Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with the accompanying Condensed Consolidated Financial Statements and Notes and with our 2023 10-K, including the Consolidated Financial Statements and Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in that report. Unless the context indicates otherwise, references to the terms “UnitedHealth Group,” the “Company,” “we,” “our” or “us” used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to UnitedHealth Group Incorporated and its consolidated subsidiaries.
Readers are cautioned that the statements, estimates, projections or outlook contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, including discussions regarding financial prospects, economic conditions, trends and uncertainties contained in this Item 2, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed or implied in the forward-looking statements. A description of some of the risks and uncertainties is set forth in Part I, Item 1A, “Risk Factors” in our 2023 10-K and in the discussion below.
EXECUTIVE OVERVIEW
General
UnitedHealth Group is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone. Our two distinct, yet complementary 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 we are privileged to serve.
We have four reportable segments:
• Optum Health;
• Optum Insight;
• Optum Rx; and
• UnitedHealthcare, which includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement and UnitedHealthcare Community & State.
Further information on our business is presented in Part I, Item 1, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 10-K and additional information on our segments can be found in this Item 2 and in Note 10 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Change Healthcare Cyberattack
As previously announced, on February 21, 2024, we identified that cybercrime threat actors had gained access to certain Change Healthcare information technology systems. Upon detection of this outside threat, we isolated the impacted systems to protect our partners and customers.
We have made substantial progress in mitigating the impact to consumers and care providers of the unprecedented cyberattack on the U.S. health system and have restored the majority of the affected Change Healthcare services. To support care providers we provided interest-free loans of nearly $9 billion through September 30, 2024. For the three and nine months ended September 30, 2024, we incurred $341 million and $1.7 billion of direct response costs, respectively; including increased medical care expenditures, as we suspended some care management activities to help care providers with their workflow processes; costs associated with providing interest-free loans; notifications of impacted persons; and network restoration. Optum Insight also experienced estimated business disruption impacts of $134 million and $747 million for the three and nine months ended September 30, 2024, respectively, reflecting lost revenue while maintaining full readiness of the affected Change Healthcare services. We expect to continue to incur direct response costs and experience business disruption impacts over the remainder of the year, which will continue at a lesser extent in 2025 as we work to bring transaction volumes back to pre-event levels and win new business.
Based upon our ongoing review of the impacted data, we have found files containing protected health information (PHI) or personally identifiable information (PII), which cover a substantial proportion of people in America. In June 2024, Change Healthcare gave public notice of the breach under the Health Insurance Portability and Accountability Act (HIPAA) and began notifying affected customer entities in June and individuals in late July. The investigation of impacted data is ongoing. It is
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possible that future risks and uncertainties resulting from the Change Healthcare cyberattack, including risks related to impacted data, litigation, reputational harm, and regulatory actions could adversely affect our financial condition or results of operations.
Business Trends
Our businesses participate in the United States and certain other international health markets. We expect overall spending on health care to continue to grow in the future, due to inflation, medical technology and pharmaceutical advancement, regulatory requirements, demographic trends in the population and national interest in health and well-being. The rate of market growth may be affected by a variety of factors, including macroeconomic conditions and regulatory changes, which could impact our results of operations, including our continued efforts to control health care costs.
Pricing Trends. To price our health care benefits, products and services, we start with our view of expected future costs, including medical cost trends, inflation and labor market dynamics. We frequently evaluate and adjust our approach in each of the local markets we serve, considering all relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio thresholds and similar revenue adjustments. We will continue seeking to balance growth and profitability across all these dimensions.
The commercial risk market remains highly competitive in the small group, large group and individual segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs.
Government programs in the community and senior sector tend to receive lower rates of increase than the commercial market due to governmental budget pressures and lower cost trends.
Medical Cost Trends. Our medical cost trends primarily relate to changes in unit costs, care activity and prescription drug costs. As expected and contemplated in our benefits design, we have continued to observe increased care patterns, primarily related to outpatient procedures for seniors, which may continue in future periods. In the third quarter, we also experienced higher medical costs due to a pronounced upshift in coding intensity by hospitals and an acceleration of the prescribing of certain high-cost specialty medications, primarily those used to treat cardiovascular disease, auto-immune disorders and cancer. We endeavor to mitigate these increases by engaging hospitals, physicians and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve quality, affordable care.
As a result of the Change Healthcare cyberattack, we incurred medical costs related to the impact of the temporary suspension of some care management activities, impacting our UnitedHealthcare and Optum Health businesses, to help care providers with their workflow processes. Early in the second quarter we resumed these activities. For the nine months ended September 30, 2024, medical costs related to the temporary suspension of some care management activities were $630 million.
Medicaid Redeterminations. Medicaid redeterminations have impacted the number of people served through our Medicaid offerings, partially offset by an increase in consumers served through our commercial offerings as we endeavor to ensure that people and families have continued access to care. The Medicaid redetermination process has also caused a timing mismatch between the current health status of people served through Medicaid and state rate updates, which remain well short of current care activity.
Regulatory Trends and Uncertainties
Medicare Advantage Rates. Medicare Advantage rate notices over the years have at times resulted in industry base rates well below the industry forward medical cost trend. For example, the Final Notices for 2024 and 2025 rates resulted in an industry base rate decrease, both well short of an increasing industry forward medical cost trend, creating continued pressure in the Medicare Advantage program. Further, substantial revisions to the risk adjustment model, which serves to adjust rates to reflect a patient’s health status and care resource needs, will result in reduced funding and potentially benefits for people, especially those with some of the greatest health and social challenges.
As a result of ongoing Medicare funding pressures, there are adjustments we can make to partially offset these rate pressures and reductions for a particular period. For example, we can seek to intensify our medical and operating cost management, make changes to the size and composition of our care provider networks, adjust member benefits and implement or increase the member premiums supplementing the monthly payments we receive from the government. Additionally, we decide annually on a county-by-county basis where we will offer Medicare Advantage plans.
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SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS
The following summarizes select third quarter 2024 year-over-year operating comparisons to third quarter 2023 and other financial results.
• Consolidated revenues grew 9%, UnitedHealthcare revenues grew 7% and Optum revenues grew 13%.
• UnitedHealthcare served 2.0 million more people domestically, driven by growth in commercial offerings, partially offset by the impact of Medicaid redeterminations.
• Consolidated earnings from operations of $8.7 billion compared to $8.5 billion last year.
• Diluted earnings per common share was $6.51.
• Cash flows from operations for the nine months ended September 30, 2024 were $21.8 billion.
RESULTS SUMMARY
The following table summarizes our consolidated results of operations and other financial information:
(in millions, except percentages and per share data) Three Months Ended
September 30, Increase/
(Decrease) Nine Months Ended
September 30, Increase/
(Decrease)
2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2023
Revenues:
Premiums $ 77,442 $ 72,339 $ 5,103 7 % $ 232,327 $ 217,599 $ 14,728 7 %
Products 12,631 10,354 2,277 22 36,751 31,272 5,479 18
Services 9,104 8,671 433 5 26,742 25,414 1,328 5
Investment and other income 1,643 997 646 65 3,651 2,910 741 25
Total revenues 100,820 92,361 8,459 9 299,471 277,195 22,276 8
Operating costs:
Medical costs 65,957 59,550 6,407 11 197,150 179,663 17,487 10
Operating costs 13,280 13,855 (575) (4) 40,519 41,289 (770) (2)
Cost of products sold 11,834 9,423 2,411 26 34,230 28,576 5,654 20
Depreciation and amortization 1,041 1,007 34 3 3,058 2,998 60 2
Total operating costs 92,112 83,835 8,277 10 274,957 252,526 22,431 9
Earnings from operations 8,708 8,526 182 2 24,514 24,669 (155) (1)
Interest expense (1,074) (834) (240) 29 (2,903) (2,416) (487) 20
Loss on sale of subsidiary and subsidiaries held for sale (20) — (20) nm (8,331) — (8,331) nm
Earnings before income taxes 7,614 7,692 (78) (1) 13,280 22,253 (8,973) (40)
Provision for income taxes (1,356) (1,654) 298 (18) (3,822) (4,784) 962 (20)
Net earnings 6,258 6,038 220 4 9,458 17,469 (8,011) (46)
Earnings attributable to noncontrolling interests (203) (197) (6) 3 (596) (543) (53) 10
Net earnings attributable to UnitedHealth Group common shareholders $ 6,055 $ 5,841 $ 214 4 $ 8,862 $ 16,926 $ (8,064) (48)
Diluted earnings per share attributable to UnitedHealth Group common shareholders $ 6.51 $ 6.24 $ 0.27 $ 9.53 $ 18.01 $ (8.48)
Medical care ratio (a) 85.2 % 82.3% 2.9 % 84.9 % 82.6% 2.3 %
Operating cost ratio 13.2 15.0 (1.8) 13.5 14.9 (1.4)
Operating margin 8.6 9.2 (0.6) 8.2 8.9 (0.7)
Tax rate 17.8 21.5 (3.7) 28.8 21.5 7.3
Net earnings margin (b) 6.0 6.3 (0.3) 3.0 6.1 (3.1)
Return on equity (c) 26.3% 28.0% (1.7) 13.2% 27.7% (14.5)
nm = not meaningful
(a) Medical care ratio (MCR) is calculated as medical costs divided by premium revenue.
(b) Net earnings margin attributable to UnitedHealth Group shareholders.
(c) Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.
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2024 RESULTS OF OPERATIONS COMPARED TO 2023 RESULTS OF OPERATIONS
Consolidated Financial Results
Revenues
The increases in revenues were primarily driven by growth in Optum Rx and Optum Health, growth across our UnitedHealthcare domestic offerings and pricing trends, partially offset by decreased UnitedHealthcare international revenue due to the sale of our Brazil operations.
Medical Costs and MCR
Medical costs increased primarily due to growth in people served through Medicare Advantage, those with higher acuity needs and domestic commercial offerings. The MCR increased as a result of the revenue effects of the Medicare funding reductions, decreased favorable reserve development and member mix. For the nine months ended September 30, 2024, the MCR also increased due to incremental medical costs for accommodations made to care providers as a result of the Change Healthcare cyberattack.
Operating Cost Ratio
The operating cost ratio decreased primarily due to operating cost management and business portfolio and asset dispositions, partially offset by the impact of our direct response efforts to the Change Healthcare cyberattack and investments to support future growth.
Loss on Sale of Subsidiary and Subsidiaries Held for Sale
On February 6, 2024, the Company completed the sale of its Brazil operations. During the nine months ended September 30, 2024, we recorded a loss of $7.1 billion, of which $4.1 billion related to the impact of cumulative foreign currency translation losses previously included in accumulated other comprehensive loss.
In the second quarter of 2024, the Company initiated a plan to sell its remaining South American operations, which were classified as held for sale as of September 30, 2024. As a result, the Company recorded a loss of $1.2 billion, of which $876 million related to the impact of cumulative foreign currency translation losses.
Reportable Segments
See Note 10 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information on our segments. We utilize various metrics to evaluate and manage our reportable segments, including people served by UnitedHealthcare by major market segment and funding arrangement, people served by Optum Health and adjusted scripts for Optum Rx. These metrics are the main drivers of revenue, earnings and cash flows at each business. The metrics also allow management and investors to evaluate and understand business mix, including the level and scope of services provided to people, and pricing trends when comparing the metrics to revenue by segment.
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The following table presents a summary of the reportable segment financial information:
Three Months Ended September 30, Increase/
(Decrease) Nine Months Ended
September 30, Increase/
(Decrease)
(in millions, except percentages) 2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2023
Revenues
UnitedHealthcare $ 74,853 $ 69,853 $ 5,000 7 % $ 224,076 $ 210,552 $ 13,524 6 %
Optum Health 25,917 23,864 2,053 9 79,698 70,785 8,913 13
Optum Insight 4,931 4,977 (46) (1) 13,976 14,147 (171) (1)
Optum Rx 34,207 28,857 5,350 19 97,457 84,921 12,536 15
Optum eliminations (1,130) (961) (169) 18 (3,275) (2,713) (562) 21
Optum 63,925 56,737 7,188 13 187,856 167,140 20,716 12
Eliminations (37,958) (34,229) (3,729) 11 (112,461) (100,497) (11,964) 12
Consolidated revenues $ 100,820 $ 92,361 $ 8,459 9 % $ 299,471 $ 277,195 $ 22,276 8 %
Earnings from operations
UnitedHealthcare $ 4,212 $ 4,592 $ (380) (8) % $ 12,611 $ 13,293 $ (682) (5) %
Optum Health 2,161 1,568 593 38 5,979 4,869 1,110 23
Optum Insight 791 1,109 (318) (29) 1,827 2,984 (1,157) (39)
Optum Rx 1,544 1,257 287 23 4,097 3,523 574 16
Optum 4,496 3,934 562 14 11,903 11,376 527 5
Consolidated earnings from operations $ 8,708 $ 8,526 $ 182 2 % $ 24,514 $ 24,669 $ (155) (1) %
Operating margin
UnitedHealthcare 5.6 % 6.6 % (1.0) % 5.6 % 6.3 % (0.7) %
Optum Health 8.3 6.6 1.7 7.5 6.9 0.6
Optum Insight 16.0 22.3 (6.3) 13.1 21.1 (8.0)
Optum Rx 4.5 4.4 0.1 4.2 4.1 0.1
Optum 7.0 6.9 0.1 6.3 6.8 (0.5)
Consolidated operating margin 8.6 % 9.2 % (0.6) % 8.2 % 8.9 % (0.7) %
UnitedHealthcare
The following table summarizes UnitedHealthcare revenues by business:
Three Months Ended
September 30, Increase/
(Decrease) Nine Months Ended
September 30, Increase/
(Decrease)
(in millions, except percentages) 2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2023
UnitedHealthcare Employer & Individual - Domestic $ 18,985 $ 16,854 $ 2,131 13 % $ 55,470 $ 50,157 $ 5,313 11 %
UnitedHealthcare Employer & Individual - Global 769 2,417 (1,648) (68) 2,892 6,905 (4,013) (58)
UnitedHealthcare Employer & Individual - Total 19,754 19,271 483 3 58,362 57,062 1,300 2
UnitedHealthcare Medicare & Retirement 34,904 32,022 2,882 9 105,294 97,468 7,826 8
UnitedHealthcare Community & State 20,195 18,560 1,635 9 60,420 56,022 4,398 8
Total UnitedHealthcare revenues $ 74,853 $ 69,853 $ 5,000 7 % $ 224,076 $ 210,552 $ 13,524 6 %
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The following table summarizes the number of people served by our UnitedHealthcare businesses, by major market segment and funding arrangement:
September 30, Increase/(Decrease)
(in thousands, except percentages) 2024 2023 2024 vs. 2023
Commercial - Domestic:
Risk-based 8,900 8,120 780 10 %
Fee-based 20,830 19,130 1,700 9
Total Commercial - Domestic 29,730 27,250 2,480 9
Medicare Advantage 7,810 7,645 165 2
Medicaid 7,450 8,065 (615) (8)
Medicare Supplement (Standardized) 4,340 4,345 (5) —
Total Community and Senior 19,600 20,055 (455) (2)
Total UnitedHealthcare - Domestic Medical 49,330 47,305 2,025 4
Commercial - Global 1,335 5,475 (4,140) (76)
Total UnitedHealthcare - Medical 50,665 52,780 (2,115) (4) %
Supplemental Data:
Medicare Part D stand-alone 3,055 3,335 (280) (8) %
UnitedHealthcare’s revenues increased due to growth in the number of people served through Medicare Advantage, domestic commercial offerings and those with higher acuity needs, partially offset by decreased people served globally due to the sale of our Brazil operations and Medicaid offerings due to continued redeterminations. Earnings from operations decreased due to Medicare Advantage funding reductions, the impacts of Medicaid redeterminations and decreased favorable reserve development, partially offset by the factors impacting revenue above. For the nine months ended September 30, 2024, earnings from operations also decreased due to incremental medical costs for accommodations to support care providers as a result of the Change Healthcare cyberattack.
Optum
Total revenues increased due to growth at Optum Rx and Optum Health. Earnings from operations increased at Optum Health and Optum Rx, partially offset by the impacts of the Change Healthcare cyberattack. The results by segment were as follows:
Optum Health
Revenues at Optum Health increased primarily due to organic growth in patients served under value-based care arrangements. Earnings from operations increased due to cost management initiatives, business portfolio and asset dispositions and increased investment income, partially offset by Medicare Advantage funding reductions and costs associated with serving newly added patients under value-based care arrangements. Optum Health served approximately 104 million people and 103 million people as of September 30, 2024 and September 30, 2023, respectively.
Optum Insight
Revenues at Optum Insight decreased due the business disruption impacts from the Change Healthcare cyberattack, partially offset by growth in technology services. Earnings from operations decreased primarily due to the business disruption impacts and direct response costs related to the Change Healthcare cyberattack, partially offset by growth in business services.
Optum Rx
Revenues and earnings from operations at Optum Rx increased due to higher script volumes from both new clients and growth in existing clients and growth in pharmacy services. Earnings from operations also increased due to operating cost efficiencies and supply chain initiatives. Optum Rx fulfilled 407 million and 383 million adjusted scripts in the third quarters of 2024 and 2023, respectively.
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LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
Liquidity
Summary of our Major Sources and Uses of Cash and Cash Equivalents
Nine Months Ended September 30, Increase/(Decrease)
(in millions) 2024 2023 2024 vs. 2023
Sources of cash:
Cash provided by operating activities $ 21,835 $ 34,261 $ (12,426)
Issuances of short-term borrowings and long-term debt, net of repayments 15,120 5,848 9,272
Proceeds from common stock issuances 1,611 1,039 572
Customer funds administered — 2,037 (2,037)
Sales and maturities of investments, net of purchases 1,852 — 1,852
Repayments of care provider loans - cyberattack 3,189 — 3,189
Total sources of cash 43,607 43,185 422
Uses of cash:
Common stock repurchases (4,028) (6,500) 2,472
Cash paid for acquisitions and other transactions, net of cash assumed (11,674) (8,389) (3,285)
Purchases of investments, net of sales and maturities — (2,850) 2,850
Purchases of property, equipment and capitalized software (2,587) (2,427) (160)
Cash dividends paid (5,601) (5,023) (578)
Loans to care providers - cyberattack (8,904) — (8,904)
Customer funds administered (1,059) — (1,059)
Other (2,497) (2,495) (2)
Total uses of cash (36,350) (27,684) (8,666)
Effect of exchange rate changes on cash and cash equivalents (30) 49 (79)
Increase in cash and cash equivalents, including cash classified within assets held for sale $ 7,227 $ 15,550 $ (8,323)
Less: net increase in cash classified within assets held for sale (254) — (254)
Net increase in cash and cash equivalents $ 6,973 $ 15,550 $ (8,577)
2024 Cash Flows Compared to 2023 Cash Flows
Decreased cash flows provided by operating activities were primarily driven by the receipt of the October CMS premium payment of $11.9 billion in September 2023 and Change Healthcare cyberattack response actions. Other significant changes in sources or uses of cash year-over-year included increased net issuances of short-term borrowings and long-term debt, net sales and maturities of investments and decreased share repurchases, offset by loans to care providers in response to the Change Healthcare cyberattack, increased cash paid for acquisitions and other transactions and decreased customer funds administered.
Financial Condition
As of September 30, 2024, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of $83.5 billion included approximately $32.4 billion of cash and cash equivalents (of which $5.2 billion was available for general corporate use), $46.3 billion of debt securities and $4.9 billion of investments in equity securities. Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. Our available-for-sale debt securities portfolio had a weighted-average duration of 4.0 years and a weighted-average credit rating of “Double A” as of September 30, 2024. When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.
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Capital Resources and Uses of Liquidity
In addition to cash flows from operations and cash and cash equivalent balances available for general corporate use, our capital resources and uses of liquidity are as follows:
Cash Requirements. A summary of our cash requirements as of December 31, 2023 was disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 10-K. During the nine months ended September 30, 2024, there were no material changes to this previously disclosed information outside the ordinary course of business. We believe our capital resources are sufficient to meet future, short-term and long-term, liquidity needs. We continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and business combinations.
Short-Term Borrowings. Our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program, which facilitates the private placement of unsecured debt through independent broker-dealers, and are available for general corporate purposes. For more information on our commercial paper and bank credit facilities, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2023 10-K.
Our revolving bank credit facilities contain various covenants, including covenants requiring us to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than 60%. As of September 30, 2024, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately 43%.
Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, such as to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. For more information on our long-term debt, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and Note 8 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2023 10-K.
Credit Ratings. Our credit ratings as of September 30, 2024 were as follows:
Moody’s S&P Global Fitch A.M. Best
Ratings Outlook Ratings Outlook Ratings Outlook Ratings Outlook
Senior unsecured debt A2 Stable A+ Stable A Stable A Stable
Commercial paper P-1 n/a A-1 n/a F1 n/a AMB-1+ n/a
The availability of financing in the form of debt or equity is influenced by many factors, including our profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions, regulatory requirements and economic and market conditions. A significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.
Share Repurchase Program. During the nine months ended September 30, 2024, we repurchased approximately 7.7 million shares at an average price of $521.21 per share. In June 2024, our Board of Directors amended our share repurchase program to authorize the repurchase of up to 35 million shares of Common Stock, in addition to all remaining shares authorized to be repurchased under the Board’s 2018 renewal of the program. As of September 30, 2024, we had Board of Directors’ authorization to purchase up to 42 million shares of our 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.
Dividends. In June 2024, our Board of Directors increased our quarterly cash dividend to an annual rate of $8.40 compared to $7.52 per share, which we had paid since June 2023. For more information on our dividend, see Note 7 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Pending Transactions. As of September 30, 2024, the Company had entered into transaction agreements in the health care sector, subject to regulatory approval and/or other customary closing conditions. The total anticipated consideration required for these transactions, excluding the payoff of acquired indebtedness, was approximately $5 billion.
For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2023 10-K.
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RECENTLY ISSUED ACCOUNTING STANDARDS
There are no recently issued accounting standards that are expected to have a material impact on our Condensed Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES
In preparing our Condensed Consolidated Financial Statements, we are required to make judgments, assumptions and estimates, which we believe are reasonable and prudent based on the available facts and circumstances. These judgments, assumptions and estimates affect certain of our revenues and expenses and their related balance sheet accounts and disclosure of our contingent liabilities. We base our assumptions and estimates primarily on historical experience and consider known and projected trends. On an ongoing basis, we re-evaluate our selection of assumptions and the method of calculating our estimates. Actual results, however, may materially differ from our calculated estimates, and this difference would be reported in our current operations.
Our critical accounting estimates include medical costs payable and goodwill. For a detailed description of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 in our 2023 10-K. For a detailed discussion of our significant accounting policies, see Note 2 of Notes to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in our 2023 10-K.
FORWARD-LOOKING STATEMENTS
The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements which are intended to take advantage of the “safe harbor” provisions of the federal securities laws. The words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. Actual results could differ materially from those that management expects, depending on the outcome of certain factors including: our ability to effectively estimate, price for and manage medical costs; new or changes in existing health care laws or regulations, or their enforcement or application; cyberattacks, other privacy/data security incidents, or our failure to comply with related regulations; reductions in revenue or delays to cash flows received under government programs; changes in Medicare, the CMS star ratings program or the application of risk adjustment data validation audits; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; risks and uncertainties associated with our businesses providing pharmacy care services; competitive pressures, including our ability to maintain or increase our market share; changes in or challenges to our public sector contract awards; failure to achieve targeted operating cost productivity improvements; failure to develop and maintain satisfactory relationships with health care payers, physicians, hospitals and other service providers; the impact of potential changes in tax laws and regulations; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to complete, manage or integrate strategic transactions; risk and uncertainties associated with the continuing sale of operations in South America; risks associated with public health crises arising from large-scale medical emergencies, pandemics, natural disasters and other extreme events; failure to attract, develop, retain, and manage the succession of key employees and executives; our investment portfolio performance; impairment of our goodwill and intangible assets; failure to protect proprietary rights to our databases, software and related products; downgrades in our credit ratings; and our ability to obtain sufficient funds from our regulated subsidiaries or from external financings to fund our obligations, reinvest in our business, maintain our debt to total capital ratio at targeted levels, maintain our quarterly dividend payment cycle, or continue repurchasing shares of our common stock.
This above list is not exhaustive. We discuss these matters, and certain risks that may affect our business operations, financial condition and results of operations, more fully in our filings with the SEC, including our reports on Forms 10-K, 10-Q and 8-K. By their nature, forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual results may vary materially from expectations expressed or implied in this document or any of our prior communications. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.