UNITEDHEALTH GROUP INC
For the period ended Dec 31, 2023. Filed Feb 28, 2024.
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FY2023 · Filed Feb 28, 2024
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13. Business Combinations
- 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.
- 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’sfour 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 Rxoffers 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.
The following table presents the reportable segment financial information:
| Optum | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | UnitedHealthcare | Optum Health | Optum Insight | Optum Rx | Optum Eliminations | Optum | Corporate andEliminations | Consolidated |
| 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 |
| 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 |
| 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 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.