gains (losses) 559 192 ( 657 ) Other comprehensive income (loss) 1,366 ( 3,009 ) ( 1,570 ) Comprehensive income 24,510 17,630 16,162 Comprehensive income attributable to noncontrolling interests ( 763 ) ( 519 ) ( 447 ) Comprehensive income attributable to UnitedHealth Group common shareholders $ 23,747 $ 17,111 $ 15,715 See Notes to the Consolidated Financial Statements 40 Table of Contents UnitedHealth Group Consolidated Statements of Changes in Equity Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Nonredeemable Noncontrolling Interests Total Equity (in millions, except per share data) Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation (Losses) Gains Balance at January 1, 2021 946 $ 10 $ — $ 69,295 $ 1,336 $ ( 5,150 ) $ 2,837 $ 68,328 Net earnings 17,285 360 17,645 Other comprehensive loss ( 913 ) ( 657 ) ( 1,570 ) Issuances of common stock, and related tax effects 8 — 1,100 1,100 Share-based compensation 729 729 Common share repurchases ( 13 ) — ( 940 ) ( 4,060 ) ( 5,000 ) Cash dividends paid on common shares ($ 5.60 per share) ( 5,280 ) ( 5,280 ) Redeemable noncontrolling interests fair value and other adjustments ( 889 ) ( 106 ) ( 995 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 407 407 Distributions to nonredeemable noncontrolling interests ( 319 ) ( 319 ) Balance at December 31, 2021 941 10 — 77,134 423 ( 5,807 ) 3,285 75,045 Net earnings 20,120 406 20,526 Other comprehensive (loss) gains ( 3,201 ) 192 ( 3,009 ) Issuances of common stock, and related tax effects 7 — 903 903 Share-based compensation 875 875 Common share repurchases ( 14 ) ( 1 ) ( 1,892 ) ( 5,107 ) ( 7,000 ) Cash dividends paid on common shares ($ 6.40 per share) ( 5,991 ) ( 5,991 ) Redeemable noncontrolling interests fair value and other adjustments 114 114 Acquisition and other adjustments of nonredeemable noncontrolling interests 374 374 Distributions to nonredeemable noncontrolling interests ( 387 ) ( 387 ) Balance at December 31, 2022 934 9 — 86,156 ( 2,778 ) ( 5,615 ) 3,678 81,450 Net earnings 22,381 575 22,956 Other comprehensive income 807 559 1,366 Issuances of common stock, and related tax effects 6 — 1,231 1,231 Share-based compensation 1,027 1,027 Common share repurchases ( 16 ) — ( 2,057 ) ( 6,002 ) ( 8,059 ) Cash dividends paid on common shares ($ 7.29 per share) ( 6,761 ) ( 6,761 ) Redeemable noncontrolling interests fair value and other adjustments ( 201 ) ( 201 ) Acquisition and other adjustments of nonredeemable noncontrolling interests 1,928 1,928 Distributions to nonredeemable noncontrolling interests ( 516 ) ( 516 ) Balance at December 31, 2023 924 $ 9 $ — $ 95,774 $ ( 1,971 ) $ ( 5,056 ) $ 5,665 $ 94,421 See Notes to the Consolidated Financial Statements 41 Table of Contents UnitedHealth Group Consolidated Statements of Cash Flows For the Years Ended December 31, (in millions) 2023 2022 2021 Operating activities Net earnings $ 23,144 $ 20,639 $ 17,732 Noncash items: Depreciation and amortization 3,972 3,400 3,103 Deferred income taxes ( 245 ) ( 673 ) 130 Share-based compensation 1,059 925 800 Other, net ( 505 ) ( 331 ) ( 944 ) Net change in other operating items, net of effects from acquisitions and changes in AARP balances: Accounts receivable ( 3,114 ) ( 2,523 ) ( 1,000 ) Other assets ( 2,444 ) ( 1,374 ) ( 1,031 ) Medical costs payable 3,482 4,053 2,701 Accounts payable and other liabilities 3,516 1,964 1,162 Unearned revenues 203 126 ( 310 ) Cash flows from operating activities 29,068 26,206 22,343 Investing activities Purchases of investments ( 18,314 ) ( 18,825 ) ( 17,139 ) Sales of investments 7,307 5,907 7,045 Maturities of investments 9,230 6,081 8,251 Cash paid for acquisitions, net of cash assumed ( 10,136 ) ( 21,458 ) ( 4,821 ) Purchases of property, equipment and capitalized software ( 3,386 ) ( 2,802 ) ( 2,454 ) Cash received from dispositions 685 3,414 15 Other, net ( 960 ) ( 793 ) ( 1,269 ) Cash flows used for investing activities ( 15,574 ) ( 28,476 ) ( 10,372 ) Financing activities Common share repurchases ( 8,000 ) ( 7,000 ) ( 5,000 ) Cash dividends paid ( 6,761 ) ( 5,991 ) ( 5,280 ) Proceeds from common stock issuances 1,353 1,253 1,355 Repayments of long-term debt ( 2,125 ) ( 3,015 ) ( 3,150 ) Proceeds from (repayments of) short-term borrowings, net 11 732 ( 1,302 ) Proceeds from issuance of long-term debt 6,394 14,819 6,933 Customer funds administered ( 521 ) 5,548 622 Purchases of redeemable noncontrolling interests ( 730 ) ( 176 ) ( 1,338 ) Other, net ( 1,150 ) ( 1,944 ) ( 295 ) Cash flows (used for) from financing activities ( 11,529 ) 4,226 ( 7,455 ) Effect of exchange rate changes on cash and cash equivalents 97 34 ( 62 ) Increase in cash and cash equivalents 2,062 1,990 4,454 Cash and cash equivalents, beginning of period 23,365 21,375 16,921 Cash and cash equivalents, end of period $ 25,427 $ 23,365 $ 21,375 Supplemental cash flow disclosures Cash paid for interest $ 3,035 $ 1,945 $ 1,653 Cash paid for income taxes 6,078 5,222 3,966 See Notes to the Consolidated Financial Statements 42 Table of Contents UnitedHealth Group Notes to the Consolidated Financial Statements 1. Description of Business 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. The Company’s two distinct, yet complementary businesses — 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. 2. Basis of Presentation, Use of Estimates and Significant Accounting Policies Basis of Presentation The Company has prepared the Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. Use of Estimates These 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 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 Premiums Premium revenues are primarily derived from risk-based arrangements in which the premium is typically at a fixed rate per individual served for a one-year period, and the Company assumes the economic risk of funding its customers’ health care and related administrative costs. Premium revenues are recognized in the period in which eligible individuals are entitled to receive health care benefits. Health care premium payments received from the Company’s customers in advance of the service period are recorded as unearned revenues. Fully insured commercial products of U.S. health plans, Medicare Advantage and Medicare Prescription Drug Benefit (Medicare Part D) plans with medical loss ratios (MLRs) as calculated under the definitions in the Patient Protection and Affordable Care Act (ACA) and related federal and state regulations and implementing regulation, falling below certain targets are required to rebate ratable portions of their premiums annually. Commercial premiums within the Company’s individual and small group markets are also subject to the ACA risk adjustment program. Medicare Advantage premium revenue includes the impact of the Centers for Medicare & Medicaid Services (CMS) quality bonuses based on plans’ Star rating. Certain of the Company’s Medicaid business is also subject to state minimum MLR rebates. Premium revenues are recognized based on the estimated premiums earned, net of projected rebates, because the Company is able to reasonably estimate the ultimate premiums of these contracts. The Company also records premium revenues for certain value-based arrangements at its Optum Health care delivery businesses. Under these value-based arrangements, the Company enters into agreements with health plans to stand ready to deliver, integrate, direct and control certain health care services for patients. In exchange, the Company receives a premium that is typically paid on a per-patient per-month basis. The Company considers these value-based arrangements to represent a single performance obligation where premium revenues are recognized in the period in which health care services are made available. The Company’s Medicare Advantage and Medicare Part D premium revenues are subject to periodic adjustment under CMS’ risk adjustment payment methodology. CMS deploys a risk adjustment model which apportions premiums paid to all health plans according to health severity and certain demographic factors. The CMS risk adjustment model provides higher per member payments for enrollees diagnosed with certain conditions and lower payments for enrollees who are healthier. Under this risk adjustment methodology, CMS calculates the risk adjusted premium payment using diagnosis and encounter data from hospital inpatient, hospital outpatient and physician treatment settings. The Company and health care providers collect, capture and submit the necessary and available data to CMS within prescribed deadlines. The Company estimates risk adjustment premium revenues based upon the data submitted and expected to be submitted to CMS. Risk adjustment data for the Company’s plans are subject to review by the government, including audit by regulators. See Note 12 for additional information regarding these audits. 43 Table of Contents Products and Services For the Company’s Optum Rx pharmacy care services business, the majority of revenues are derived from products sold through a contracted network of retail pharmacies or home delivery, specialty and community health pharmacies. Product revenues include the cost of pharmaceuticals (net of rebates), a negotiated dispensing fee and customer co-payments. Pharmacy products are billed to customers based on the number of transactions occurring during the billing period. Product revenues are recognized when the prescriptions are dispensed. The Company has entered into contracts in which it is primarily obligated to pay its network pharmacy providers for benefits provided to their customers regardless of whether the Company is paid. The Company is also involved in establishing the prices charged by retail pharmacies, determining which drugs will be included in formulary listings and selecting which retail pharmacies will be included in the network offered to plan sponsors’ members and accordingly, product revenues are reported on a gross basis. Services revenue includes a number of services and products sold through Optum. Optum Health’s service revenues include net patient service revenues recorded based upon established billing rates, less allowances for contractual adjustments, and are recognized as services are provided. For its financial services offerings, Optum Health charges fees and earns investment income on managed funds. Optum Insight provides software and information products, advisory consulting arrangements and managed services outsourcing contracts, which may be delivered over several years. Optum Insight revenues are generally recognized over time and measured each period based on the progress to date as services are performed or made available to customers. Services revenue also consists of fees derived from services performed for customers who self-insure the health care costs of their employees and employees’ dependents. Under service fee contracts, the Company receives a monthly fixed fee per employee, which is recognized as revenue as the Company performs, or makes available, the applicable services to the customer. The customers retain the risk of financing health care costs for their employees and employees’ dependents, and the Company administers the payment of customer funds to physicians and other health care professionals from customer-funded bank accounts. As the Company has neither the obligation for funding the health care costs, nor the primary responsibility for providing the medical care, the Company does not recognize premium revenue and medical costs for these contracts in its Consolidated Financial Statements. For these fee-based customer arrangements, the Company provides coordination and facilitation of medical services; transaction processing; customer, consumer and care professional services; and access to contracted networks of physicians, hospitals and other health care professionals. These services are performed throughout the contract period. As of December 31, 2023 and 2022, accounts receivables related to products and services were $ 8.6 billion and $ 7.1 billion, respectively. In 2023 and 2022, the Company had no material bad-debt expense and there were no material contract assets, contract liabilities or deferred contract costs recorded on the Consolidated Balance Sheets as of December 31, 2023 or 2022. For the years ended December 31, 2023, 2022 and 2021, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price) was not material. As of December 31, 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 . See Note 14 for disaggregation of revenue by segment and type. Medical Costs and Medical Costs Payable The Company’s estimate of medical costs payable represents management’s best estimate of its liability for unpaid medical costs as of December 31, 2023. Each period, the Company re-examines previously established medical costs payable estimates based on actual claim submissions and other changes in facts and circumstances. As more complete claim information becomes available, the Company adjusts the amount of the estimates and includes the changes in estimates in medical costs in the period in which the change is identified. Approximately 90 % of claims related to medical care services are known and settled within 90 days from the date of service and substantially all within twelve months. Medical costs and medical costs payable include estimates of the Company’s obligations for medical care services rendered on behalf of consumers, but for which claims have either not yet been received, processed, or paid. The Company develops estimates for medical care services incurred but not reported (IBNR), which includes estimates for claims which have not been received or fully processed, using an actuarial process consistently applied, centrally controlled and automated. The actuarial models consider factors such as time from date of service to claim processing, seasonal variances in medical care consumption, health care professional contract rate changes, care activity and other medical cost trends, membership volume and 44 Table of Contents demographics, the introduction of new technologies, benefit plan changes and business mix changes related to products, customers and geography. In developing its medical costs payable estimates, the Company applies different estimation methods depending on which incurred claims are being estimated. For the most recent two months, the Company estimates claim costs incurred by applying observed medical cost trend factors to the average per member per month medical costs incurred in prior months for which more complete claim data are available, supplemented by a review of near-term completion factors (actuarial estimates, based upon historical experience and analysis of current trends, of the percentage of incurred claims during a given period adjudicated by the Company at the date of estimation). For months prior to the most recent two months, the Company applies the completion factors to actual claims adjudicated-to-date to estimate the expected amount of ultimate incurred claims for those months. Cost of Products Sold The Company’s cost of products sold includes the cost of pharmaceuticals dispensed to unaffiliated customers either directly at its home delivery, specialty and community pharmacy locations, or indirectly through its nationwide network of participating pharmacies. Rebates attributable to unaffiliated clients are accrued as rebates receivable and a reduction of cost of products sold, with a corresponding payable for the amounts of the rebates to be remitted to those unaffiliated clients in accordance with their contracts and recorded in the Consolidated Statements of Operations as a reduction of product revenue. Cost of products sold also includes the cost of personnel to support the Company’s transaction processing services, system sales, maintenance and professional services. Cash, Cash Equivalents and Investments Cash and cash equivalents are highly liquid investments having an original maturity of three months or less. The fair value of cash and cash equivalents approximates their carrying value because of the short maturity of the instruments. Investments with maturities of less than one year are classified as short-term. Because of regulatory requirements, certain investments are included in long-term investments regardless of their maturity date. The Company classifies these investments as held-to-maturity and reports them at amortized cost. Substantially all other investments are classified as available-for-sale and reported at fair value based on quoted market prices, where available. Equity investments are measured at fair value, with certain exceptions where the Company has elected to measure investments with unobservable inputs at cost, subject to fair value adjustments upon an impairment or a transaction of the same or similar security. Changes in fair value of equity investments are recognized in net earnings. The Company excludes unrealized gains and losses on available-for-sale debt securities from net earnings and reports them as comprehensive income and, net of income tax effects, as a separate component of equity. To calculate realized gains and losses on the sale of debt securities, the Company specifically identifies the cost of each investment sold. The Company evaluates an available-for-sale debt security for credit-related impairment by considering the present value of expected cash flows relative to a security’s amortized cost, the extent to which fair value is less than amortized cost, the financial condition and near-term prospects of the issuer and specific events or circumstances which may influence the operations of the issuer. Credit-related impairments are recorded as an allowance, with an offset to investment and other income. Non-credit related impairments are recorded through other comprehensive income. If the Company intends to sell an impaired security, or will likely be required to sell a security before recovery of the entire amortized cost, the entire impairment is included in net earnings. New information and the passage of time can change these judgments. The Company manages its investment portfolio to limit its exposure to any one issuer or market sector, and largely limits its investments to investment grade quality. Assets Under Management The Company provides health insurance products and services to members of AARP under a Supplemental Health Insurance Program (the AARP Program) and to AARP members and non-members under separate Medicare Advantage and Medicare Part D arrangements. The products and services under the AARP Program include supplemental Medicare benefits, hospital indemnity insurance, including insurance for individuals between 50 to 64 years of age, and other related products. Pursuant to the Company’s agreement with AARP, program assets are managed separately from the Company’s general investment portfolio and are used to pay costs associated with the AARP Program. These assets are invested at the Company’s discretion, within investment guidelines approved by AARP. The Company does not guarantee any rates of return on these investments and, upon any transfer of the AARP Program contract to another entity, the Company would transfer cash equal in amount to the fair value of these investments at the date of transfer to the entity. Because the purpose of these assets is to fund the medical costs payable, the rate stabilization fund (RSF) liabilities and other related liabilities associated with this AARP contract, assets under management are classified as current assets, consistent with the classification of these liabilities. 45 Table of Contents The effects of changes in other balance sheet amounts associated with the AARP Program also accrue to the overall benefit of the AARP policyholders through the RSF balance. Accordingly, the Company excludes the effect of such changes in its Consolidated Statements of Cash Flows. Other Current Receivables Other current receivables include amounts due from pharmaceutical manufacturers for rebates and Medicare Part D drug discounts, accrued interest and other miscellaneous amounts due to the Company. The Company’s pharmacy care services businesses contract with pharmaceutical manufacturers, some of which provide rebates based on use of the manufacturers’ products by its affiliated and unaffiliated clients. The Company accrues rebates as they are earned by its clients on a monthly basis based on the terms of the applicable contracts, historical data and current estimates. The pharmacy care services businesses bill these rebates to the manufacturers on a monthly or quarterly basis depending on the contractual terms and record rebates attributable to affiliated clients as a reduction to medical costs. The Company generally receives rebates two to five months after billing. As of December 31, 2023 and 2022, total pharmaceutical manufacturer rebates receivable included in other receivables in the Consolidated Balance Sheets amounted to $ 11.0 billion and $ 8.2 billion, respectively. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets included pharmaceutical drug and supplies inventory of $ 2.8 billion and $ 3.5 billion as of December 31, 2023 and 2022, respectively. Property, Equipment and Capitalized Software Property, equipment and capitalized software are stated at cost, net of accumulated depreciation and amortization. Capitalized software consists of certain costs incurred in the development of internal-use software, including external direct costs of materials and services and applicable payroll costs of employees devoted to specific software development. The Company calculates depreciation and amortization using the straight-line method over the estimated useful lives of the assets. The useful lives for property, equipment and capitalized software are: Furniture, fixtures and equipment 3 to 10 years Buildings 35 to 40 years Capitalized software 3 to 5 years Leasehold improvements are depreciated over the shorter of the remaining lease term or their estimated useful economic life. Operating Leases The Company leases facilities and equipment under long-term operating leases which are non-cancelable and expire on various dates. At the lease commencement date, lease right-of-use (ROU) assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term, which includes all fixed obligations arising from the lease contract. If an interest rate is not implicit in a lease, the Company utilizes its incremental borrowing rate for a period closely matching the lease term. The Company’s ROU assets are included in other assets, and lease liabilities are included in other current liabilities and other liabilities in the Company’s Consolidated Balance Sheet . Goodwill To determine whether goodwill is impaired, annually or more frequently if needed, the Company performs impairment tests. The Company may first assess qualitative factors to determine if it is more likely than not the carrying value of a reporting unit exceeds its estimated fair value. The Company may also elect to skip the qualitative testing and proceed directly to the quantitative testing. When performing quantitative testing, the Company first estimates the fair values of its reporting units using discounted cash flows. To determine fair values, the Company must make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include financial projections of free cash flow (including significant assumptions about operations, capital levels and income taxes), long-term growth rates for determining terminal value and discount rates. Comparative market multiples are used to corroborate the results of the discounted cash flow test. If the fair value is less than the carrying value of the reporting unit, an impairment is recognized for the difference, up to the carrying amount of goodwill. There was no impairment of goodwill during the years ended December 31, 2023, 2022 and 2021. 46 Table of Contents Intangible Assets The Company’s finite-lived intangible assets are subject to impairment tests when events or circumstances indicate an intangible asset (or asset group) may be impaired. The Company’s indefinite-lived intangible assets are also tested for impairment annually. There was no impairment of intangible assets during the years ended December 31, 2023, 2022 and 2021. Other Current Liabilities Other current liabilities include health savings account deposits ($ 13.5 billion as of December 31, 2023 and 2022), accruals for premium rebates payable, the RSF associated with the AARP Program, the current portion of future policy benefits and customer balances. Policy Acquisition Costs The Company’s short duration health insurance contracts typically have a one-year term and may be canceled by the customer with at least 30 days’ notice. Costs related to the acquisition and renewal of short duration customer contracts are primarily charged to expense as incurred. Redeemable Noncontrolling Interests Redeemable noncontrolling interests in the Company’s subsidiaries whose redemption is outside of the Company’s control are classified as temporary equity. These interests primarily relate to put options on unowned shares, which are typically redeemable at fair value after a certain time period. The Company accretes changes in the redemption value to the earliest redemption date utilizing the interest method. If all interests were currently redeemable, the difference between the carrying value and the estimated redemption value is not material. The following table provides details of the Company's redeemable noncontrolling interests’ activity for the years ended December 31, 2023 and 2022: (in millions) 2023 2022 Redeemable noncontrolling interests, beginning of period $ 4,897 $ 1,434 Net earnings 188 113 Acquisitions 122 3,108 Redemptions ( 730 ) ( 176 ) Distributions ( 144 ) ( 82 ) Fair value and other adjustments 165 500 Redeemable noncontrolling interests, end of period $ 4,498 $ 4,897 Share-Based Compensation The Company recognizes compensation expense for share-based awards, including stock options and restricted stock and restricted stock units (collectively, restricted shares), on a straight-line basis over the related service period (generally the vesting period) of the award, or to an employee’s eligible retirement date under the award agreement, if earlier. Restricted shares vest ratably, primarily over four years, and compensation expense related to restricted shares is based on the share price on the date of grant. Stock options vest ratably primarily over four years and may be exercised up to 10 years from the date of grant. Compensation expense related to stock options is based on the fair value at the date of grant, which is estimated on the date of grant using a binomial option-pricing model. Under the Company’s Employee Stock Purchase Plan (ESPP), eligible employees are allowed to purchase the Company’s stock at a discounted price, which is 90% of the market price of the Company’s common stock at the end of the six-month purchase period. Share-based compensation expense for all programs is recognized in operating costs in the Consolidated Statements of Operations. Net Earnings Per Common Share The Company computes basic earnings per common share attributable to UnitedHealth Group common shareholders by dividing net earnings attributable to UnitedHealth Group common shareholders by the weighted-average number of common shares outstanding during the period. The Company determines diluted net earnings per common share attributable to UnitedHealth Group common shareholders using the weighted-average number of common shares outstanding during the period, adjusted for potentially dilutive shares associated with stock options, restricted shares and the ESPP (collectively, common stock equivalents), using the treasury stock method. The treasury stock method assumes a hypothetical issuance of shares to settle the share-based awards, with the assumed proceeds used to purchase common stock at the average market price for the period. Assumed proceeds include the amount the employee must pay upon exercise and the average unrecognized compensation cost. The difference between the number of shares assumed issued and number of shares assumed purchased represents the dilutive shares. 47 Table of Contents 3. 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 December 31, 2023 Debt securities - available-for-sale: U.S. government and agency obligations $ 4,674 $ 3 $ ( 234 ) $ 4,443 State and municipal obligations 7,636 39 ( 322 ) 7,353 Corporate obligations 23,136 67 ( 1,186 ) 22,017 U.S. agency mortgage-backed securities 8,982 22 ( 708 ) 8,296 Non-U.S. agency mortgage-backed securities 3,023 3 ( 240 ) 2,786 Total debt securities - available-for-sale 47,451 134 ( 2,690 ) 44,895 Debt securities - held-to-maturity: U.S. government and agency obligations 506 1 ( 6 ) 501 State and municipal obligations 28 — ( 2 ) 26 Corporate obligations 69 — — 69 Total debt securities - held-to-maturity 603 1 ( 8 ) 596 Total debt securities $ 48,054 $ 135 $ ( 2,698 ) $ 45,491 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 Nearly all of the Company’s investments in mortgage-backed securities were rated “Double A” or better as of December 31, 2023. The Company held $ 4.9 billion and $ 3.7 billion of equity securities as of December 31, 2023 and 2022, respectively. The Company’s investments in equity securities primarily consist of venture investments, employee savings plan related 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 primarily in operating businesses in the health care sector, as of December 31, 2023 and 2022, respectively. The allowance for credit losses on held-to-maturity securities as of December 31, 2023 and 2022 was not material. 48 Table of Contents The amortized cost and fair value of debt securities as of December 31, 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 $ 4,286 $ 4,260 $ 313 $ 310 Due after one year through five years 15,124 14,556 246 244 Due after five years through ten years 10,844 10,036 26 25 Due after ten years 5,192 4,961 18 17 U.S. agency mortgage-backed securities 8,982 8,296 — — Non-U.S. agency mortgage-backed securities 3,023 2,786 — — Total debt securities $ 47,451 $ 44,895 $ 603 $ 596 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 December 31, 2023 U.S. government and agency obligations $ 1,270 $ ( 7 ) $ 2,077 $ ( 227 ) $ 3,347 $ ( 234 ) State and municipal obligations 907 ( 7 ) 4,063 ( 315 ) 4,970 ( 322 ) Corporate obligations 1,826 ( 17 ) 14,696 ( 1,169 ) 16,522 ( 1,186 ) U.S. agency mortgage-backed securities 1,337 ( 12 ) 5,069 ( 696 ) 6,406 ( 708 ) Non-U.S. agency mortgage-backed securities 279 ( 6 ) 2,202 ( 234 ) 2,481 ( 240 ) Total debt securities - available-for-sale $ 5,619 $ ( 49 ) $ 28,107 $ ( 2,641 ) $ 33,726 $ ( 2,690 ) December 31, 2022 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 all securities as of December 31, 2023 were generated from approximately 30,000 positions out of a total of 40,000 positions. The Company believes 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 December 31, 2023, the Company did not have the intent to sell any of the 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 as of December 31, 2023 and 2022 was not material. 4. Fair Value Certain assets and liabilities are measured at fair value in the Consolidated Financial Statements or have fair values disclosed in the Notes to the Consolidated Financial Statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety based on the lowest level input which is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. 49 Table of Contents The fair value hierarchy is summarized as follows: Level 1 — Quoted prices (unadjusted) for identical assets/liabilities in active markets. Level 2 — Other observable inputs, either directly or indirectly, including: • Quoted prices for similar assets/liabilities in active markets; • Quoted prices for identical or similar assets/liabilities in inactive markets (e.g., few transactions, limited information, noncurrent prices, high variability over time); • Inputs other than quoted prices observable for the asset/liability (e.g., interest rates, yield curves, implied volatilities, credit spreads); and • Inputs corroborated by other observable market data. Level 3 — Unobservable inputs cannot be corroborated by observable market data. There were no transfers in or out of Level 3 financial assets or liabilities during the years ended December 31, 2023 or 2022. Nonfinancial assets and liabilities or financial assets and liabilities 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. For the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 276 million, $ 211 million and $ 840 million respectively, of unrealized gains in investment and other income related to fair value adjustments on equity securities primarily in the Company’s venture portfolio, based upon transactions of the same or similar security. There were no other significant fair value adjustments for these assets and liabilities recorded during the years ended December 31, 2023, 2022 or 2021. The following methods and assumptions were used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument included in the tables below: Cash and Cash Equivalents. The carrying value of cash and cash equivalents approximates fair value as maturities are less than three months. Fair values of cash equivalent instruments which do not trade on a regular basis in active markets are classified as Level 2. Debt and Equity Securities. Fair values of debt securities and equity securities reported at fair value on a recurring basis are based on quoted market prices, where available. The Company obtains one price for each security primarily from a third-party pricing service (pricing service), which generally uses quoted or other observable inputs for the determination of fair value. The pricing service normally derives the security prices through recently reported trades for identical or similar securities, and, if necessary, makes adjustments through the reporting date based upon available observable market information. For securities not actively traded, the pricing service may use quoted market prices of comparable instruments or discounted cash flow analyses, incorporating inputs currently observable in the markets for similar securities. Inputs often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and nonbinding broker quotes. As the Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to prices reported by a secondary pricing source, such as its custodian, its investment consultant and third-party investment advisors. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and reviews of fair value methodology documentation provided by independent pricing services have not historically resulted in adjustment to the prices obtained from the pricing service. Fair values of debt securities which do not trade on a regular basis in active markets but are priced using other observable inputs are classified as Level 2. Fair value estimates for Level 1 and Level 2 equity securities reported at fair value on a recurring basis are based on quoted market prices for actively traded equity securities and/or other market data for the same or comparable instruments and transactions in establishing the prices. The fair values of Level 3 investments in corporate bonds, which are not a significant portion of our investments, are estimated using valuation techniques relying heavily on management assumptions and qualitative observations. Throughout the procedures discussed above in relation to the Company’s processes for validating third-party pricing information, the Company validates the understanding of assumptions and inputs used in security pricing and determines the proper classification in the hierarchy based on such understanding. Assets Under Management. Assets under management consists of debt securities and other investments held to fund costs associated with the AARP Program and are priced and classified using the same methodologies as the Company’s investments in debt and equity securities. 50 Table of Contents Long-Term Debt. The fair values of the Company’s long-term debt are estimated and classified using the same methodologies as the Company’s investments in debt securities. 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 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 December 31, 2023 Cash and cash equivalents $ 25,345 $ 82 $ — $ 25,427 Debt securities - available-for-sale: U.S. government and agency obligations 4,167 276 — 4,443 State and municipal obligations — 7,353 — 7,353 Corporate obligations 15 21,800 202 22,017 U.S. agency mortgage-backed securities — 8,296 — 8,296 Non-U.S. agency mortgage-backed securities — 2,786 — 2,786 Total debt securities - available-for-sale 4,182 40,511 202 44,895 Equity securities 2,468 16 69 2,553 Assets under management 1,505 2,140 110 3,755 Total assets at fair value $ 33,500 $ 42,749 $ 381 $ 76,630 Percentage of total assets at fair value 44 % 55 % 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 % 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 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 December 31, 2023 Debt securities - held-to-maturity $ 524 $ 72 $ — $ 596 $ 603 Long-term debt and other financing obligations $ — $ 59,851 $ — $ 59,851 $ 61,449 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 The carrying amounts reported on the Consolidated Balance Sheets for other current financial assets and liabilities approximate fair value because of their short-term nature. These assets and liabilities are not listed in the table above. 51 Table of Contents 5. Property, Equipment and Capitalized Software A summary of property, equipment and capitalized software is as follows: (in millions) December 31, 2023 December 31, 2022 Land and improvements $ 712 $ 697 Buildings and improvements 5,573 5,519 Computer equipment 2,007 2,093 Furniture and fixtures 2,375 2,113 Less accumulated depreciation ( 4,210 ) ( 4,499 ) Property and equipment, net 6,457 5,923 Capitalized software 7,822 6,636 Less accumulated amortization ( 2,829 ) ( 2,431 ) Capitalized software, net 4,993 4,205 Total property, equipment and capitalized software, net $ 11,450 $ 10,128 Depreciation expense for property and equipment for the years ended December 31, 2023, 2022 and 2021 was $ 1.1 billion, $ 1.1 billion, and $ 1.0 billion, respectively. Amortization expense for capitalized software for the years ended December 31, 2023, 2022 and 2021 was $ 1.2 billion, $ 1.0 billion and $ 0.9 billion, respectively. 6. Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill, by reportable segment, were as follows: (in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Consolidated Balance at January 1, 2022 $ 27,389 $ 24,224 $ 8,619 $ 15,563 $ 75,795 Acquisitions 19 5,158 8,623 3,910 17,710 Foreign currency effects and other adjustments, net ( 13 ) ( 144 ) 2 2 ( 153 ) Balance at December 31, 2022 27,395 29,238 17,244 19,475 93,352 Acquisitions 296 8,023 1,802 — 10,121 Foreign currency effects and other adjustments, net 187 ( 182 ) 261 ( 7 ) 259 Balance at December 31, 2023 $ 27,878 $ 37,079 $ 19,307 $ 19,468 $ 103,732 The gross carrying value, accumulated amortization and net carrying value of other intangible assets were as follows: December 31, 2023 December 31, 2022 (in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Customer-related $ 16,636 $ ( 5,909 ) $ 10,727 $ 16,303 $ ( 5,179 ) $ 11,124 Trademarks and technology 2,508 ( 958 ) 1,550 2,398 ( 704 ) 1,694 Operating licenses and certificates, trademarks and other indefinite-lived 2,116 — 2,116 661 — 661 Other 1,213 ( 412 ) 801 1,176 ( 254 ) 922 Total $ 22,473 $ ( 7,279 ) $ 15,194 $ 20,538 $ ( 6,137 ) $ 14,401 52 Table of Contents The acquisition date fair values and weighted-average useful lives assigned to intangible assets acquired in business combinations consisted of the following by year of acquisition: 2023 2022 (in millions, except years) Fair Value Weighted-Average Useful Life Fair Value Weighted-Average Useful Life Customer-related $ 477 12 years $ 3,927 15 years Trademarks and technology 226 5 years 1,058 6 years Other 44 9 years 776 13 years Total acquired finite-lived $ 747 9 years $ 5,761 13 years Total acquired indefinite-lived - operating licenses and certificates, trademarks and other 1,427 53 Total acquired intangible assets $ 2,174 $ 5,814 Estimated full year amortization expense relating to intangible assets for each of the next five years ending December 31 is as follows: (in millions) 2024 $ 1,609 2025 1,480 2026 1,328 2027 1,265 2028 1,187 Amortization expense relating to intangible assets for the years ended December 31, 2023, 2022 and 2021 was $ 1.6 billion, $ 1.3 billion and $ 1.2 billion, respectively. 7. Medical Costs Payable The following table shows the components of the change in medical costs payable for the years ended December 31: (in millions) 2023 2022 2021 Medical costs payable, beginning of period $ 29,056 $ 24,483 $ 21,872 Acquisitions 1 308 88 Reported medical costs: Current year 242,734 211,252 188,631 Prior years ( 840 ) ( 410 ) ( 1,720 ) Total reported medical costs 241,894 210,842 186,911 Medical payments: Payments for current year ( 211,380 ) ( 184,049 ) ( 165,524 ) Payments for prior years ( 27,176 ) ( 22,528 ) ( 18,864 ) Total medical payments ( 238,556 ) ( 206,577 ) ( 184,388 ) Medical costs payable, end of period $ 32,395 $ 29,056 $ 24,483 For the years ended December 31, 2023 and 2022 , prior years’ medical cost reserve development included no individual factors that were significant. For the year ended December 31, 2021, prior years’ medical cost reserve development was primarily driven by lower than expected care activity and care patterns disrupted by COVID-19. Medical costs payable included IBNR of $ 22.3 billion and $ 20.0 billion at December 31, 2023 and 2022, respectively. Substantially all of the IBNR balance as of December 31, 2023 relates to the current year. 53 Table of Contents The following is information about incurred and paid medical cost development as of December 31, 2023: Net Incurred Medical Costs (in millions) For the Years Ended December 31, Year 2022 2023 2022 $ 211,252 $ 210,476 2023 242,734 Total $ 453,210 Net Cumulative Medical Payments (in millions) For the Years Ended December 31, Year 2022 2023 2022 $ ( 184,049 ) $ ( 209,564 ) 2023 ( 211,380 ) Total ( 420,944 ) Net remaining outstanding liabilities prior to 2022 129 Total medical costs payable $ 32,395 54 Table of Contents 8. Short-Term Borrowings and Long-Term Debt Short-term borrowings and senior unsecured long-term debt consisted of the following: Carrying Value as of December 31, (in millions, except percentages) 2023 2022 Commercial paper $ 1,088 $ 800 $ 625 million 2.750 % notes due February 2023 — 622 $ 750 million 2.875 % notes due March 2023 — 746 $ 750 million 3.500 % notes due June 2023 — 750 $ 750 million 3.500 % notes due February 2024 750 749 $ 1,000 million 0.550 % notes due May 2024 999 998 $ 750 million 2.375 % notes due August 2024 750 749 $ 500 million 5.000 % notes due October 2024 499 499 $ 2,000 million 3.750 % notes due July 2025 1,997 1,995 $ 750 million 5.150 % notes due October 2025 748 747 $ 300 million 3.700 % notes due December 2025 299 299 $ 500 million 1.250 % notes due January 2026 498 498 $ 1,000 million 3.100 % notes due March 2026 998 998 $ 1,000 million 1.150 % notes due May 2026 924 893 $ 750 million 3.450 % notes due January 2027 748 748 $ 625 million 3.375 % notes due April 2027 622 622 $ 600 million 3.700 % notes due May 2027 598 597 $ 950 million 2.950 % notes due October 2027 944 943 $ 1,000 million 5.250 % notes due February 2028 1,011 1,008 $ 1,150 million 3.850 % notes due June 2028 1,146 1,145 $ 850 million 3.875 % notes due December 2028 846 845 $ 1,250 million 4.250 % notes due January 2029 1,238 — $ 900 million 4.000 % notes due May 2029 862 849 $ 1,000 million 2.875 % notes due August 2029 908 886 $ 1,250 million 5.300 % notes due February 2030 1,275 1,269 $ 1,250 million 2.000 % notes due May 2030 1,238 1,237 $ 1,500 million 2.300 % notes due May 2031 1,290 1,256 $ 1,500 million 4.200 % notes due May 2032 1,412 1,393 $ 2,000 million 5.350 % notes due February 2033 2,046 2,037 $ 1,500 million 4.500 % notes due April 2033 1,463 — $ 1,000 million 4.625 % notes due July 2035 1,014 993 $ 850 million 5.800 % notes due March 2036 838 840 $ 500 million 6.500 % notes due June 2037 491 493 $ 650 million 6.625 % notes due November 2037 640 642 $ 1,100 million 6.875 % notes due February 2038 1,078 1,079 $ 1,250 million 3.500 % notes due August 2039 1,242 1,242 $ 1,000 million 2.750 % notes due May 2040 968 967 $ 300 million 5.700 % notes due October 2040 296 296 $ 350 million 5.950 % notes due February 2041 346 346 $ 1,500 million 3.050 % notes due May 2041 1,484 1,483 $ 600 million 4.625 % notes due November 2041 590 590 $ 502 million 4.375 % notes due March 2042 486 486 55 Table of Contents Carrying Value as of December 31, (in millions, except percentages) 2023 2022 $ 625 million 3.950 % notes due October 2042 609 609 $ 750 million 4.250 % notes due March 2043 736 736 $ 2,000 million 4.750 % notes due July 2045 1,975 1,975 $ 750 million 4.200 % notes due January 2047 739 739 $ 725 million 4.250 % notes due April 2047 718 718 $ 950 million 3.750 % notes due October 2047 935 935 $ 1,350 million 4.250 % notes due June 2048 1,331 1,331 $ 1,100 million 4.450 % notes due December 2048 1,087 1,087 $ 1,250 million 3.700 % notes due August 2049 1,236 1,236 $ 1,250 million 2.900 % notes due May 2050 1,211 1,210 $ 2,000 million 3.250 % notes due May 2051 1,972 1,971 $ 2,000 million 4.750 % notes due May 2052 1,966 1,965 $ 2,000 million 5.875 % notes due February 2053 1,968 1,968 $ 2,000 million 5.050 % notes due April 2053 1,969 — $ 1,250 million 3.875 % notes due August 2059 1,229 1,228 $ 1,000 million 3.125 % notes due May 2060 966 966 $ 1,000 million 4.950 % notes due May 2062 981 981 $ 1,500 million 6.050 % notes due February 2063 1,466 1,466 $ 1,750 million 5.200 % notes due April 2063 1,709 — Total short-term borrowings and long-term debt $ 61,473 $ 56,756 The Company’s long-term debt obligations also included $ 1.1 billion and $ 0.9 billion of other financing obligations, of which $ 188 million and $ 192 million were current as of December 31, 2023 and 2022, respectively. Maturities of short-term borrowings and long-term debt for the years ending December 31 are as follows: (in millions) 2024 $ 4,276 2025 3,224 2026 2,674 2027 3,099 2028 3,174 Thereafter 47,176 Short-Term Borrowings Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers. As of December 31, 2023, the Company’s outstanding commercial paper had a weighted-average annual interest rate of 5.4 %. The Company has $ 6.0 billion five -year, $ 6.0 billion three -year and $ 6.0 billion 364 -day revolving bank credit facilities with 25 banks, which mature in December 2028, December 2026 and December 2024, respectively. These facilities provide full liquidity support for the Company’s commercial paper program and are available for general corporate purposes. As of December 31, 2023, no amounts had been drawn on any of the bank credit facilities. The annual interest rates, which are variable based on term, are calculated based on one-month term Secured Overnight Financing Rate (SOFR) plus a SOFR Adjustment of 10 basis points plus a credit spread based on the Company’s senior unsecured credit ratings. If amounts had been drawn on the bank credit facilities as of December 31, 2023, annual interest rates would have ranged from 5.8 % to 8.5 %. Debt Covenants The Company’s bank credit facilities contain various covenants, including requiring the Company to maintain a debt to debt-plus-shareholders’ equity ratio of not more than 60%. The Company was in compliance with its debt covenants as of December 31, 2023. 56 Table of Contents 9. Income Taxes The current income tax provision reflects the tax consequences of revenues and expenses currently taxable or deductible on various income tax returns for the year reported. The deferred income tax provision or benefit generally reflects the net change in deferred income tax assets and liabilities during the year, excluding any deferred income tax assets and liabilities of acquired businesses. The components of the provision for income taxes for the years ended December 31 are as follows: (in millions) 2023 2022 2021 Current Provision: Federal $ 4,418 $ 4,842 $ 3,451 State and local 716 855 481 Foreign 1,079 680 516 Total current provision 6,213 6,377 4,448 Deferred (benefit) provision ( 245 ) ( 673 ) 130 Total provision for income taxes $ 5,968 $ 5,704 $ 4,578 The reconciliation of the tax provision at the U.S. federal statutory rate to the provision for income taxes and the effective tax rate for the years ended December 31 is as follows: (in millions, except percentages) 2023 2022 2021 Tax provision at the U.S. federal statutory rate $ 6,114 21.0 % $ 5,532 21.0 % $ 4,685 21.0 % State income taxes, net of federal benefit 567 2.0 621 2.4 419 1.9 Share-based awards - excess tax benefit ( 75 ) ( 0.3 ) ( 110 ) ( 0.4 ) ( 100 ) ( 0.4 ) Non-deductible compensation 174 0.6 150 0.6 144 0.6 Foreign rate differential ( 442 ) ( 1.5 ) ( 265 ) ( 1.0 ) ( 246 ) ( 1.1 ) Other, net ( 370 ) ( 1.3 ) ( 224 ) ( 0.9 ) ( 324 ) ( 1.5 ) Provision for income taxes $ 5,968 20.5 % $ 5,704 21.7 % $ 4,578 20.5 % 57 Table of Contents Deferred income tax assets and liabilities are recognized for the differences between the financial and income tax reporting bases of assets and liabilities based on enacted tax rates and laws. The components of deferred income tax assets and liabilities as of December 31 are as follows: (in millions) 2023 2022 Deferred income tax assets: Accrued expenses and allowances $ 754 $ 707 U.S. federal and state net operating loss carryforwards 417 540 Share-based compensation 173 154 Nondeductible liabilities 329 341 Non-U.S. tax loss carryforwards 1,061 631 Lease liability 930 972 Net unrealized losses on investments 586 829 Other-domestic 327 291 Other-non-U.S. 484 423 Subtotal 5,061 4,888 Less: valuation allowances ( 366 ) ( 291 ) Total deferred income tax assets 4,695 4,597 Deferred income tax liabilities: U.S. federal and state intangible assets ( 3,712 ) ( 3,520 ) Non-U.S. goodwill and intangible assets ( 731 ) ( 550 ) Capitalized software ( 415 ) ( 548 ) Depreciation and amortization ( 371 ) ( 520 ) Prepaid expenses ( 326 ) ( 275 ) Outside basis in partnerships ( 811 ) ( 653 ) Lease right-of-use asset ( 914 ) ( 958 ) Other-non-U.S. ( 436 ) ( 342 ) Total deferred income tax liabilities ( 7,716 ) ( 7,366 ) Net deferred income tax liabilities $ ( 3,021 ) $ ( 2,769 ) Valuation allowances are provided when it is considered more likely than not deferred tax assets will not be realized. The valuation allowances primarily relate to future tax benefits on certain federal, state and non-U.S. net operating loss carryforwards. Gross federal net operating loss carryforwards of $ 125 million expire beginning in 2026 through 2042 and $ 360 million have an indefinite carryforward period; state net operating loss carryforwards expire beginning in 2024 through 2043, with some having an indefinite carryforward period. Substantially all of the non-U.S. tax loss carryforwards have indefinite carryforward periods. Additionally, as of December 31, 2023, the Company has historical non-U.S. net operating loss carryforwards for which a deferred tax asset and valuation allowance of $4.5 billion are not established because realization of the loss carryforwards is remote. As of December 31, 2023, the Company’s undistributed earnings from non-U.S. subsidiaries are intended to be indefinitely reinvested in non-U.S. operations, and therefore no U.S. deferred taxes have been recorded. Taxes payable on the remittance of such earnings would be minimal. 58 Table of Contents A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31 is as follows: (in millions) 2023 2022 2021 Gross unrecognized tax benefits, beginning of period $ 3,081 $ 2,310 $ 1,829 Gross increases: Current year tax positions 782 586 538 Prior year tax positions 97 206 10 Gross decreases: Prior year tax positions ( 212 ) ( 21 ) ( 47 ) Statute of limitations lapses and settlements ( 32 ) — ( 20 ) Gross unrecognized tax benefits, end of period $ 3,716 $ 3,081 $ 2,310 The Company believes it is reasonably possible its liability for unrecognized tax benefits will decrease in the next twelve months by $ 145 million as a result of audit settlements and the expiration of statutes of limitations. The Company classifies net interest and penalties associated with uncertain income tax positions as income taxes within its Consolidated Statements of Operations. During the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 177 million, $ 64 million and $ 66 million of net interest and penalties, respectively. The Company had $ 430 million and $ 253 million of accrued interest and penalties for uncertain tax positions as of December 31, 2023 and 2022, respectively. These amounts are not included in the reconciliation above. As of December 31, 2023, there were $ 2.0 billion of unrecognized tax benefits which, if recognized, would affect the effective tax rate. The Company currently files income tax returns in the United States, various states and localities and non-U.S. jurisdictions. The U.S. Internal Revenue Service (IRS) has completed exams on the consolidated income tax returns for fiscal years 2016 and prior. The Company’s 2017 through 2020 tax years are under review by the IRS under its Compliance Assurance Program. The Company is no longer subject to state income tax examinations prior to the 2014 tax year. In general, the Company is subject to examination in non-U.S. jurisdictions for years 2015 and forward. 10. Shareholders' Equity Regulatory Capital and Dividend Restrictions The Company’s regulated insurance and HMO subsidiaries are subject to regulations and standards in their respective jurisdictions. These standards, among other things, require these subsidiaries to maintain specified levels of statutory capital, as defined by each jurisdiction, and restrict the timing and amount of dividends and other distributions which may be paid to their parent companies. In the United States, most of these state regulations and standards are generally consistent with model regulations established by the NAIC. These standards generally permit dividends to be paid from statutory unassigned surplus of the regulated subsidiary and are limited based on the regulated subsidiary’s level of statutory net income and statutory capital and surplus. These dividends are referred to as “ordinary dividends” and generally may be paid without prior regulatory approval. If the dividend, together with other dividends paid within the preceding twelve months, exceeds a specified statutory limit or is paid from sources other than earned surplus, it is generally considered an “extraordinary dividend” and must receive prior regulatory approval. For the year ended December 31, 2023, the Company’s domestic insurance and HMO subsidiaries paid their parent companies dividends of $ 8.0 billion, including $ 4.9 billion of extraordinary dividends. For the year ended December 31, 2022, the Company’s domestic insurance and HMO subsidiaries paid their parent companies dividends of $ 8.8 billion, including $ 7.4 billion of extraordinary dividends. The Company's global financially regulated subsidiaries had estimated aggregate statutory capital and surplus of $ 38.5 billion as of December 31, 2023. The estimated statutory capital and surplus necessary to satisfy regulatory requirements of the Company's global financially regulated subsidiaries was approximately $ 18.3 billion as of December 31, 2023. Optum Bank must meet minimum capital requirements of the FDIC under the capital adequacy rules to which it is subject. At December 31, 2023, the Company believes Optum Bank met the FDIC requirements to be considered “Well Capitalized.” 59 Table of Contents Share Repurchase Program Under its Board of Directors’ authorization, the Company maintains a share repurchase program. The objectives of the share repurchase program are to optimize the Company’s capital structure and cost of capital, thereby improving returns to shareholders, as well as to offset the dilutive impact of share-based awards. Repurchases may be made from time to time in open market purchases or other types of transactions (including prepaid or structured share repurchase programs), subject to certain restrictions. In June 2018, the Board of Directors renewed the Company’s share repurchase program with an authorization to repurchase up to 100 million shares of its common stock. The Board of Directors from time to time may further amend the share repurchase program in order to increase the authorized number of shares which may be repurchased under the program. A summary of common share repurchases for the years ended December 31, 2023 and 2022 is as follows: Years Ended December 31, (in millions, except per share data) 2023 2022 Common share repurchases, shares 16 14 Common share repurchases, average price per share $ 493.79 $ 501.67 Common share repurchases, aggregate cost $ 8,000 $ 7,000 Board authorized shares remaining 15 31 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 and may be adjusted as business needs or market conditions change. The following table provides details of the Company’s 2023 dividend payments: 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 December 12 1.88 1,738 11. Share-Based Compensation The Company’s outstanding share-based awards consist mainly of non-qualified stock options and restricted shares. As of December 31, 2023, the Company had 53 million shares available for future grants of share-based awards under the 2020 Stock Incentive Plan. As of December 31, 2023, there were 17 million shares of common stock available for issuance under the ESPP. Stock Options Stock option activity for the year ended December 31, 2023 is summarized in the table below: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life Aggregate Intrinsic Value (in millions) (in years) (in millions) Outstanding at beginning of period 23 $ 281 Granted 3 492 Exercised ( 4 ) 231 Forfeited ( 1 ) 443 Outstanding at end of period 21 320 5.5 $ 4,451 Exercisable at end of period 13 248 4.2 3,595 Vested and expected to vest, end of period 21 318 5.5 4,430 60 Table of Contents Restricted Shares Restricted share activity for the year ended December 31, 2023 is summarized in the table below: (shares in millions) Shares Weighted-Average Grant Date Fair Value per Share Nonvested at beginning of period 4 $ 401 Granted 2 493 Vested ( 2 ) 393 Nonvested at end of period 4 449 Other Share-Based Compensation Data (in millions, except per share amounts) For the Years Ended December 31, 2023 2022 2021 Stock Options Weighted-average grant date fair value of shares granted, per share $ 134 $ 116 $ 71 Total intrinsic value of stock options exercised 1,325 1,419 1,519 Restricted Shares Weighted-average grant date fair value of shares granted, per share 493 483 352 Total fair value of restricted shares vested $ 803 $ 760 $ 560 Employee Stock Purchase Plan Number of shares purchased 1 1 1 Share-Based Compensation Items Share-based compensation expense, before tax $ 1,059 $ 925 $ 800 Share-based compensation expense, net of tax effects 937 836 719 Income tax benefit realized from share-based award exercises 231 207 173 (in millions, except years) December 31, 2023 Unrecognized compensation expense related to share awards $ 1,134 Weighted-average years to recognize compensation expense 1.3 Share-Based Compensation Recognition and Estimates The principal assumptions the Company used in calculating grant-date fair value for stock options were as follows: For the Years Ended December 31, 2023 2022 2021 Risk-free interest rate 3.8% - 4.6% 1.9% - 4.3% 0.7% - 1.2% Expected volatility 29.7% - 30.6% 30.6% - 30.8% 29.2% - 29.8% Expected dividend yield 1.3% - 1.5% 1.2% 1.3% - 1.5% Forfeiture rate 5.0 % 5.0 % 5.0 % Expected life in years 4.6 4.7 4.8 Risk-free interest rates are based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on the historical volatility of the Company’s common stock and the implied volatility from exchange-traded options on the Company’s common stock. Expected dividend yields are based on the per share cash dividend paid by the Company. The Company uses historical data to estimate option exercises and forfeitures within the valuation model. The expected lives of options granted represent the periods of time the awards granted are expected to be outstanding based on historical exercise patterns. Other Employee Benefit Plans The Company offers a 401(k) plan for its employees. Compensation expense related to this plan was not material for the years ended December 31, 2023, 2022 and 2021. In addition, the Company maintains non-qualified, deferred compensation plans, which allow certain members of senior management and executives to defer portions of their salary or bonus. The deferrals are recorded within long-term investments 61 Table of Contents with an approximately equal amount in other liabilities in the Consolidated Balance Sheets. The total deferrals are distributable based upon termination of employment or other periods, as elected under each plan and were $ 1.9 billion and $ 1.6 billion as of December 31, 2023 and 2022, respectively. 12. Commitments and Contingencies Leases Operating lease costs, including immaterial variable and short-term lease costs, were $ 1.4 billion, $ 1.3 billion and $ 1.2 billion for the years ended December 31, 2023, 2022 and 2021, respectively. Cash payments made on the Company’s operating lease liabilities were $ 1.1 billion, $ 1.0 billion and $ 0.9 billion for the years ended December 31, 2023, 2022 and 2021, respectively, which were classified within operating activities in the Consolidated Statements of Cash Flows. As of December 31, 2023, the Company’s weighted-average remaining lease term and weighted-average discount rate for its operating leases were 8.7 years and 4.0 %, respectively. As of December 31, 2023, future minimum annual lease payments under all non-cancelable operating leases were as follows: (in millions) Future Minimum Lease Payments 2024 $ 1,038 2025 906 2026 728 2027 607 2028 486 Thereafter 2,210 Total future minimum lease payments 5,975 Less imputed interest ( 1,077 ) Total $ 4,898 Other Commitments The Company provides guarantees related to its service level under certain contracts. If minimum standards are not met, the Company may be financially at risk up to a stated percentage of the contracted fee or a stated dollar amount. None of the amounts accrued, paid or charged to income for service level guarantees were material as of December 31, 2023, 2022 or 2021. Pending Acquisitions As of December 31, 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 capital required for these acquisitions, excluding the payoff of acquired indebtedness, is approximately $ 6 billion. Pending Disposition On December 22, 2023, the Company entered into an agreement to sell its operations in Brazil to a private investor, subject to regulatory approval and other closing conditions. The Company completed the disposition on February 6, 2024, and will record a loss of approximately $ 7 billion in the quarter ending March 31, 2024, the majority of which was due to foreign currency translation losses in accumulated other comprehensive income. 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. 62 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 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 IRS, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the FDIC, the Consumer Financial Protection Bureau, 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. 13. Business Combinations During the year ended December 31, 2023, the Company completed several business combinations for total consideration of $ 10.2 billion. Acquired assets (liabilities) at acquisition date were: (in millions) Cash and cash equivalents $ 134 Accounts receivable and other current assets 660 Property, equipment and other long-term assets 634 Other intangible assets 2,174 Total identifiable assets acquired 3,602 Medical costs payable ( 1 ) Accounts payable and other current liabilities ( 667 ) Other long-term liabilities ( 768 ) Total identifiable liabilities acquired ( 1,436 ) Total net identifiable assets 2,166 Goodwill 10,121 Redeemable noncontrolling interests ( 122 ) Nonredeemable noncontrolling interests ( 1,925 ) Net assets acquired $ 10,240 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 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. For the year ended December 31, 2023, the acquired entities’ impact on revenues and net earnings was not material. Unaudited pro forma revenues and net earnings for the years ended December 31, 2023 and 2022, as if the business combinations had occurred on January 1, 2022, were immaterial for both periods. 63 Table of Contents 14. Segment Financial Information Factors used to determine the Company’s reportable segments include the nature of operating activities, economic characteristics, existence of separate senior management teams and the type of information used by the Company’s chief operating decision maker to evaluate its results of operations. Reportable segments with similar economic characteristics, products and services, customers, distribution methods and operational processes which operate in a similar regulatory environment are combined. The following is a description of the types of products and services from which each of the Company’s four reportable segments derives its revenues: • UnitedHealthcare includes the combined results of operations of UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State. The U.S. businesses share significant common assets, including a contracted network of physicians, health care professionals, hospitals and other facilities, information technology and consumer engagement infrastructure and other resources. Domestically, UnitedHealthcare Employer & Individual offers an array of consumer-oriented health benefit plans and services for employers and individuals. Globally, UnitedHealthcare Employer & Individual provides health and dental benefits and hospital and clinical services to employers and individuals in South America and other diversified global businesses. UnitedHealthcare Medicare & Retirement provides health care coverage and health and well-being services to individuals age 50 and older, addressing their unique needs. UnitedHealthcare Community & State provides diversified health care benefits products and services to state programs caring for the economically disadvantaged, the medically underserved and those without the benefit of employer-funded health care coverage. • Optum Health focuses on care delivery, including value-based care; care management; wellness and consumer engagement and health financial services. Optum Health is building a comprehensive, connected health care delivery and engagement platform by directly providing high-quality care, helping people manage chronic and complex health needs, and proactively engaging consumers in managing their health through in-person, in-home, virtual and digital clinical platforms. • Optum Insight brings together advanced analytics, technology and health care expertise to deliver integrated services and solutions. Hospital systems, physicians, health plans, governments, life sciences companies and other organizations depend on Optum Insight to help them improve performance, achieve efficiency, reduce costs, meet compliance mandates and modernize their core operating systems to meet the changing needs of the health system. • Optum Rx offers pharmacy care services and programs, including retail network contracting, home delivery, specialty and community health pharmacy services, infusion, purchasing and clinical capabilities, and develops programs in areas such as step therapy, formulary management, drug adherence and disease and drug therapy management. Optum Rx integrates pharmacy and medical care and is positioned to serve patients with complex clinical needs and consumers looking for a better digital pharmacy experience with transparent pricing. The Company’s accounting policies for reportable segment operations are consistent with those described in the Summary of Significant Accounting Policies (see Note 2 ). Transactions between reportable segments principally consist of sales of pharmacy care products and services to UnitedHealthcare customers by Optum Rx; care delivery, care management services and certain product offerings sold to UnitedHealthcare by Optum Health; and health information and technology solutions, consulting and other services sold to UnitedHealthcare by Optum Insight. These transactions are recorded at management’s estimate of fair value. Transactions with affiliated customers are eliminated in consolidation. Assets and liabilities jointly used are assigned to each reportable segment using estimates of pro-rata usage. Cash and investments are assigned so each reportable segment has working capital and/or at least minimum specified levels of regulatory capital. As a percentage of the Company’s total consolidated revenues, premium revenues from CMS were 40 %, 38 % and 36 % for the years ended December 31, 2023, 2022 and 2021, respectively, most of which were generated by UnitedHealthcare Medicare & Retirement and included in the UnitedHealthcare segment. U.S. customer revenue represented approximately 97 % of consolidated total revenues for 2023, 2022 and 2021. Long-lived fixed assets located in the United States represented approximately 82 % and 81 % of the total long-lived fixed assets as of December 31, 2023 and 2022, respectively. The non-U.S. revenues and fixed assets are primarily related to UnitedHealthcare Employer & Individual’s international businesses. 64 Table of Contents The following table presents the reportable segment financial information: Optum (in millions) UnitedHealthcare Optum Health Optum Insight Optum Rx Optum Eliminations Optum Corporate and Eliminations Consolidated 2023 Revenues - unaffiliated customers: Premiums $ 269,052 $ 21,775 $ — $ — $ — $ 21,775 $ — $ 290,827 Products — 207 162 42,214 — 42,583 — 42,583 Services 10,057 14,109 7,760 2,197 — 24,066 — 34,123 Total revenues - unaffiliated customers 279,109 36,091 7,922 44,411 — 88,424 — 367,533 Total revenues - affiliated customers — 57,696 10,896 71,484 ( 3,703 ) 136,373 ( 136,373 ) — Investment and other income 2,251 1,532 114 192 — 1,838 — 4,089 Total revenues $ 281,360 $ 95,319 $ 18,932 $ 116,087 $ ( 3,703 ) $ 226,635 $ ( 136,373 ) $ 371,622 Earnings from operations $ 16,415 $ 6,560 $ 4,268 $ 5,115 $ — $ 15,943 $ — $ 32,358 Interest expense — — — — — — ( 3,246 ) ( 3,246 ) Earnings before income taxes $ 16,415 $ 6,560 $ 4,268 $ 5,115 $ — $ 15,943 $ ( 3,246 ) $ 29,112 Total assets $ 110,943 $ 89,432 $ 34,173 $ 51,266 $ — $ 174,871 $ ( 12,094 ) $ 273,720 Purchases of property, equipment and capitalized software 866 1,199 974 347 — 2,520 — 3,386 Depreciation and amortization 989 1,058 1,229 696 — 2,983 — 3,972 2022 Revenues - unaffiliated customers: Premiums $ 238,783 $ 18,374 $ — $ — $ — $ 18,374 $ — $ 257,157 Products — 72 180 37,172 — 37,424 — 37,424 Services 10,035 10,917 4,996 1,603 — 17,516 — 27,551 Total revenues - unaffiliated customers 248,818 29,363 5,176 38,775 — 73,314 — 322,132 Total revenues - affiliated customers — 40,883 9,288 60,936 ( 2,760 ) 108,347 ( 108,347 ) — Investment and other income 923 928 117 62 — 1,107 — 2,030 Total revenues $ 249,741 $ 71,174 $ 14,581 $ 99,773 $ ( 2,760 ) $ 182,768 $ ( 108,347 ) $ 324,162 Earnings from operations $ 14,379 $ 6,032 $ 3,588 $ 4,436 $ — $ 14,056 $ — $ 28,435 Interest expense — — — — — — ( 2,092 ) ( 2,092 ) Earnings before income taxes $ 14,379 $ 6,032 $ 3,588 $ 4,436 $ — $ 14,056 $ ( 2,092 ) $ 26,343 Total assets $ 107,094 $ 68,950 $ 31,090 $ 47,476 $ — $ 147,516 $ ( 8,905 ) $ 245,705 Purchases of property, equipment and capitalized software 799 997 698 308 — 2,003 — 2,802 Depreciation and amortization 973 943 841 643 — 2,427 — 3,400 2021 Revenues - unaffiliated customers: Premiums $ 212,381 $ 13,852 $ — $ — $ — $ 13,852 $ — $ 226,233 Products — 32 159 34,246 — 34,437 — 34,437 Services 9,661 9,894 3,936 1,112 — 14,942 — 24,603 Total revenues - unaffiliated customers 222,042 23,778 4,095 35,358 — 63,231 — 285,273 Total revenues - affiliated customers — 29,234 7,867 55,779 ( 2,013 ) 90,867 ( 90,867 ) — Investment and other income 857 1,053 237 177 — 1,467 — 2,324 Total revenues $ 222,899 $ 54,065 $ 12,199 $ 91,314 $ ( 2,013 ) $ 155,565 $ ( 90,867 ) $ 287,597 Earnings from operations $ 11,975 $ 4,462 $ 3,398 $ 4,135 $ — $ 11,995 $ — $ 23,970 Interest expense — — — — — — ( 1,660 ) ( 1,660 ) Earnings before income taxes $ 11,975 $ 4,462 $ 3,398 $ 4,135 $ — $ 11,995 $ ( 1,660 ) $ 22,310 Total assets $ 102,967 $ 60,474 $ 16,868 $ 40,181 $ — $ 117,523 $ ( 8,284 ) $ 212,206 Purchases of property, equipment and capitalized software 795 791 567 301 — 1,659 — 2,454 Depreciation and amortization 1,004 818 684 597 — 2,099 — 3,103 65 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.