SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Securities registered pursuant to Section 12(b) of the Act:~~

As of July ~~31, 2019,~~30, 2020, there were ~~947,680,609~~950,335,762 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.

Page

Part I. Financial Information

Item 1.
Financial Statements (unaudited)
1

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018
1

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018
2

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018
3

Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2019 and 2018
4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018
6

Notes to the Condensed Consolidated Financial Statements
7

1.
Basis of Presentation
7

2.
Investments
8

3.
Fair Value
10

4.
Medical Costs Payable
11

5.
Commercial Paper and Long-Term Debt
12

6.
Dividends
13

7.
Commitments and Contingencies
13

8.
Segment Financial Information
15
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
23
Item 4.
Controls and Procedures
24
Part II. Other Information

Item 1.
Legal Proceedings
24
Item 1A.
Risk Factors
24
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
24
Item 6.
Exhibits
25
Signatures
26

PART I

ITEM 1. FINANCIAL STATEMENTS

UnitedHealth Group

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions, except per share data) June 30,
2019 December 31,
2018
Assets
Current assets:
Cash and cash equivalents $ 13,745
$ 10,866
Short-term investments 3,524
3,458
Accounts receivable, net 9,741
11,388
Other current receivables, net 8,434
6,862
Assets under management 2,943
3,032
Prepaid expenses and other current assets 3,651
3,086
Total current assets 42,038
38,692
Long-term investments 35,696
32,510
Property, equipment and capitalized software, net 8,681
8,458
Goodwill 62,000
58,910
Other intangible assets, net 9,999
9,325
Other assets 8,786
4,326
Total assets $ 167,200
$ 152,221
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable $ 20,907
$ 19,891
Accounts payable and accrued liabilities 17,128
16,705
Commercial paper and current maturities of long-term debt 7,800
1,973
Unearned revenues 2,019
2,396
Other current liabilities 14,474
12,244
Total current liabilities 62,328
53,209
Long-term debt, less current maturities 34,473
34,581
Deferred income taxes 2,908
2,474
Other liabilities 9,435
5,730
Total liabilities 109,144
95,994
Commitments and contingencies (Note 7)

Redeemable noncontrolling interests 2,202
1,908
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; 948 and 960 issued and outstanding 9
10
Retained earnings 56,367
55,846
Accumulated other comprehensive loss (3,273 ) (4,160 )
Nonredeemable noncontrolling interests 2,751
2,623
Total equity 55,854
54,319
Total liabilities, redeemable noncontrolling interests and equity $ 167,200
$ 152,221


(in millions, except per share data)	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	22,327	$	10,985
Short-term investments	3,266		3,260
Accounts receivable, net	12,546		11,822
Other current receivables, net	11,430		9,640
Assets under management	3,417		3,076
Prepaid expenses and other current assets	5,932		3,851
Total current assets	58,918		42,634
Long-term investments	36,778		37,209
Property, equipment and capitalized software, net	8,126		8,704
Goodwill	67,872		65,659
Other intangible assets, net	10,552		10,349
Other assets	10,237		9,334
Total assets	$	192,483	$	173,889
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable	$	19,200	$	21,690
Accounts payable and accrued liabilities	25,423		19,005
Short-term borrowings and current maturities of long-term debt	6,156		3,870
Unearned revenues	2,299		2,622
Other current liabilities	16,805		14,595
Total current liabilities	69,883		61,782
Long-term debt, less current maturities	39,901		36,808
Deferred income taxes	3,286		2,993
Other liabilities	11,056		10,144
Total liabilities	124,126		111,727
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests	1,842		1,726
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; 950 and 948 issued and outstanding	10		9
Additional paid-in capital	388		7
Retained earnings	67,776		61,178
Accumulated other comprehensive loss	(4,550)		(3,578)
Nonredeemable noncontrolling interests	2,891		2,820
Total equity	66,515		60,436
Total liabilities, redeemable noncontrolling interests and equity	$	192,483	$	173,889

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share data) 2019 2018 2019 2018
Revenues:
Premiums $ 47,164
$ 44,458
$ 94,677
$ 88,542
Products 8,353
7,004
16,425
13,706
Services 4,496
4,269
8,814
8,373
Investment and other income 582
355
987
653
Total revenues 60,595
56,086
120,903
111,274
Operating costs:
Medical costs 39,184
36,427
78,123
72,290
Operating costs 8,415
8,386
16,932
16,892
Cost of products sold 7,598
6,471
14,979
12,655
Depreciation and amortization 654
598
1,293
1,180
Total operating costs 55,851
51,882
111,327
103,017
Earnings from operations 4,744
4,204
9,576
8,257
Interest expense (418 ) (344 ) (818 ) (673 )
Earnings before income taxes 4,326
3,860
8,758
7,584
Provision for income taxes (941 ) (850 ) (1,816 ) (1,650 )
Net earnings 3,385
3,010
6,942
5,934
Earnings attributable to noncontrolling interests (92 ) (88 ) (182 ) (176 )
Net earnings attributable to UnitedHealth Group common shareholders $ 3,293
$ 2,922
$ 6,760
$ 5,758
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic $ 3.47
$ 3.04
$ 7.09
$ 5.98
Diluted $ 3.42
$ 2.98
$ 6.97
$ 5.85
Basic weighted-average number of common shares outstanding 950
961
954
963
Dilutive effect of common share equivalents 14
21
16
21
Diluted weighted-average number of common shares outstanding 964
982
970
984
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 11
6
9
7


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share data)	2020		2019		2020		2019
Revenues:
Premiums	$	49,394	$	47,164	$	100,034	$	94,677
Products	8,247		8,353		16,678		16,425
Services	4,156		4,496		9,141		8,814
Investment and other income	341		582		706		987
Total revenues	62,138		60,595		126,559		120,903
Operating costs:
Medical costs	34,678		39,184		75,678		78,123
Operating costs	10,001		8,415		20,016		16,932
Cost of products sold	7,501		7,598		15,188		14,979
Depreciation and amortization	717		654		1,440		1,293
Total operating costs	52,897		55,851		112,322		111,327
Earnings from operations	9,241		4,744		14,237		9,576
Interest expense	(430)		(418)		(867)		(818)
Earnings before income taxes	8,811		4,326		13,370		8,758
Provision for income taxes	(2,115)		(941)		(3,209)		(1,816)
Net earnings	6,696		3,385		10,161		6,942
Earnings attributable to noncontrolling interests	(59)		(92)		(142)		(182)
Net earnings attributable to UnitedHealth Group common shareholders	6,637		3,293		$	10,019	$	6,760
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic	$	6.99	$	3.47	$	10.56	$	7.09
Diluted	$	6.91	$	3.42	$	10.43	$	6.97
Basic weighted-average number of common shares outstanding	949		950		949		954
Dilutive effect of common share equivalents	11		14		12		16
Diluted weighted-average number of common shares outstanding	960		964		961		970
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents	11		11		11		9

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2019 2018 2019 2018
Net earnings $ 3,385
$ 3,010
$ 6,942
$ 5,934
Other comprehensive income (loss):
Gross unrealized gains (losses) on investment securities during the period 493
(43 ) 1,013
(421 )
Income tax effect (113 ) 10
(232 ) 96
Total unrealized gains (losses), net of tax 380
(33 ) 781
(325 )
Gross reclassification adjustment for net realized gains included in net earnings (5 ) (36 ) (1 ) (55 )
Income tax effect 1
9
—
13
Total reclassification adjustment, net of tax (4 ) (27 ) (1 ) (42 )
Total foreign currency translation gains (losses) 109
(1,069 ) 107
(1,070 )
Other comprehensive income (loss) 485
(1,129 ) 887
(1,437 )
Comprehensive income 3,870
1,881
7,829
4,497
Comprehensive income attributable to noncontrolling interests (92 ) (88 ) (182 ) (176 )
Comprehensive income attributable to UnitedHealth Group common shareholders $ 3,778
$ 1,793
$ 7,647
$ 4,321


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Net earnings	$	6,696	$	3,385	$	10,161	$	6,942
Other comprehensive income (loss):
Gross unrealized gains on investment securities during the period	1,120		493		771		1,013
Income tax effect	(257)		(113)		(177)		(232)
Total unrealized gains, net of tax	863		380		594		781
Gross reclassification adjustment for net realized gains included in net earnings	(11)		(5)		(29)		(1)
Income tax effect	3		1		7		—
Total reclassification adjustment, net of tax	(8)		(4)		(22)		(1)
Total foreign currency translation (losses) gains	(45)		109		(1,544)		107
Other comprehensive income (loss)	810		485		(972)		887
Comprehensive income	7,506		3,870		9,189		7,829
Comprehensive income attributable to noncontrolling interests	(59)		(92)		(142)		(182)
Comprehensive income attributable to UnitedHealth Group common shareholders	$	7,447	$	3,778	$	9,047	$	7,647

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Common Stock Additional Paid-In Capital Retained Earnings
Accumulated Other Comprehensive
Income (Loss)
Nonredeemable Noncontrolling Interests
Total
Equity
Three months ended June 30,
(in millions)
Shares Amount Net Unrealized Gains (Losses) on Investments
Foreign Currency Translation (Losses)
Gains

Balance at March 31, 2019 953
$ 10
$ —
$ 55,472
$ 140
$ (3,898 ) $ 2,727
$ 54,451
Net earnings 3,293
54
3,347
Other comprehensive income 376
109
485
Issuances of common stock,
and related tax effects 1
—
105
105
Share-based compensation 152
152
Common share repurchases (6 ) (1 ) (124 ) (1,374 ) (1,499 )
Cash dividends paid on common shares ($1.08 per share) (1,024 ) (1,024 )
Redeemable noncontrolling interests fair value and other adjustments (133 ) (133 )
Acquisition and other adjustments of nonredeemable noncontrolling interests 32
32
Distribution to nonredeemable noncontrolling interests (62 ) (62 )
Balance at June 30, 2019 948
$ 9
$ —
$ 56,367
$ 516
$ (3,789 ) $ 2,751
$ 55,854

Balance at March 31, 2018 962
$ 10
$ —
$ 50,494
$ (296 ) $ (2,655 ) $ 2,483
$ 50,036
Net earnings 2,922
59
2,981
Other comprehensive loss (60 ) (1,069 ) (1,129 )
Issuances of common stock, and related tax effects 2
—
107
107
Share-based compensation 141
141
Common share repurchases (2 ) —
(313 ) (187 ) (500 )
Cash dividends paid on common shares ($0.90 per share) (866 ) (866 )
Redeemable noncontrolling interests fair value and other adjustments 65
65
Acquisition and other adjustments of nonredeemable noncontrolling interests (7 ) (7 )
Distribution to nonredeemable noncontrolling interests (45 ) (45 )
Balance at June 30, 2018 962
$ 10
$ —
$ 52,363
$ (356 ) $ (3,724 ) $ 2,490
$ 50,783


	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)						Nonredeemable Noncontrolling Interests	Total Equity
Three months ended June 30,	Shares	Amount								Net Unrealized Gains on Investments		Foreign Currency Translation (Losses) Gains
Balance at March 31, 2020	947	$	10	$	—	$	62,327	$	306	$	(5,666)	$	2,886	$	59,863
Net earnings						6,637						38		6,675
Other comprehensive income (loss)								855		(45)				810
Issuances of common stock, and related tax effects	3	—		287										287
Share-based compensation				144										144
Common share repurchases	—	—		—		—								—
Cash dividends paid on common shares ($1.25 per share)						(1,188)								(1,188)
Redeemable noncontrolling interests fair value and other adjustments				(43)										(43)
Distribution to nonredeemable noncontrolling interests												(33)		(33)
Balance at June 30, 2020	950	$	10	$	388	$	67,776	$	1,161	$	(5,711)	$	2,891	$	66,515

Balance at March 31, 2019	953	$	10	$	—	$	55,472	$	140	$	(3,898)	$	2,727	$	54,451
Net earnings						3,293						54		3,347
Other comprehensive income								376		109				485
Issuances of common stock, and related tax effects	1	—		105										105
Share-based compensation				152										152
Common share repurchases	(6)	(1)		(124)		(1,374)								(1,499)
Cash dividends paid on common shares ($1.08 per share)						(1,024)								(1,024)
Redeemable noncontrolling interests fair value and other adjustments				(133)										(133)
Acquisition and other adjustments of nonredeemable noncontrolling interests												32		32
Distribution to nonredeemable noncontrolling interests												(62)		(62)
Balance at June 30, 2019	948	$	9	$	—	$	56,367	$	516	$	(3,789)	$	2,751	$	55,854

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Common Stock Additional Paid-In Capital Retained Earnings
Accumulated Other Comprehensive (Loss)
Income
Nonredeemable Noncontrolling Interests
Total
Equity
Six months ended June 30,
(in millions)
Shares Amount Net Unrealized (Losses) Gains on Investments Foreign Currency Translation (Losses)
Gains
Balance at January 1, 2019 960
$ 10
$ —
$ 55,846
$ (264 ) $ (3,896 ) $ 2,623
$ 54,319
Adjustment to adopt ASU 2016-02 (13 ) (5 ) (18 )
Net earnings 6,760
114
6,874
Other comprehensive income 780
107
887
Issuances of common stock,
and related tax effects 6
—
161
161
Share-based compensation 391
391
Common share repurchases (18 ) (1 ) (158 ) (4,342 ) (4,501 )
Cash dividends paid on common shares ($1.98 per share) (1,884 ) (1,884 )
Redeemable noncontrolling interests fair value and other adjustments (285 ) (285 )
Acquisition and other adjustments of nonredeemable noncontrolling interests (109 ) 164
55
Distribution to nonredeemable noncontrolling interests (145 ) (145 )
Balance at June 30, 2019 948
$ 9
$ —
$ 56,367
$ 516
$ (3,789 ) $ 2,751
$ 55,854

Balance at January 1, 2018 969
$ 10
$ 1,703
$ 48,730
$ (13 ) $ (2,654 ) $ 2,057
$ 49,833
Adjustment to adopt ASU 2016-01 (24 ) 24
—
Net earnings 5,758
112
5,870
Other comprehensive loss (367 ) (1,070 ) (1,437 )
Issuances of common stock, and related tax effects 7
—
522
522
Share-based compensation 347
347
Common share repurchases (14 ) —
(2,637 ) (513 ) (3,150 )
Cash dividends paid on common shares ($1.65 per share) (1,588 ) (1,588 )
Redeemable noncontrolling interests fair value and other adjustments 65
65
Acquisition and other adjustments of nonredeemable noncontrolling interests 416
416
Distribution to nonredeemable noncontrolling interests (95 ) (95 )
Balance at June 30, 2018 962
$ 10
$ —
$ 52,363
$ (356 ) $ (3,724 ) $ 2,490
$ 50,783


	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)						Nonredeemable Noncontrolling Interests	Total Equity
Six months ended June 30,	Shares	Amount								Net Unrealized Gains (Losses) on Investments		Foreign Currency Translation (Losses) Gains
Balance at January 1, 2020	948	$	9	$	7	$	61,178	$	589	$	(4,167)	$	2,820	$	60,436
Adjustment to adopt ASU 2016-13						(28)								(28)
Net earnings						10,019						97		10,116
Other comprehensive income (loss)								572		(1,544)				(972)
Issuances of common stock, and related tax effects	8	1		607										608
Share-based compensation				378										378
Common share repurchases	(6)	—		(510)		(1,181)								(1,691)
Cash dividends paid on common shares ($2.33 per share)						(2,212)								(2,212)
Redeemable noncontrolling interests fair value and other adjustments				(94)										(94)
Acquisition and other adjustments of nonredeemable noncontrolling interests												50		50
Distribution to nonredeemable noncontrolling interests												(76)		(76)
Balance at June 30, 2020	950	$	10	$	388	$	67,776	$	1,161	$	(5,711)	$	2,891	$	66,515

Balance at January 1, 2019	960	$	10	$	—	$	55,846	$	(264)	$	(3,896)	$	2,623	$	54,319
Adjustment to adopt ASU 2016-02						(13)						(5)		(18)
Net earnings						6,760						114		6,874
Other comprehensive income								780		107				887
Issuances of common stock, and related tax effects	6	—		161										161
Share-based compensation				391										391
Common share repurchases	(18)	(1)		(158)		(4,342)								(4,501)
Cash dividends paid on common shares ($1.98 per share)						(1,884)								(1,884)
Redeemable noncontrolling interests fair value and other adjustments				(285)										(285)
Acquisition and other adjustments of nonredeemable noncontrolling interests				(109)								164		55
Distribution to nonredeemable noncontrolling interests												(145)		(145)
Balance at June 30, 2019	948	$	9	$	—	$	56,367	$	516	$	(3,789)	$	2,751	$	55,854

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended June 30,
(in millions) 2019 2018
Operating activities
Net earnings $ 6,942
$ 5,934
Noncash items:
Depreciation and amortization 1,293
1,180
Deferred income taxes 195
(158 )
Share-based compensation 398
358
Other, net (127 ) 10
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
Accounts receivable 2,196
(1,021 )
Other assets (1,774 ) (2,369 )
Medical costs payable 447
1,263
Accounts payable and other liabilities (33 ) 2,233
Unearned revenues (429 ) 4,946
Cash flows from operating activities 9,108

12,376
Investing activities
Purchases of investments (7,649 ) (8,182 )
Sales of investments 2,680
2,003
Maturities of investments 3,315
3,211
Cash paid for acquisitions, net of cash assumed (4,751 ) (2,636 )
Purchases of property, equipment and capitalized software (977 ) (960 )
Other, net 504
(134 )
Cash flows used for investing activities (6,878 ) (6,698 )
Financing activities
Common share repurchases (4,501 ) (3,150 )
Cash dividends paid (1,884 ) (1,588 )
Proceeds from common stock issuances 448
478
Repayments of long-term debt (1,250 ) (1,100 )
Proceeds from (repayments of) commercial paper, net 6,924
(181 )
Proceeds from issuance of long-term debt —
3,964
Customer funds administered 1,435
3,082
Other, net (529 ) (718 )
Cash flows from financing activities 643
787
Effect of exchange rate changes on cash and cash equivalents 6
(78 )
Increase in cash and cash equivalents 2,879
6,387
Cash and cash equivalents, beginning of period 10,866
11,981
Cash and cash equivalents, end of period $ 13,745
$ 18,368


	Six Months Ended June 30,
(in millions)	2020		2019
Operating activities
Net earnings	$	10,161	$	6,942
Noncash items:
Depreciation and amortization	1,440		1,293
Deferred income taxes	114		195
Share-based compensation	388		398
Other, net	124		(127)
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
Accounts receivable	(439)		2,196
Other assets	(3,784)		(1,774)
Medical costs payable	(2,353)		447
Accounts payable and other liabilities	7,591		(33)
Unearned revenues	(296)		(429)
Cash flows from operating activities	12,946		9,108
Investing activities
Purchases of investments	(6,412)		(7,649)
Sales of investments	3,548		2,680
Maturities of investments	3,437		3,315
Cash paid for acquisitions, net of cash assumed	(3,952)		(4,751)
Purchases of property, equipment and capitalized software	(920)		(977)
Other, net	(186)		504
Cash flows used for investing activities	(4,485)		(6,878)
Financing activities
Common share repurchases	(1,691)		(4,501)
Cash dividends paid	(2,212)		(1,884)
Proceeds from common stock issuances	870		448
Repayments of long-term debt	—		(1,250)
Proceeds from short-term borrowings, net	351		6,924
Proceeds from issuance of long-term debt	4,864		—
Customer funds administered	1,263		1,435
Other, net	(421)		(529)
Cash flows from financing activities	3,024		643
Effect of exchange rate changes on cash and cash equivalents	(143)		6
Increase in cash and cash equivalents	11,342		2,879
Cash and cash equivalents, beginning of period	10,985		10,866
Cash and cash equivalents, end of period	$	22,327	$	13,745

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

UnitedHealth Group

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

UnitedHealth Group Incorporated (individually and together with its subsidiaries, “UnitedHealth Group” and ~~the “Company”~~“the Company”) is a diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone.

Through its diversified family of businesses, the Company leverages core competencies in data and health information; advanced technology; and clinical expertise. These core competencies are deployed within two distinct, but strategically aligned, business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum.

The Company has prepared the Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, these Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and the Notes included in Part II, Item 8, “Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 as filed with the SEC ~~(2018~~(2019 10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly.

Use of Estimates

These Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates include medical costs payable and goodwill. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the period in which the estimate is adjusted.

Revenue from Products

For the three and six months ended June 30, 2020, the Company recognized revenue and cost of products sold for retail pharmacy co-payments related to its OptumRx business. Revenue recognized in prior periods related to retail pharmacy transactions excludes the member’s applicable co-payment. There was no impact on earnings from operations, net earnings, earnings per share or total equity.

Recently Adopted Accounting Standards

In ~~February~~June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. ~~2016-02, “Leases~~2016-13, “Financial Instruments - Credit Losses (Topic ~~842)~~326)” ~~as modified by ASUs 2018-01, 2018-10, 2018-11, 2018-20~~(ASU 2016-13). ASU 2016-13 requires the use of the current expected credit loss impairment model to develop an estimate of expected credit losses for certain financial assets. ASU 2016-13 also requires expected credit losses on available-for-sale debt securities to be recognized through an allowance for credit losses and 2019-01 (collectively, ASU 2016-02). Under ASU 2016-02, an entity is required to recognize assets and liabilities for the rights and obligations created by leases on the entity’s balance sheet for both finance and operating leases.revises certain disclosure requirements. The Company adopted ASU ~~2016-02~~2016-13 on January 1, 2020 using a ~~cumulative-effect~~cumulative effect upon adoption approach as of January 1, 2019. Upon adoption, the Company recognized $3.3 billion of lease right-of-use (ROU) assets and liabilities for operating leases on its Condensed Consolidated Balance Sheet, of which, $668 million were classified as current liabilities.approach. The adoption of ASU ~~2016-02~~2016-13 was immaterial to the Company’s consolidated balance sheet, results of operations, equity and cash flows. ~~The~~

Under the current expected credit loss impairment model, the Company ~~has included the disclosures required~~evaluates an available-for-sale debt security for credit-related impairment by ~~ASU 2016-02 below and in~~ ~~Note 7, “Commitments and Contingencies.”~~

The Company leases facilities and equipment under long-term operating leases that are non-cancelable and expire on various dates. At the lease commencement date, lease ROU assets and lease liabilities are recognized based onconsidering the present value of expected cash flows relative to a security’s amortized cost, the ~~future minimum lease payments over~~extent to which fair value is less than amortized cost, the ~~lease term, which includes all fixed obligations arising from~~financial condition and near-term prospects of the ~~lease contract.~~issuer and specific events or circumstances that 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 ~~an interest rate is not implicit in a lease,~~ the Company ~~utilizes its incremental borrowing rate for~~intends to sell an impaired security, or will likely be required to sell a ~~period that closely matches~~security before recovery of the ~~lease term.~~

~~The Company’s ROU assets are~~entire amortized cost, the entire impairment is included in ~~other assets, and lease liabilities are included in other current liabilities and other liabilities in the Company’s Condensed Consolidated Balance Sheet.~~net earnings.

The Company has determined that there have been no other recently adopted or issued accounting standards that had, or will have, a material impact on its Condensed Consolidated Financial Statements.

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2. Investments

A summary of debt securities by major security type is as follows:

(in millions)
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value
June 30, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations $ 3,684
$ 80
$ (5 ) $ 3,759
State and municipal obligations 6,532
237
(1 ) 6,768
Corporate obligations 16,597
265
(12 ) 16,850
U.S. agency mortgage-backed securities 5,662
83
(15 ) 5,730
Non-U.S. agency mortgage-backed securities 1,593
39
(1 ) 1,631
Total debt securities - available-for-sale 34,068
704
(34 ) 34,738
Debt securities - held-to-maturity:
U.S. government and agency obligations 275
2
—
277
State and municipal obligations 31
1
—
32
Corporate obligations 435
1
—
436
Total debt securities - held-to-maturity 741
4
—
745
Total debt securities $ 34,809
$ 708
$ (34 ) $ 35,483
December 31, 2018
Debt securities - available-for-sale:
U.S. government and agency obligations $ 3,434
$ 13
$ (42 ) $ 3,405
State and municipal obligations 7,117
61
(57 ) 7,121
Corporate obligations 15,366
14
(218 ) 15,162
U.S. agency mortgage-backed securities 4,947
11
(106 ) 4,852
Non-U.S. agency mortgage-backed securities 1,376
2
(20 ) 1,358
Total debt securities - available-for-sale 32,240
101
(443 ) 31,898
Debt securities - held-to-maturity:
U.S. government and agency obligations 255
1
(2 ) 254
State and municipal obligations 11
—
—
11
Corporate obligations 355
—
—
355
Total debt securities - held-to-maturity 621
1
(2 ) 620
Total debt securities $ 32,861
$ 102
$ (445 ) $ 32,518


(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2020
Debt securities - available-for-sale:
U.S. government and agency obligations	$	3,402	$	178	$	—	$	3,580
State and municipal obligations	5,872		330		(3)		6,199
Corporate obligations	17,324		728		(68)		17,984
U.S. agency mortgage-backed securities	6,005		274		—		6,279
Non-U.S. agency mortgage-backed securities	1,875		83		(14)		1,944
Total debt securities - available-for-sale	34,478		1,593		(85)		35,986
Debt securities - held-to-maturity:
U.S. government and agency obligations	421		8		—		429
State and municipal obligations	31		2		—		33
Corporate obligations	285		—		—		285
Total debt securities - held-to-maturity	737		10		—		747
Total debt securities	$	35,215	$	1,603	$	(85)	$	36,733
December 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations	$	3,502	$	55	$	(4)	$	3,553
State and municipal obligations	5,680		251		(5)		5,926
Corporate obligations	17,910		343		(11)		18,242
U.S. agency mortgage-backed securities	6,425		109		(6)		6,528
Non-U.S. agency mortgage-backed securities	1,811		37		(3)		1,845
Total debt securities - available-for-sale	35,328		795		(29)		36,094
Debt securities - held-to-maturity:
U.S. government and agency obligations	402		2		—		404
State and municipal obligations	32		2		—		34
Corporate obligations	538		—		(1)		537
Total debt securities - held-to-maturity	972		4		(1)		975
Total debt securities	$	36,300	$	799	$	(30)	$	37,069

The Company held ~~$2.2 billion and~~ $2.0 billion of equity securities as of June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019. The Company’s investments in equity securities primarily consist of employee savings plan related investments and shares of Brazilian real denominated fixed-income funds ~~and dividend paying stocks~~ with readily determinable fair values. Additionally, the Company’s investments included ~~$1.5~~$1.4 billion of equity method investments in operating businesses in the health care sector as of ~~both~~ June 30, ~~2019~~2020 and December 31, ~~2018.~~2019. The allowance for credit losses on held-to-maturity securities at June 30, 2020 was not material.

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The amortized cost and fair value of debt securities as of June 30, ~~2019,~~2020, 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 $ 3,647
$ 3,652
$ 182
$ 182
Due after one year through five years 12,150
12,298
283
285
Due after five years through ten years 8,084
8,394
136
136
Due after ten years 2,932
3,033
140
142
U.S. agency mortgage-backed securities 5,662
5,730
—
—
Non-U.S. agency mortgage-backed securities 1,593
1,631
—
—
Total debt securities $ 34,068
$ 34,738
$ 741
$ 745


	Available-for-Sale						Held-to-Maturity
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,414	$	3,433	$	429	$	429
Due after one year through five years	10,974		11,365		255		261
Due after five years through ten years	8,481		9,083		31		33
Due after ten years	3,729		3,882		22		24
U.S. agency mortgage-backed securities	6,005		6,279		—		—
Non-U.S. agency mortgage-backed securities	1,875		1,944		—		—
Total debt securities	$	34,478	$	35,986	$	737	$	747

The fair value of available-for-sale debt securities with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:

Less Than 12 Months 12 Months or Greater Total
(in millions)
Fair
Value

Gross
Unrealized
Losses

Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
June 30, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations $ —
$ —
$ 655
$ (5 ) $ 655
$ (5 )
State and municipal obligations —
—
366
(1 ) 366
(1 )
Corporate obligations 703
(3 ) 2,352
(9 ) 3,055
(12 )
U.S. agency mortgage-backed securities —
—
1,562
(15 ) 1,562
(15 )
Non-U.S. agency mortgage-backed securities —
—
128
(1 ) 128
(1 )
Total debt securities - available-for-sale $ 703
$ (3 ) $ 5,063
$ (31 ) $ 5,766
$ (34 )
December 31, 2018
Debt securities - available-for-sale:
U.S. government and agency obligations $ 998
$ (7 ) $ 1,425
$ (35 ) $ 2,423
$ (42 )
State and municipal obligations 1,334
(11 ) 2,491
(46 ) 3,825
(57 )
Corporate obligations 8,105
(109 ) 4,239
(109 ) 12,344
(218 )
U.S. agency mortgage-backed securities 1,296
(22 ) 2,388
(84 ) 3,684
(106 )
Non-U.S. agency mortgage-backed securities 622
(7 ) 459
(13 ) 1,081
(20 )
Total debt securities - available-for-sale $ 12,355
$ (156 ) $ 11,002
$ (287 ) $ 23,357
$ (443 )


	Less Than 12 Months						12 Months or Greater						Total
(in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 30, 2020
Debt securities - available-for-sale:
State and municipal obligations	$	284	$	(3)	$	—	$	—	$	284	$	(3)
Corporate obligations	1,908		(58)		375		(10)		2,283		(68)
Non-U.S. agency mortgage-backed securities	249		(12)		42		(2)		291		(14)
Total debt securities - available-for-sale	$	2,441	$	(73)	$	417	$	(12)	$	2,858	$	(85)
December 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations	$	616	$	(4)	$	—	$	—	$	616	$	(4)
State and municipal obligations	440		(5)		—		—		440		(5)
Corporate obligations	1,903		(7)		740		(4)		2,643		(11)
U.S. agency mortgage-backed securities	657		(3)		333		(3)		990		(6)
Non-U.S. agency mortgage-backed securities	406		(3)		—		—		406		(3)
Total debt securities - available-for-sale	$	4,022	$	(22)	$	1,073	$	(7)	$	5,095	$	(29)

The Company’s unrealized losses from debt securities as of June 30, ~~2019~~2020 were generated from ~~5,000~~approximately 3,000 positions out of a total of 31,000 positions. The Company believes that it will collect the timely 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.~~securities that impacted our 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, and the potential economic impacts of COVID-19 on the issuers, noting no significant credit deterioration since purchase. As of June 30, ~~2019,~~2020, the Company did not have the intent to sell any of the available-for-sale debt securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary. The allowance for credit losses on available-for-sale debt securities at June 30, 2020 was not material.

Certain assets and liabilities are measured at fair value in the Condensed Consolidated Financial Statements or have fair values disclosed in the Notes to the Condensed Consolidated Financial Statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” in the ~~2018~~2019 10-K.

The following table presents a summary of fair value measurements by level and carrying values for items measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:

(in millions)
Quoted Prices
in Active
Markets
(Level 1)

Other
Observable
Inputs
(Level 2)

Unobservable
Inputs
(Level 3)

Total
Fair and Carrying
Value
June 30, 2019
Cash and cash equivalents $ 13,562
$ 183
$ —
$ 13,745
Debt securities - available-for-sale:
U.S. government and agency obligations 3,474
285
—
3,759
State and municipal obligations —
6,768
—
6,768
Corporate obligations 65
16,583
202
16,850
U.S. agency mortgage-backed securities —
5,730
—
5,730
Non-U.S. agency mortgage-backed securities —
1,631
—
1,631
Total debt securities - available-for-sale 3,539
30,997
202
34,738
Equity securities 2,035
15
—
2,050
Assets under management 1,011
1,911
21
2,943
Total assets at fair value
$ 20,147
$ 33,106
$ 223
$ 53,476
Percentage of total assets at fair value 38 % 62 % — % 100 %
December 31, 2018
Cash and cash equivalents $ 10,757
$ 109
$ —
$ 10,866
Debt securities - available-for-sale:
U.S. government and agency obligations 3,060
345
—
3,405
State and municipal obligations —
7,121
—
7,121
Corporate obligations 39
14,950
173
15,162
U.S. agency mortgage-backed securities —
4,852
—
4,852
Non-U.S. agency mortgage-backed securities —
1,358
—
1,358
Total debt securities - available-for-sale 3,099
28,626
173
31,898
Equity securities 1,832
13
—
1,845
Assets under management 1,086
1,938
8
3,032
Total assets at fair value $ 16,774
$ 30,686
$ 181
$ 47,641
Percentage of total assets at fair value 35 % 65 % — % 100 %

There were no transfers in or out of Level 3 financial assets or liabilities during the six months ended June 30, ~~2019~~2020 or ~~2018.~~2019.

The following table presents a summary of fair value measurements by level and carrying values for certain financial instruments not measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:

(in millions)
Quoted Prices
in Active
Markets
(Level 1)

Other
Observable
Inputs
(Level 2)

Unobservable
Inputs
(Level 3)

Total
Fair
Value
Total Carrying Value
June 30, 2019
Debt securities - held-to-maturity $ 293
$ 177
$ 275
$ 745
$ 741
Long-term debt and other financing obligations $ —
$ 38,927
$ —
$ 38,927
$ 35,300
December 31, 2018
Debt securities - held-to-maturity $ 260
$ 65
$ 295
$ 620
$ 621
Long-term debt and other financing obligations $ —
$ 37,944
$ —
$ 37,944
$ 36,554


(in millions)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Fair Value		Total Carrying Value
June 30, 2020
Debt securities - held-to-maturity	$	566	$	96	$	85	$	747	$	737
Long-term debt and other financing obligations	$	—	$	53,119	$	—	$	53,119	$	45,284
December 31, 2019
Debt securities - held-to-maturity	$	541	$	181	$	253	$	975	$	972
Long-term debt and other financing obligations	$	—	$	45,078	$	—	$	45,078	$	40,278

Nonfinancial assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded during either the six months ended June 30, ~~2019~~2020 or ~~2018~~.2019.

4. Medical Costs Payable

The following table shows the components of the change in medical costs payable for the six months ended June 30:

(in millions) 2019 2018
Medical costs payable, beginning of period $ 19,891
$ 17,871
Acquisitions 522
261
Reported medical costs:
Current year 78,523
72,570
Prior years (400 ) (280 )
Total reported medical costs 78,123
72,290
Medical payments:
Payments for current year (60,707 ) (55,738 )
Payments for prior years (16,922 ) (15,345 )
Total medical payments (77,629 ) (71,083 )
Medical costs payable, end of period $ 20,907
$ 19,339


(in millions)	2020		2019
Medical costs payable, beginning of period	$	21,690	$	19,891
Acquisitions	41		522
Reported medical costs:
Current year	76,338		78,523
Prior years	(660)		(400)
Total reported medical costs	75,678		78,123
Medical payments:
Payments for current year	(59,482)		(60,707)
Payments for prior years	(18,727)		(16,922)
Total medical payments	(78,209)		(77,629)
Medical costs payable, end of period	$	19,200	$	20,907

For the six months ended June 30, 2020, prior years medical cost reserve development was primarily driven by lower than expected health system utilization. For the six months ended June 30, 2019, ~~and 2018,~~ the prior years medical cost reserve development included no individual factors that were significant. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of ~~$14.5~~$13.7 billion and ~~$13.2~~$13.8 billion at June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

5. ~~Commercial Paper~~Short-Term Borrowings and Long-Term Debt

~~Commercial paper~~Short-term borrowings and senior unsecured long-term debt consisted of the following:

The Company’s long-term debt obligations also included ~~$1.2~~$1.1 billion and ~~$1.3~~$1.2 billion of other financing obligations, of which ~~$329~~$328 million and ~~$229~~$322 million were classified as current as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~In July 2019, the Company issued $5.5 billion of senior unsecured notes consisting of the following:~~

(in millions, except percentages) Par Value
2.375% notes due August 2024 $ 750
2.875% notes due August 2029 1,000
3.500% notes due August 2039 1,250
3.700% notes due August 2049 1,250
3.875% notes due August 2059 1,250

Commercial Paper and Bank Credit Facilities

Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers. As of June 30, ~~2019,~~2020, the Company’s outstanding commercial paper had a weighted average annual interest rate of ~~2.6%~~0.3%.

The Company has ~~$3.5~~$4.4 billion five-year, ~~$3.5~~$4.4 billion three-year and ~~$3.0~~$3.8 billion 364-day revolving bank credit facilities with 2625 banks, which mature in December ~~2023,~~2024, December ~~2021~~2022 and December ~~2019,~~2020, respectively. ~~The Company additionally has a $2.5 billion 364-day revolving bank credit facility with 6 banks that matures in May 2020.~~ These facilities provide liquidity support for the Company’s commercial paper program and are available for general corporate purposes. As of June 30, ~~2019,~~2020, 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 the London Interbank Offered Rate (LIBOR) 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 June 30, ~~2019,~~2020, annual interest rates would have ranged from ~~2.9%~~0.8% to ~~3.1%~~1.1%.

The Company’s bank credit facilities contain various covenants, including covenants requiring the Company to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than 60%. The Company was in compliance with its debt covenants as of June 30, ~~2019.~~2020.

In June ~~2019,~~2020, the Company’s Board of Directors increased the Company’s ~~annual~~quarterly cash dividend ~~rate~~ to shareholders to ~~$4.32~~an annual rate of $5.00 compared to ~~$3.60~~$4.32 per share, which the Company had paid since June ~~2018.~~2019. 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 ~~2019~~2020 dividend payments:

Payment Date Amount per Share Total Amount Paid
(in millions)
March 19 $ 0.90
$ 860
June 25 1.08
1,024


Payment Date	Amount per Share	Total Amount Paid
		(in millions)
March 24	$1.08	$	1,024
June 30	$1.25	1,188

7. Commitments and Contingencies

Operating lease costs were $247 million and $485 million for the three and six months ended June 30, 2019, respectively, and included immaterial variable and short-term lease costs. Cash payments made on the Company’s operating lease liabilities were $363 million for the six months ended June 30, 2019, which were classified within operating activities in the Condensed Consolidated Statements of Cash Flows. As of June 30, 2019, the Company’s weighted-average remaining lease term and weighted-average discount rate for its operating leases were 8.8 years and 4.0%, respectively.

~~As of June 30, 2019, future minimum annual lease payments under all non-cancelable operating leases were as follows:~~

(in millions) Future Operating Lease Payments
2019 $ 396
2020 760
2021 666
2022 562
2023 463
Thereafter 1,977
Total future minimum lease payments 4,824
Less imputed interest (806 )
Total $ 4,018

Because of the nature of its businesses, 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 that a loss may be incurred.

Government Investigations, Audits and Reviews

The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services (CMS), state insurance and health and welfare departments, ~~the Brazilian national regulatory agency for private health insurance and plans (the Agência Nacional de Saúde Suplementar),~~ 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, the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the ~~Brazilian federal revenue service (the Secretaria da Receita Federal), the~~ U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Defense Contract Audit Agency and other governmental authorities. Similarly, our international businesses are also subject to investigations, audits and reviews by applicable foreign governments, including South American and other non-U.S.

governmental authorities. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS has selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans.

On February 14, 2017, the Department of Justice (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 that 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, 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 that may result from this matter given its procedural status.

8. Segment Financial Information

The Company’s ~~four~~4 reportable segments are UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. For more information on the Company’s segments see Part I, Item I, “Business” and Note 1314 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” in the ~~2018~~2019 10-K. Total assets at OptumHealth increased to $38.8 billion as of June 30, 2019 compared to $29.8 billion as of December 31, 2018, primarily due to goodwill and other intangibles assets from a second quarter 2019 acquisition and the recognition of ROU assets from ASU 2016-02.

The following tables present reportable segment financial information:


			Optum
(in millions)	UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations		Optum		Corporate and Eliminations		Consolidated
Three Months Ended June 30, 2020
Revenues - unaffiliated customers:
Premiums	$	47,039	$	2,355	$	—	$	—	$	—	$	2,355	$	—	$	49,394
Products	—		7		27		8,213		—		8,247		—		8,247
Services	1,895		1,225		764		272		—		2,261		—		4,156
Total revenues - unaffiliated customers	48,934		3,587		791		8,485		—		12,863		—		61,797
Total revenues - affiliated customers	—		5,423		1,823		12,865		(447)		19,664		(19,664)		—
Investment and other income	173		129		18		21		—		168		—		341
Total revenues	$	49,107	$	9,139	$	2,632	$	21,371	$	(447)	$	32,695	$	(19,664)	$	62,138
Earnings from operations	$	7,007	$	841	$	561	$	832	$	—	$	2,234	$	—	$	9,241
Interest expense	—		—		—		—		—		—		(430)		(430)
Earnings before income taxes	$	7,007	$	841	$	561	$	832	$	—	$	2,234	$	(430)	$	8,811
Three Months Ended June 30, 2019
Revenues - unaffiliated customers:
Premiums	$	46,030	$	1,134	$	—	$	—	$	—	$	1,134	$	—	$	47,164
Products	—		9		22		8,322		—		8,353		—		8,353
Services	2,188		1,370		790		148		—		2,308		—		4,496
Total revenues - unaffiliated customers	48,218		2,513		812		8,470		—		11,795		—		60,013
Total revenues - affiliated customers	—		4,449		1,521		10,439		(381)		16,028		(16,028)		—
Investment and other income	376		186		6		14		—		206		—		582
Total revenues	$	48,594	$	7,148	$	2,339	$	18,923	$	(381)	$	28,029	$	(16,028)	$	60,595
Earnings from operations	$	2,642	$	688	$	525	$	889	$	—	$	2,102	$	—	$	4,744
Interest expense	—		—		—		—		—		—		(418)		(418)
Earnings before income taxes	$	2,642	$	688	$	525	$	889	$	—	$	2,102	$	(418)	$	4,326

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			Optum																				Optum
(in millions)	UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations			Optum		Corporate and Eliminations			Consolidated			(in millions)	UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations		Optum		Corporate and Eliminations		Consolidated
Three Months Ended June 30, 2019
Six Months Ended June 30, 2020																				Six Months Ended June 30, 2020
Revenues - unaffiliated customers:																				Revenues - unaffiliated customers:
Premiums	$	46,030	$	1,134	$	—	$	—	$	—		$	1,134	$	—		$	47,164		Premiums	$	95,632	$	4,402	$	—	$	—	$	—	$	4,402	$	—	$	100,034
Products	—		9		22		8,322		—			8,353		—			8,353			Products	—		16		56		16,606		—		16,678		—		16,678
Services	2,188		1,370		790		148		—			2,308		—			4,496			Services	4,173		2,773		1,655		540		—		4,968		—		9,141
Total revenues - unaffiliated customers	48,218		2,513		812		8,470		—			11,795		—			60,013			Total revenues - unaffiliated customers	99,805		7,191		1,711		17,146		—		26,048		—		125,853
Total revenues - affiliated customers	—		4,449		1,521		10,439		(381		)	16,028		(16,028		)	—			Total revenues - affiliated customers	—		10,875		3,385		25,741		(851)		39,150		(39,150)		—
Investment and other income	376		186		6		14		—			206		—			582			Investment and other income	370		265		30		41		—		336		—		706
Total revenues	$	48,594	$	7,148	$	2,339	$	18,923	$	(381	)	$	28,029	$	(16,028	)	$	60,595		Total revenues	$	100,175	$	18,331	$	5,126	$	42,928	$	(851)	$	65,534	$	(39,150)	$	126,559
Earnings from operations	$	2,642	$	688	$	525	$	889	$	—		$	2,102	$	—		$	4,744		Earnings from operations	$	9,895	$	1,553	$	1,097	$	1,692	$	—	$	4,342	$	—	$	14,237
Interest expense	—		—		—		—		—			—		(418		)	(418		)	Interest expense	—		—		—		—		—		—		(867)		(867)
Earnings before income taxes	$	2,642	$	688	$	525	$	889	$	—		$	2,102	$	(418	)	$	4,326		Earnings before income taxes	$	9,895	$	1,553	$	1,097	$	1,692	$	—	$	4,342	$	(867)	$	13,370
Three Months Ended June 30, 2018
Six Months Ended June 30, 2019																				Six Months Ended June 30, 2019
Revenues - unaffiliated customers:																				Revenues - unaffiliated customers:
Premiums	$	43,496	$	962	$	—	$	—	$	—		$	962	$	—		$	44,458		Premiums	$	92,531	$	2,146	$	—	$	—	$	—	$	2,146	$	—	$	94,677
Products	—		12		20		6,972		—			7,004		—			7,004			Products	—		17		45		16,363		—		16,425		—		16,425
Services	2,142		1,203		776		148		—			2,127		—			4,269			Services	4,329		2,644		1,544		297		—		4,485		—		8,814
Total revenues - unaffiliated customers	45,638		2,177		796		7,120		—			10,093		—			55,731			Total revenues - unaffiliated customers	96,860		4,807		1,589		16,660		—		23,056		—		119,916
Total revenues - affiliated customers	—		3,640		1,380		9,807		(341		)	14,486		(14,486		)	—			Total revenues - affiliated customers	—		8,736		2,928		20,052		(740)		30,976		(30,976)		—
Investment and other income	208		124		9		14		—			147		—			355			Investment and other income	630		318		11		28		—		357		—		987
Total revenues	$	45,846	$	5,941	$	2,185	$	16,941	$	(341	)	$	24,726	$	(14,486	)	$	56,086		Total revenues	$	97,490	$	13,861	$	4,528	$	36,740	$	(740)	$	54,389	$	(30,976)	$	120,903
Earnings from operations	$	2,357	$	570	$	453	$	824	$	—		$	1,847	$	—		$	4,204		Earnings from operations	$	5,596	$	1,314	$	957	$	1,709	$	—	$	3,980	$	—	$	9,576
Interest expense	—		—		—		—		—			—		(344		)	(344		)	Interest expense	—		—		—		—		—		—		(818)		(818)
Earnings before income taxes	$	2,357	$	570	$	453	$	824	$	—		$	1,847	$	(344	)	$	3,860		Earnings before income taxes	$	5,596	$	1,314	$	957	$	1,709	$	—	$	3,980	$	(818)	$	8,758

Optum
(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Optum Eliminations Optum Corporate and
Eliminations Consolidated
Six Months Ended June 30, 2019
Revenues - unaffiliated customers:
Premiums $ 92,531
$ 2,146
$ —
$ —
$ —
$ 2,146
$ —
$ 94,677
Products —
17
45
16,363
—
16,425
—
16,425
Services 4,329
2,644
1,544
297
—
4,485
—
8,814
Total revenues - unaffiliated customers 96,860
4,807
1,589
16,660
—
23,056
—
119,916
Total revenues - affiliated customers —
8,736
2,928
20,052
(740 ) 30,976
(30,976 ) —
Investment and other income 630
318
11
28
—
357
—
987
Total revenues $ 97,490
$ 13,861
$ 4,528
$ 36,740
$ (740 ) $ 54,389
$ (30,976 ) $ 120,903
Earnings from operations $ 5,596
$ 1,314
$ 957
$ 1,709
$ —
$ 3,980
$ —
$ 9,576
Interest expense —
—
—
—
—
—
(818 ) (818 )
Earnings before income taxes $ 5,596
$ 1,314
$ 957
$ 1,709
$ —
$ 3,980
$ (818 ) $ 8,758
Six Months Ended June 30, 2018
Revenues - unaffiliated customers:
Premiums $ 86,733
$ 1,809
$ —
$ —
$ —
$ 1,809
$ —
$ 88,542
Products —
24
43
13,639
—
13,706
—
13,706
Services 4,181
2,391
1,516
285
—
4,192
—
8,373
Total revenues - unaffiliated customers 90,914
4,224
1,559
13,924
—
19,707
—
110,621
Total revenues - affiliated customers —
7,246
2,684
19,102
(674 ) 28,358
(28,358 ) —
Investment and other income 391
230
11
21
—
262
—
653
Total revenues $ 91,305
$ 11,700
$ 4,254
$ 33,047
$ (674 ) $ 48,327
$ (28,358 ) $ 111,274
Earnings from operations $ 4,757
$ 1,058
$ 848
$ 1,594
$ —
$ 3,500
$ —
$ 8,257
Interest expense —
—
—
—
—
—
(673 ) (673 )
Earnings before income taxes $ 4,757
$ 1,058
$ 848
$ 1,594
$ —
$ 3,500
$ (673 ) $ 7,584

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~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

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 ~~2018~~2019 10-K, including the Consolidated Financial Statements and Notes in Part II, Item 8, “Financial Statements and Supplementary Data” in that report. Unless the context indicates otherwise, references to the terms “UnitedHealth Group,” “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 ~~2018~~2019 10-K and in the discussion below.

EXECUTIVE OVERVIEW

General

UnitedHealth Group is a diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone. Through our diversified family of businesses, we leverage core competencies in data and health ~~information;~~information, advanced ~~technology;~~technology, and clinical ~~expertise.~~expertise, focused on improving health outcomes, lowering health care costs and creating a better experience for patients, their caregivers and physicians. These core competencies are deployed within our two distinct,

but strategically aligned, business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum.

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 ~~2018~~2019 10-K and additional information on our segments can be found in this Item 2 and in Note 8 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

COVID-19 Trends and Uncertainties

The COVID-19 pandemic continues to evolve and the ultimate impact on our business, results of operations, financial condition and cash flows remains uncertain and difficult to predict. During the quarter, the global health system experienced unprecedented levels of care deferral, which meaningfully impacted all of our businesses. As the pandemic advanced, access to and demand for care was most constrained from mid-March through April, began to recover in May and approached more typical levels by the end of the second quarter. The temporary deferral of care may cause care patterns to moderately exceed normal baselines in the second half of this year as utilization of health system capacity continues to increase. Health system capacity may be subject to possible increased volatility due to the pandemic from time to time. Specific trends and uncertainties related to our two business platforms are as follows:

UnitedHealthcare. We have expanded benefit coverage in areas such as COVID-19 testing and treatment, telemedicine, and pharmacy benefits; provided customers assistance in the form of co-pay waivers and premium forgiveness; offered additional enrollment opportunities to those who previously declined employer-sponsored offerings; extended certain premium payment terms for customers experiencing financial hardship; simplified administrative practices; and accelerated payments to care providers, all with the aim of assisting our customers, providers and members in addressing the COVID-19 crisis. Temporary care deferrals significantly impacted UnitedHealthcare’s results of operations for the three-months ended June 30, 2020, contributing to significantly lower medical costs and higher operating earnings than previous periods. The impact of care disruption has been, and will continue to be offset by factors such as COVID-19 related treatment and testing, potential future vaccines and the financial assistance we continue to provide our customers. As health system capacity continues to approach normal levels, consumer demand for care, potentially even higher acuity care, is expected to result in increased future medical costs. Disrupted care patterns, as a result of the pandemic, may temporarily affect the ability to obtain complete member health status information, impacting future revenue in businesses that utilize risk adjustment methodologies. Depending on the future pacing and intensity of the virus, as well as the duration of policies and initiatives to address COVID-19, the ultimate impact is uncertain.

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Optum. The temporary deferral of care also meaningfully impacted the Optum businesses for the three-months ended June 30, 2020. For example, our fee-for-service care delivery business, such as traditional procedure work at our ambulatory surgery centers, was negatively impacted, while our risk-based care delivery business performance reflected lower demand for care. Our OptumInsight and OptumRx volume-based businesses were negatively impacted by the lower level of care encounters which took place, contributing to lower managed services and prescription volume. As the health system continues to return nearer to normal seasonally adjusted levels of care, we have seen business activity approach more normal levels. COVID-19 will also continue to influence customer and consumer behavior, both during and after the pandemic, which could impact how care is delivered and the manner in which consumers wish to receive their prescription drugs or infusion services. The impact of COVID-19 on our care provider and payer clients could impact the volume and types of services that Optum provides, as well as the pacing of potential new business opportunities. As a result of the dynamic situation and broad-reaching impact to the health system, the ultimate impact of COVID-19 is uncertain.

Business Trends

Our businesses participate in the United States, South American and certain other international health markets. ~~In the United States, health care spending has grown consistently for many years and comprises approximately 18% of gross domestic product.~~ Overall spending on health care is impacted by inflation; utilization; medical technology and pharmaceutical advancement; regulatory requirements; demographic trends in the ~~population~~population; and national interest in health and ~~well-being, mitigated by our continued efforts to control health care costs.~~well-being. The rate of market growth may be affected by a variety of factors, including macro-economic conditions, such as the economic impact of COVID-19, and regulatory changes, which could impact our results of ~~operations.~~operations, including our continued efforts to control health care costs.

Pricing Trends. To price our health care benefit products, we start with our view of expected future costs, including any ~~impact~~potential impacts from COVID-19 and the Health Insurance ~~Industry~~ Tax. 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 (MLR) thresholds. We will continue seeking to balance growth and profitability across all of these dimensions.

The commercial risk market remains highly competitive in both the small group and large group segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs amid reform changes. Pricing for contracts that cover some portion of calendar year ~~2020~~2021 will reflect the ~~return~~permanent repeal of the Health Insurance ~~Industry Tax after a moratorium in 2019.~~Tax.

Government programs in the public 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, health system utilization and prescription drug costs. We endeavor to mitigate those increases by engaging physicians and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve high quality, affordable care. The uncertain impact of COVID-19 may impact our ability to estimate medical costs payable, which could result in increased variability to medical cost reserve development in future periods. As a result of higher than expected care deferrals, favorable reserve development of $1.4 billion occurred in the second quarter.

Regulatory Trends and Uncertainties

Following is a summary of management’s view of regulatory trends and uncertainties. For additional information regarding regulatory trends and uncertainties, see Part I, Item 1 “Business - Government Regulation,” Part 1, Item 1A, “Risk ~~Factors” and~~Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2018 10-K.~~2019 10-K and “Risk Factors” in Part II, Item 1A of this report.

Medicare Advantage Rates. Final ~~2020~~2021 Medicare Advantage rates resulted in an increase in industry base rates of approximately ~~2.5%~~1.7%, short of the industry forward medical cost trend, ~~including the return of the Health Insurance Industry Tax,~~ creating continued pressure in the Medicare Advantage program.

~~Health Insurance Industry~~Affordable Care Act (ACA) Tax. ~~There is~~After a ~~one year~~ moratorium onin 2019, the industry-wide amount of the Health Insurance ~~Industry~~ Tax ~~in 2019. This moratorium~~for 2020, which is primarily borne by customers, is $15.5 billion, with our portion being approximately $3.0 billion. The return of the tax impacts year-over-year comparability of our financial statements, including revenues, operating costs, medical care ratio (MCR), operating cost ratio, effective tax rate and cash flows from operations. The ACA Tax was permanently repealed by Congress, effective January 1, 2021.

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SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select second quarter ~~2019~~2020 year-over-year operating comparisons to second quarter ~~2018.~~2019, which were significantly impacted by the effects of COVID-19 on the health system.

•Consolidated revenues grew 8%3%, UnitedHealthcare revenues grew 6%1% and Optum revenues grew ~~13%~~17%.

•UnitedHealthcare served ~~705,000 additional~~425,000 fewer people domestically primarily asdue to increased unemployment and expected attrition in commercial group benefits and the proactive withdrawal from a ~~result of acquisitions and growth in services to self-funded employers and seniors.~~Medicaid market.

~~Earnings~~•Consolidated earnings from operations increased, ~~13%,~~primarily due to temporary care deferrals caused by COVID-19, including increases ~~of 12%~~ at UnitedHealthcare and ~~14% at~~ Optum.

•Diluted earnings per common share increased ~~15%.~~to $6.91.

•Cash flows from operations for the six months ended June 30, ~~2019~~2020 were ~~$9.1~~$12.9 billion.


•	~~Return on equity was~~ ~~25.1%~~Return on equity was 44.0%.

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 June 30,												Increase/(Decrease)									Six Months Ended June 30,							Increase/(Decrease)
				2020				2019				2020 vs. 2019									2020				2019			2020 vs. 2019
Revenues:
Premiums	$	49,394			$	47,164			$	2,230			5	%	$	100,034		$	94,677			$	5,357			6	%
Products	8,247				8,353				(106)				(1)		16,678			16,425				253				2
Services	4,156				4,496				(340)				(8)		9,141			8,814				327				4
Investment and other income	341				582				(241)				(41)		706			987				(281)				(28)
Total revenues	62,138				60,595				1,543				3		126,559			120,903				5,656				5
Operating costs:
Medical costs	34,678				39,184				(4,506)				(11)		75,678			78,123				(2,445)				(3)
Operating costs	10,001				8,415				1,586				19		20,016			16,932				3,084				18
Cost of products sold	7,501				7,598				(97)				(1)		15,188			14,979				209				1
Depreciation and amortization	717				654				63				10		1,440			1,293				147				11
Total operating costs	52,897				55,851				(2,954)				(5)		112,322			111,327				995				1
Earnings from operations	9,241				4,744				4,497				95		14,237			9,576				4,661				49
Interest expense	(430)				(418)				(12)				3		(867)			(818)				(49)				6
Earnings before income taxes	8,811				4,326				4,485				104		13,370			8,758				4,612				53
Provision for income taxes	(2,115)				(941)				(1,174)				125		(3,209)			(1,816)				(1,393)				77
Net earnings	6,696				3,385				3,311				98		10,161			6,942				3,219				46
Earnings attributable to noncontrolling interests	(59)				(92)				33				(36)		(142)			(182)				40				(22)
Net earnings attributable to UnitedHealth Group common shareholders	$	6,637			$	3,293			$	3,344			102	%	$	10,019		$	6,760			$	3,259			48	%
Diluted earnings per share attributable to UnitedHealth Group common shareholders	$	6.91			$	3.42			$	3.49			102	%	$	10.43		$	6.97			$	3.46			50	%
Medical care ratio (a)	70.2		%		83.1		%		(12.9)		%				75.7		%	82.5		%		(6.8)		%
Operating cost ratio	16.1				13.9				2.2						15.8			14.0				1.8
Operating margin	14.9				7.8				7.1						11.2			7.9				3.3
Tax rate	24.0				21.8				2.2						24.0			20.7				3.3
Net earnings margin (b)	10.7				5.4				5.3						7.9			5.6				2.3
Return on equity (c)	44.0		%		25.1		%		18.9		%				33.7		%	25.9		%		7.8		%

(a)

(in millions, except percentages and per share data) Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
Revenues:
Premiums $ 47,164
$ 44,458
$ 2,706
6 % $ 94,677
$ 88,542
$ 6,135
7 %
Products 8,353
7,004
1,349
19
16,425
13,706
2,719
20
Services 4,496
4,269
227
5
8,814
8,373
441
5
Investment and other income 582
355
227
64
987
653
334
51
Total revenues 60,595
56,086
4,509
8
120,903
111,274
9,629
9
Operating costs:
Medical costs 39,184
36,427
2,757
8
78,123
72,290
5,833
8
Operating costs 8,415
8,386
29
—
16,932
16,892
40
—
Cost of products sold 7,598
6,471
1,127
17
14,979
12,655
2,324
18
Depreciation and amortization 654
598
56
9
1,293
1,180
113
10
Total operating costs 55,851
51,882
3,969
8
111,327
103,017
8,310
8
Earnings from operations 4,744
4,204
540
13
9,576
8,257
1,319
16
Interest expense (418 ) (344 ) (74 ) 22
(818 ) (673 ) (145 ) 22
Earnings before income taxes 4,326
3,860
466
12
8,758
7,584
1,174
15
Provision for income taxes (941 ) (850 ) (91 ) 11
(1,816 ) (1,650 ) (166 ) 10
Net earnings 3,385
3,010
375
12
6,942
5,934
1,008
17
Earnings attributable to noncontrolling interests (92 ) (88 ) (4 ) 5
(182 ) (176 ) (6 ) 3
Net earnings attributable to UnitedHealth Group common shareholders $ 3,293
$ 2,922
$ 371
13 % $ 6,760
$ 5,758
$ 1,002
17 %
Diluted earnings per share attributable to UnitedHealth Group common shareholders $ 3.42
$ 2.98
$ 0.44
15 % $ 6.97
$ 5.85
$ 1.12
19 %
Medical care ratio (a) 83.1 % 81.9 % 1.2 % 82.5 % 81.6 % 0.9 %
Operating cost ratio 13.9
15.0
(1.1 ) 14.0
15.2
(1.2 )
Operating margin 7.8
7.5
0.3
7.9
7.4
0.5

Tax rate 21.8
22.0
(0.2 ) 20.7
21.8
(1.1 )
Net earnings margin (b) 5.4
5.2
0.2
5.6
5.2
0.4

Return on equity (c) 25.1 % 24.4 % 0.7 % 25.9 % 24.1 % 1.8 %

Medical care ratio is calculated as medical costs divided by premium revenue.

(b)Net earnings margin attributable to UnitedHealth Group shareholders.


~~(a)~~	~~Medical care ratio 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.

~~2019~~(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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2020 RESULTS OF OPERATIONS COMPARED TO ~~2018~~2019 RESULTS OF OPERATIONS

Consolidated Financial Results

Revenue

The increases in revenue were primarily driven by the increase in the number of individuals served through ~~various~~ Medicare ~~products;~~Advantage; pricing trends; and acquisition and organic growth across the Optum business, primarily due to expansion in pharmacy care services and care ~~delivery;~~delivery. The increases were partially offset by ~~the moratorium~~decreased individuals served through our Medicaid, commercial and Global benefits businesses; decreases in our fee-for-service care delivery and other volume-based businesses, primarily as a result of the ~~Health Insurance Industry Tax in 2019.~~impacts of COVID-19 on the economy and health system; and certain customer assistance programs.

Medical Costs and MCR

Medical costs ~~increased~~decreased as a result of the temporary deferral of care due to COVID-19 and decreased people served in Medicaid, commercial and Global, partially offset by growth in people served through Medicare ~~products~~Advantage and medical cost ~~trends, partially offset by increased prior year favorable medical cost development.~~trends. The MCR ~~increased~~decreased primarily due to the temporary deferral of care and the revenue effects of the return of the Health Insurance ~~Industry Tax moratorium.~~Tax.

Operating Cost Ratio

The operating cost ratio ~~decreased~~increased primarily due to the impact of the return of the Health Insurance ~~Industry~~ Tax ~~moratorium~~ and ~~effective operating cost management.~~

the Company’s COVID-19 response efforts.

Income Tax Rate

Our effective tax rate ~~decreased~~increased primarily due to the impact of the ~~moratorium~~return of the nondeductible Health Insurance ~~Industry~~ Tax.

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Reportable Segments

See Note 8 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 individuals served by UnitedHealthcare by major market segment and funding arrangement, people served by OptumHealth and adjusted scripts for OptumRx. 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, customer penetration and pricing trends when comparing the metrics to revenue by segment.

The following table presents a summary of the reportable segment financial information:


	Three Months Ended June 30,						Increase/(Decrease)					Six Months Ended June 30,						Increase/(Decrease)						Three Months Ended June 30,									Increase/(Decrease)								Six Months Ended June 30,					Increase/(Decrease)
(in millions, except percentages)	2019			2018			2019 vs. 2018					2019			2018			2019 vs. 2018					(in millions, except percentages)	2020			2019			2020 vs. 2019								2020			2019			2020 vs. 2019
Revenues																							Revenues
UnitedHealthcare	$	48,594		$	45,846		$	2,748		6	%	$	97,490		$	91,305		$	6,185		7	%	UnitedHealthcare	$	49,107		$	48,594		$	513		1	%	$	100,175		$	97,490		$	2,685		3	%
OptumHealth	7,148			5,941			1,207			20		13,861			11,700			2,161			18		OptumHealth	9,139			7,148			1,991			28		18,331			13,861			4,470			32
OptumInsight	2,339			2,185			154			7		4,528			4,254			274			6		OptumInsight	2,632			2,339			293			13		5,126			4,528			598			13
OptumRx	18,923			16,941			1,982			12		36,740			33,047			3,693			11		OptumRx	21,371			18,923			2,448			13		42,928			36,740			6,188			17
Optum eliminations	(381		)	(341		)	(40		)	12		(740		)	(674		)	(66		)	10		Optum eliminations	(447)			(381)			(66)			17		(851)			(740)			(111)			15
Optum	28,029			24,726			3,303			13		54,389			48,327			6,062			13		Optum	32,695			28,029			4,666			17		65,534			54,389			11,145			20
Eliminations	(16,028		)	(14,486		)	(1,542		)	11		(30,976		)	(28,358		)	(2,618		)	9		Eliminations	(19,664)			(16,028)			(3,636)			23		(39,150)			(30,976)			(8,174)			26
Consolidated revenues	$	60,595		$	56,086		$	4,509		8	%	$	120,903		$	111,274		$	9,629		9	%	Consolidated revenues	$	62,138		$	60,595		$	1,543		3	%	$	126,559		$	120,903		$	5,656		5	%
Earnings from operations																							Earnings from operations
UnitedHealthcare	$	2,642		$	2,357		$	285		12	%	$	5,596		$	4,757		$	839		18	%	UnitedHealthcare	$	7,007		$	2,642		$	4,365		165	%	$	9,895		$	5,596		$	4,299		77	%
OptumHealth	688			570			118			21		1,314			1,058			256			24		OptumHealth	841			688			153			22		1,553			1,314			239			18
OptumInsight	525			453			72			16		957			848			109			13		OptumInsight	561			525			36			7		1,097			957			140			15
OptumRx	889			824			65			8		1,709			1,594			115			7		OptumRx	832			889			(57)			(6)		1,692			1,709			(17)			(1)
Optum	2,102			1,847			255			14		3,980			3,500			480			14		Optum	2,234			2,102			132			6		4,342			3,980			362			9
Consolidated earnings from operations	$	4,744		$	4,204		$	540		13	%	$	9,576		$	8,257		$	1,319		16	%	Consolidated earnings from operations	$	9,241		$	4,744		$	4,497		95	%	$	14,237		$	9,576		$	4,661		49	%
Operating margin																							Operating margin
UnitedHealthcare	5.4		%	5.1		%	0.3		%			5.7		%	5.2		%	0.5		%			UnitedHealthcare	14.3		%	5.4		%	8.9		%			9.9		%	5.7		%	4.2		%
OptumHealth	9.6			9.6			—					9.5			9.0			0.5					OptumHealth	9.2			9.6			(0.4)					8.5			9.5			(1.0)
OptumInsight	22.4			20.7			1.7					21.1			19.9			1.2					OptumInsight	21.3			22.4			(1.1)					21.4			21.1			0.3
OptumRx	4.7			4.9			(0.2		)			4.7			4.8			(0.1		)			OptumRx	3.9			4.7			(0.8)					3.9			4.7			(0.8)
Optum	7.5			7.5			—					7.3			7.2			0.1					Optum	6.8			7.5			(0.7)					6.6			7.3			(0.7)
Consolidated operating margin	7.8		%	7.5		%	0.3		%			7.9		%	7.4		%	0.5		%			Consolidated operating margin	14.9		%	7.8		%	7.1		%			11.2		%	7.9		%	3.3		%

UnitedHealthcare

The following table summarizes UnitedHealthcare revenues by business:


	Three Months Ended June 30,						Increase/(Decrease)						Six Months Ended June 30,				Increase/(Decrease)
(in millions, except percentages)	2020		2019		2020 vs. 2019						2020		2019		2020 vs. 2019
UnitedHealthcare Employer & Individual	$	12,963	$	14,032	$	(1,069)	(8)	%	$	27,243	$	28,116	$	(873)	(3)	%
UnitedHealthcare Medicare & Retirement	22,855		20,855		2,000		10		46,007		41,951		4,056		10
UnitedHealthcare Community & State	11,523		11,186		337		3		22,976		22,368		608		3
UnitedHealthcare Global	1,766		2,521		(755)		(30)		3,949		5,055		(1,106)		(22)
Total UnitedHealthcare revenues	$	49,107	$	48,594	$	513	1	%	$	100,175	$	97,490	$	2,685	3	%

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Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
(in millions, except percentages) 2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
UnitedHealthcare Employer & Individual $ 14,032
$ 13,708
$ 324
2 % $ 28,116
$ 27,122
$ 994
4 %
UnitedHealthcare Medicare & Retirement 20,855
18,859
1,996
11
41,951
37,784
4,167
11
UnitedHealthcare Community & State 11,186
10,746
440
4
22,368
21,417
951
4
UnitedHealthcare Global 2,521
2,533
(12 ) —
5,055
4,982
73
1
Total UnitedHealthcare revenues $ 48,594
$ 45,846
$ 2,748
6 % $ 97,490
$ 91,305
$ 6,185
7 %

The following table summarizes the number of individuals served by our UnitedHealthcare businesses, by major market segment and funding arrangement:


	June 30,		Increase/(Decrease)					June 30,			Increase/(Decrease)
(in thousands, except percentages)	2019	2018	2019 vs. 2018				(in thousands, except percentages)	2020	2019	2020 vs. 2019
Commercial:							Commercial:
Risk-based	8,325	8,385	(60	)	(1	)%	Risk-based	8,065	8,325	(260)	(3)	%
Fee-based	19,090	18,415	675		4		Fee-based	18,705	19,090	(385)	(2)
Total commercial	27,415	26,800	615		2		Total commercial	26,770	27,415	(645)	(2)
Medicare Advantage	5,190	4,790	400		8		Medicare Advantage	5,605	5,190	415	8
Medicaid	6,360	6,710	(350	)	(5	)	Medicaid	6,210	6,360	(150)	(2)
Medicare Supplement (Standardized)	4,495	4,505	(10	)	—		Medicare Supplement (Standardized)	4,450	4,495	(45)	(1)
Total public and senior	16,045	16,005	40		—		Total public and senior	16,265	16,045	220	1
Total UnitedHealthcare - domestic medical	43,460	42,805	655		2		Total UnitedHealthcare - domestic medical	43,035	43,460	(425)	(1)
International	6,070	6,020	50		1
Global							Global	5,365	6,070	(705)	(12)
Total UnitedHealthcare - medical	49,530	48,825	705		1	%	Total UnitedHealthcare - medical	48,400	49,530	(1,130)	(2)	%
Supplemental Data:							Supplemental Data:
Medicare Part D stand-alone	4,430	4,730	(300	)	(6	)%	Medicare Part D stand-alone	4,120	4,430	(310)	(7)	%

Fee-based and risk-based commercial ~~group~~ business ~~increased~~decreased primarily due to ~~an acquisition.~~increased unemployment and expected attrition. Medicare Advantage increased due to growth in people served through individual ~~and employer-sponsored group~~ Medicare Advantage plans. The decrease in people served through Medicaid was primarily driven by the proactive withdrawal from a market as well as by states ~~adding new carriers to existing programs, reduced enrollment from state efforts to manage~~managing eligibility, ~~status and the sale of our New Mexico Medicaid plan in 2018,~~ partially offset by increases in Dual Special Needs ~~Plans.~~Plans and states easing redetermination requirements. The decrease in people served by UnitedHealthcare Global is a result of our continued affordability efforts, underwriting discipline and increased unemployment.

UnitedHealthcare’s revenue ~~and earnings from operations~~ increased due to growth in the number of individuals served through ~~several~~ Medicare ~~products,~~Advantage, a greater mix of people with higher ~~revenue membership mix~~acuity needs and ~~rate increases for underlying medical cost trends. Revenue increases were~~the return of the Health Insurance Tax, partially offset by a decrease in the number of individuals served through the commercial, Medicaid and Global businesses and foreign currency impacts. Earnings from operations increased due to the deferral of care caused by COVID-19 on the health system and the factors impacting revenue, partially offset by the ~~moratorium on~~return of the Health Insurance ~~Industry~~ Tax, ~~in 2019. Earnings from operations were also favorably impacted by operating cost management.~~COVID-19 treatment and testing costs and customer assistance programs.

Optum

Total revenues ~~and earnings from operations~~ increased as each segment reported revenue growth. Earnings from operations increased ~~revenues~~due to growth at OptumHealth and OptumInsight, partially offset by decreased earnings from operations ~~as a result of productivity and overall cost management initiatives in addition to the factors discussed below.~~at OptumRx.

The results by segment were as follows:

OptumHealth

Revenue ~~increased~~and earnings at OptumHealth increased primarily due to ~~organic growth and~~ acquisitions ~~in care delivery, increased care services~~ and organic growth in ~~behavioral health. Increased operating earnings were primarily~~risk-based care delivery, partially offset by reduced care volumes in fee-for-service arrangements as a result of COVID-19. Earnings from operations also increased at our risk-based business due to the deferral of care ~~delivery and care services.~~caused by COVID-19. OptumHealth served approximately 97 million people as of June 30, 2020 compared to 95 million people as of June 30, ~~2019 compared to 92 million people as of June 30, 2018.~~2019.

OptumInsight

Revenue and earnings from operations at OptumInsight increased primarily due to organic growth and acquisitions in managed ~~services.~~services, partially offset by decreased activity levels in volume-based services due to the impact of COVID-19 on payer and care provider clients.

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OptumRx

Revenue ~~and earnings from operations~~ at OptumRx and the corresponding eliminations increased ~~primarily~~ due to ~~acquisitions~~the inclusion of retail pharmacy co-payments. See Note 1 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for further detail. Revenue at OptumRx also increased due to organic and ~~organic~~acquisition growth in specialty pharmacy ~~home delivery services~~ and ~~overall prescription growth.~~new client wins, partially offset by an expected large client transition and lower script volumes driven by COVID-19 related care deferral, primarily related to first fill script volumes. Earnings from operations decreased primarily due to the impact of lower script volumes, partially offset by improved supply chain management. OptumRx fulfilled ~~343~~316 million and ~~332~~343 million adjusted scripts in the second quarters of 2020 and 2019, respectively. The decrease was due to the expected large client transition and ~~2018, respectively.~~lower script volumes due to the impacts of COVID-19, partially offset by organic growth.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES

Liquidity

Summary of our Major Sources and Uses of Cash and Cash Equivalents


	Six Months Ended June 30,						Increase/(Decrease)				Six Months Ended June 30,						Increase/(Decrease)
(in millions)	2019			2018			2019 vs. 2018			(in millions)	2020		2019		2020 vs. 2019
Sources of cash:										Sources of cash:
Cash provided by operating activities	$	9,108		$	12,376		$	(3,268	)	Cash provided by operating activities	$	12,946	$	9,108	$	3,838
Issuances of commercial paper and long-term debt, net of repayments	5,674			2,683			2,991
Issuances of short-term borrowings and long-term debt, net of repayments										Issuances of short-term borrowings and long-term debt, net of repayments	5,215		5,674		(459)
Proceeds from common stock issuances	448			478			(30		)	Proceeds from common stock issuances	870		448		422
Customer funds administered	1,435			3,082			(1,647		)	Customer funds administered	1,263		1,435		(172)
Sales and maturities of investments, net of purchases										Sales and maturities of investments, net of purchases	573		—		573
Other	504			—			504			Other	—		504		(504)
Total sources of cash	17,169			18,619						Total sources of cash	20,867		17,169
Uses of cash:										Uses of cash:
Common stock repurchases	(4,501		)	(3,150		)	(1,351		)	Common stock repurchases	(1,691)		(4,501)		2,810
Cash paid for acquisitions, net of cash assumed	(4,751		)	(2,636		)	(2,115		)	Cash paid for acquisitions, net of cash assumed	(3,952)		(4,751)		799
Purchases of investments, net of sales and maturities	(1,654		)	(2,968		)	1,314			Purchases of investments, net of sales and maturities	—		(1,654)		1,654
Purchases of property, equipment and capitalized software	(977		)	(960		)	(17		)	Purchases of property, equipment and capitalized software	(920)		(977)		57
Cash dividends paid	(1,884		)	(1,588		)	(296		)	Cash dividends paid	(2,212)		(1,884)		(328)
Other	(529		)	(852		)	323			Other	(607)		(529)		(78)
Total uses of cash	(14,296		)	(12,154		)				Total uses of cash	(9,382)		(14,296)
Effect of exchange rate changes on cash and cash equivalents	6			(78		)	84			Effect of exchange rate changes on cash and cash equivalents	(143)		6		(149)
Net increase in cash and cash equivalents	$	2,879		$	6,387		$	(3,508	)	Net increase in cash and cash equivalents	$	11,342	$	2,879	$	8,463

~~2019~~2020 Cash Flows Compared to ~~2018~~2019 Cash Flows

~~Decreased~~Increased cash flows provided by operating activities were primarily driven by increased net earnings as a result of the ~~increase in unearned revenues in 2018 due~~temporary deferral of care experienced at our benefits businesses related to ~~the June 2018 early receipt of our July CMS premium payment of $5.2 billion~~COVID-19 and the ~~year-over-year impact~~timing of federal income tax payments, which will be paid in the ~~Health Insurance Industry Tax moratorium, partially offset by higher net earnings and changes in working capital accounts.~~

third quarter. Other significant changes in sources or uses of cash year-over-year included ~~increased cash paid for acquisitions;~~decreased common stock ~~repurchases; and issuances of commercial paper~~repurchases and decreased net purchases of ~~investments and customer funds administered, due to the early receipt of our CMS payment in 2018 described above.~~investments.

As of June 30, ~~2019,~~2020, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of ~~$50.7~~$60.3 billion included approximately ~~$13.7~~$22.3 billion of cash and cash equivalents (of which ~~$900 million~~$4.2 billion was available for general corporate use), ~~$34.7~~$36.0 billion of debt securities and ~~$2.2~~$2.0 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 portfolio had a weighted-average duration of ~~3.3~~3.5 years and a weighted-average credit rating of “Double A” as of June 30, ~~2019.~~2020. 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.

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:

Commercial Paper and Bank Credit Facilities. Our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program, which facilitates the private placement of unsecured debt through ~~third-party~~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.

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 June 30, ~~2019,~~2020, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately ~~41%~~39%.

Long-Term Debt. ~~In July 2019,~~Periodically, we ~~issued $5.5 billion in senior unsecured notes. We intend to use the net proceeds from this offering~~access capital markets and issue long-term debt for general corporate purposes, ~~including refinancing commercial paper borrowings,~~such as, to meet our working capital requirements, to refinance debt, to finance acquisitions or ~~redeeming, repurchasing or repaying outstanding securities.~~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.

Credit Ratings. Our credit ratings as of June 30, ~~2019~~2020 were as follows:

Moody’s

S&P Global

~~Fitch~~

Fitch

A.M. Best

Ratings

Outlook

Ratings

Outlook

Ratings

Outlook

Ratings

Outlook

Senior unsecured debt

Stable

A+

Stable

A-A

Stable

A-

~~Stable~~Positive

Commercial paper

P-2

n/a

A-1

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. For example, a~~conditions, including the impacts of COVID-19 and related governmental market stabilization programs. 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 six months ended June 30, ~~2019,~~2020, we repurchased 186 million shares at an average price of ~~$246.84~~$271.32 per share. As of June 30, ~~2019,~~2020, we had Board authorization to purchase up to 7666 million shares of our common stock.

Dividends. In June ~~2019, our~~2020, the Company’s Board of Directors increased ~~our~~the Company’s quarterly cash dividend to shareholders to an annual ~~dividend~~ rate of $5.00 compared to $4.32 per share. For more information on our dividend, see Note 6 of Notes to the Condensed Consolidated ~~Financial~~Fina ncial Statements included in Part I,1, Item 1 of this report.

For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our ~~2018~~2019 10-K.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

A summary of future obligations under our various contractual obligations and commitments as of December 31, ~~2018~~2019 was disclosed in our ~~2018~~2019 10-K. During the six months ended June 30, ~~2019,~~2020, there were no material changes to this previously disclosed information outside the ordinary course of business. However, we continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and acquisitions.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 1 of Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a discussion of new accounting pronouncements that affect us.

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” in Part II, Item 7 in our ~~2018~~2019 10-K. For a detailed discussion of our significant accounting policies, see Note 2 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” in our ~~2018~~2019 10-K.

FORWARD-LOOKING STATEMENTS

The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements ~~within the meaning of the PSLRA. These statements~~which are intended to take advantage of the “safe harbor” provisions of the ~~PSLRA. Generally the~~federal securities law. The words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking ~~statements, which generally are not historical in nature.~~statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. ~~We caution that actual~~Actual results could differ materially from those that management expects, depending on the outcome of certain ~~factors.~~

~~Some~~ factors ~~that could cause actual results to differ materially from results discussed or implied in~~including: risks associated with public health crises, large-scale medical emergencies and pandemics, such as the ~~forward-looking statements include:~~COVID-19 pandemic; our ability to effectively estimate, price for and manage ~~our~~ medical ~~costs, including the impact of any~~costs; new ~~coverage requirements; new laws or regulations,~~ or changes in existing health care laws or regulations, or their enforcement or application, including increases in medical, administrative, technology or other costs or decreases in enrollment resulting from U.S., South American and other jurisdictions’ regulations affecting the health care industry; the outcome ofapplication; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in ~~CMS star ratings and other~~ quality scores ~~that impact~~impacting revenue; reductions in revenue or delays to cash flows received under ~~Medicare, Medicaid and other~~ government ~~programs, including the effects of a prolonged U.S. government shutdown or debt ceiling constraints;~~programs; changes in Medicare, ~~including changes in payment methodology,~~ the CMS star ratings program or the application of risk adjustment data validation audits; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; cyber-attacks, or other ~~privacy or~~ privacy/data security ~~incidents;~~incidents, or our failure to comply with ~~privacy and data security~~related regulations; ~~regulatory and other~~ risks and uncertainties ofassociated with the pharmacy benefits management industry; competitive ~~pressures, which could affect our ability to maintain or increase our market share;~~pressures; changes in or challenges to our public sector contract awards; our ability to ~~execute contracts~~contract on competitive terms with physicians, hospitals and other service providers; failure to achieve targeted operating cost productivity ~~improvements, including savings resulting from technology enhancement and administrative modernization;~~improvements; increases in costs and other liabilities associated with ~~increased~~ litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of ~~acquisitions and other~~ strategic ~~transactions,~~transactions; fluctuations in foreign currency exchange ~~rates on our reported shareholders’ equity and results of operations;~~rates; downgrades in our credit ratings; ~~the performance of~~ our investment ~~portfolio;~~portfolio performance; impairment ~~of the value~~ of our goodwill and intangible assets if estimated future results do not adequately support goodwill and intangible assets recorded for our existing businesses or the businesses that we acquire; failure to maintain effective and efficient information systems or if our technology products do not operate as intended;assets; and our ability to obtain sufficient funds from our regulated subsidiaries or ~~the debt or capital markets~~from external financings to fund our obligations, to maintain our debt to total capital ratio at targeted levels, to maintain our quarterly dividend payment cycle, or to continue repurchasing shares of our common stock.

This above list ~~of important factors~~ is not ~~intended to be~~ exhaustive. We discuss ~~certain of~~ these matters, ~~more fully, as well as~~and certain ~~risk factors~~risks that may affect our business operations, financial condition and results of operations more fully in our ~~other periodic and current~~ filings with the SEC, including our ~~annual~~ reports on ~~Form~~Forms 10-K, ~~quarterly reports on Form~~ 10-Q and ~~current reports on Form~~ 8-K. ~~Any or all forward-looking statements we make may turn out to be wrong, and can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.~~ 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 ~~future~~ 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 ~~applicable securities laws.~~law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We manage exposure to market interest rates by diversifying investments across different fixed-income market sectors and debt across maturities, as well as by endeavoring to match our floating-rate assets and liabilities over time, either directly or through the use of interest rate swap contracts. Unrealized gains and losses on investments in available-for-sale debt securities are reported in comprehensive income.

The following table summarizes the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of June 30, ~~2019~~2020 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):


	June 30, 2020
Increase (Decrease) in Market Interest Rate	Investment Income Per Annum (a)		Interest Expense Per Annum (a)		Fair Value of Financial Assets (b)		Fair Value of Financial Liabilities
2 %	$	504	$	200	$	(2,567)	$	(8,573)
1	252		100		(1,271)		(4,715)
(1)	(80)		(16)		623		4,676
(2)	(80)		(16)		657		6,214

(a) Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of June 30, 2020, the assumed hypothetical change in interest rates does not reflect the full 100 and 200 basis point reduction in interest income or interest expense, as the rate cannot fall below zero.

June 30, 2019
Increase (Decrease) in Market Interest Rate
Investment
Income Per
Annum

Interest
Expense Per
Annum
Fair Value of
Financial Assets
Fair Value of
Financial Liabilities
2 % $ 337
$ 305
$ (2,456 ) $ (5,466 )
1 169
152
(1,233 ) (2,964 )
(1) (169 ) (152 ) 1,177
3,491
(2) (337 ) (305 ) 2,034
7,581

(b) As of June 30, 2020, some of our investments had interest rates below 1% so the assumed hypothetical change in the fair value of investments does not reflect the full 100 and 200 basis point reduction.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this quarterly report on Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, ~~2019.~~2020. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, ~~2019.~~2020.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting during the quarter ended June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 1. LEGAL PROCEEDINGS

A description of our legal proceedings is included in and incorporated by reference to Note 7 of Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our ~~2018~~2019 10-K and Part II, Item 1A, “Risk Factors” of our 10-Q for the quarterly period ended March 31, 2020 (“2020 First Quarter 10-Q”), which could materially affect our business, financial condition or future results. The risks described in our ~~2018~~2019 10-K and 2020 First Quarter 10-Q, are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

There have been no other material changes to the risk factors as disclosed in our ~~2018 10-K.~~2019 10-K and 2020 First Quarter 10-Q.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

In November 1997, our Board of Directors adopted a share repurchase program, which the Board evaluates periodically. There is no established expiration date for the program. During the second quarter ~~2019,~~2020, we ~~repurchased approximately 6 million~~did not repurchase any shares ~~at an average price~~ of ~~$235.77 per share.~~our common stock. As of June 30, ~~2019,~~2020, we had Board authorization to purchase up to 7666 million shares of our common stock.


~~ITEM 6.~~	EXHIBITS*

The following exhibits are filed or incorporated by reference herein in response to Item 601 of Regulation S-K. The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-10864.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITEDHEALTH GROUP INCORPORATED

/s/ DAVID S. WICHMANN

Executive Vice President and

Chief Financial Officer
(principal financial officer)

Senior Vice President and

Chief Accounting Officer
(principal accounting officer)



~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common Stock, $.01 par value~~	~~UNH~~	~~NYSE~~



3.1						Certificate of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A/A filed on July 1, 2015)
3.2						Bylaws of UnitedHealth Group Incorporated, effective August 15, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 16, 2017)
4.1						Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
4.2						Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
4.3						Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
4.4						Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
10.1						UnitedHealth Group ~~Executive Savings~~2020 Stock Incentive Plan ~~(2019 Statement)~~(incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8, SEC File Number 333-238854, filed on June 1, 2020)
~~31.1~~10.2						Form of Agreement for Restricted Stock Unit Award to Executives under UnitedHealth Group Incorporated’s 2020 Stock Incentive Plan
10.3						Form of Agreement for Nonqualified Stock Option Award to Executives under UnitedHealth Group Incorporated’s 2020 Stock Incentive Plan
10.4						Form of Agreement for Performance-Based Restricted Stock Unit Award to Executives under UnitedHealth Group Incorporated’s 2020 Stock Incentive Plan
10.5						Form of Agreement for Deferred Stock Unit Award to Non-Employee Directors under UnitedHealth Group Incorporated’s 2020 Stock Incentive Plan
31.1						Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101).



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			Page

Part I. Financial Information
Item 1.		Financial Statements (unaudited)			1
	Condensed Consolidated Balance Sheets as of June 3 0 , 2020 and December 31, 2019			1
	Condensed Consolidated Statements of Operations for the Thre e and Six M onths Ended June 3 0 , 2020 and 2019			2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 3 0 , 2020 and 2019			3
	Condensed Consolidated Statements of Changes in Equity for the Three a nd Six Months Ended June 3 0 , 2020 and 2019			4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2020 and 2019			6
	Notes to the Condensed Consolidated Financial Statements			7
	1.	Basis of Presentation	7
	2.	Investments	8
	3.	Fair Value	10
	4.	Medical Costs Payable	11
	5.	Short-Term Borrowings and Long-Term Debt	12
	6.	Dividends	13
	7.	Commitments and Contingencies	13
	8.	Segment Financial Information	14
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			25
Item 4.		Controls and Procedures			25
Part II. Other Information
Item 1.		Legal Proceedings			25
Item 1A.		Risk Factors			26
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 6.		Exhibits			27
Signatures						28



(in millions, except per share data)	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	13,745		$	10,866
Short-term investments	3,524			3,458
Accounts receivable, net	9,741			11,388
Other current receivables, net	8,434			6,862
Assets under management	2,943			3,032
Prepaid expenses and other current assets	3,651			3,086
Total current assets	42,038			38,692
Long-term investments	35,696			32,510
Property, equipment and capitalized software, net	8,681			8,458
Goodwill	62,000			58,910
Other intangible assets, net	9,999			9,325
Other assets	8,786			4,326
Total assets	$	167,200		$	152,221
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable	$	20,907		$	19,891
Accounts payable and accrued liabilities	17,128			16,705
Commercial paper and current maturities of long-term debt	7,800			1,973
Unearned revenues	2,019			2,396
Other current liabilities	14,474			12,244
Total current liabilities	62,328			53,209
Long-term debt, less current maturities	34,473			34,581
Deferred income taxes	2,908			2,474
Other liabilities	9,435			5,730
Total liabilities	109,144			95,994
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests	2,202			1,908
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; 948 and 960 issued and outstanding	9			10
Retained earnings	56,367			55,846
Accumulated other comprehensive loss	(3,273		)	(4,160		)
Nonredeemable noncontrolling interests	2,751			2,623
Total equity	55,854			54,319
Total liabilities, redeemable noncontrolling interests and equity	$	167,200		$	152,221


	June 30, 2019						December 31, 2018							June 30, 2020										December 31, 2019
(in millions, except percentages)	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value		(in millions, except percentages)	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value
Commercial paper	$	6,984	$	6,973	$	6,973	$	—	$	—	$	—	Commercial paper	$	773	$	773	$	773	$	400	$	400	$	400
1.700% notes due February 2019	—		—		—		750		750		749
1.625% notes due March 2019	—		—		—		500		500		499
2.300% notes due December 2019	500		498		500		500		494		497
2.700% notes due July 2020	1,500		1,498		1,506		1,500		1,498		1,494		2.700% notes due July 2020	1,500		1,500		1,501		1,500		1,499		1,506
Floating rate notes due October 2020	300		299		300		300		299		298		Floating rate notes due October 2020	300		300		300		300		300		300
3.875% notes due October 2020	450		449		457		450		443		456		3.875% notes due October 2020	450		452		451		450		450		455
1.950% notes due October 2020	900		898		896		900		897		884		1.950% notes due October 2020	900		900		904		900		899		900
4.700% notes due February 2021	400		404		413		400		398		412		4.700% notes due February 2021	400		405		406		400		403		410
2.125% notes due March 2021	750		748		749		750		747		734		2.125% notes due March 2021	750		749		759		750		749		753
Floating rate notes due June 2021	350		349		350		350		349		347		Floating rate notes due June 2021	350		350		350		350		349		350
3.150% notes due June 2021	400		399		407		400		399		400		3.150% notes due June 2021	400		399		411		400		399		407
3.375% notes due November 2021	500		500		512		500		489		503		3.375% notes due November 2021	500		511		517		500		501		512
2.875% notes due December 2021	750		752		761		750		735		748		2.875% notes due December 2021	750		768		778		750		753		765
2.875% notes due March 2022	1,100		1,082		1,117		1,100		1,051		1,091		2.875% notes due March 2022	1,100		1,117		1,139		1,100		1,087		1,121
3.350% notes due July 2022	1,000		997		1,034		1,000		997		1,005		3.350% notes due July 2022	1,000		998		1,061		1,000		998		1,036
2.375% notes due October 2022	900		895		903		900		894		872		2.375% notes due October 2022	900		897		942		900		896		911
0.000% notes due November 2022	15		13		13		15		12		13		0.000% notes due November 2022	15		13		14		15		13		14
2.750% notes due February 2023	625		622		633		625		602		611		2.750% notes due February 2023	625		648		659		625		624		638
2.875% notes due March 2023	750		772		764		750		750		739		2.875% notes due March 2023	750		798		799		750		770		770
3.500% notes due June 2023	750		747		782		750		746		756		3.500% notes due June 2023	750		748		817		750		747		786
3.500% notes due February 2024	750		745		786		750		745		755		3.500% notes due February 2024	750		746		825		750		746		792
2.375% notes due August 2024													2.375% notes due August 2024	750		747		801		750		747		760
3.750% notes due July 2025	2,000		1,990		2,136		2,000		1,989		2,025		3.750% notes due July 2025	2,000		1,991		2,279		2,000		1,990		2,161
3.700% notes due December 2025	300		298		320		300		298		303		3.700% notes due December 2025	300		298		344		300		298		325
1.250% notes due January 2026													1.250% notes due January 2026	500		496		509		—		—		—
3.100% notes due March 2026	1,000		996		1,030		1,000		995		965		3.100% notes due March 2026	1,000		996		1,116		1,000		996		1,048
3.450% notes due January 2027	750		746		789		750		746		742		3.450% notes due January 2027	750		746		855		750		746		804
3.375% notes due April 2027	625		619		653		625		619		611		3.375% notes due April 2027	625		620		712		625		620		667
2.950% notes due October 2027	950		939		966		950		938		898		2.950% notes due October 2027	950		940		1,060		950		939		988
3.850% notes due June 2028	1,150		1,142		1,246		1,150		1,142		1,163		3.850% notes due June 2028	1,150		1,143		1,360		1,150		1,142		1,269
3.875% notes due December 2028	850		843		927		850		842		861		3.875% notes due December 2028	850		843		1,017		850		843		941
2.875% notes due August 2029													2.875% notes due August 2029	1,000		1,111		1,116		1,000		993		1,029
2.000% notes due May 2030													2.000% notes due May 2030	1,250		1,233		1,309		—		—		—
4.625% notes due July 2035	1,000		992		1,149		1,000		992		1,060		4.625% notes due July 2035	1,000		992		1,308		1,000		992		1,215
5.800% notes due March 2036	850		838		1,090		850		838		1,003		5.800% notes due March 2036	850		838		1,202		850		838		1,129
6.500% notes due June 2037	500		492		693		500		492		638		6.500% notes due June 2037	500		492		761		500		492		712
6.625% notes due November 2037	650		641		915		650		641		841		6.625% notes due November 2037	650		641		994		650		641		940
6.875% notes due February 2038	1,100		1,076		1,591		1,100		1,076		1,437		6.875% notes due February 2038	1,100		1,077		1,713		1,100		1,076		1,631
3.500% notes due August 2039													3.500% notes due August 2039	1,250		1,241		1,454		1,250		1,241		1,313
2.750% notes due May 2040													2.750% notes due May 2040	1,000		963		1,071		—		—		—
5.700% notes due October 2040	300		296		385		300		296		355		5.700% notes due October 2040	300		296		438		300		296		396
5.950% notes due February 2041	350		345		462		350		345		426		5.950% notes due February 2041	350		345		521		350		345		475
4.625% notes due November 2041	600		588		684		600		588		627		4.625% notes due November 2041	600		589		787		600		589		716
4.375% notes due March 2042	502		484		556		502		484		503		4.375% notes due March 2042	502		484		642		502		484		580
3.950% notes due October 2042	625		607		655		625		607		596		3.950% notes due October 2042	625		608		749		625		607		688
4.250% notes due March 2043	750		735		820		750		734		744		4.250% notes due March 2043	750		735		938		750		735		856
4.750% notes due July 2045	2,000		1,973		2,369		2,000		1,973		2,116		4.750% notes due July 2045	2,000		1,973		2,694		2,000		1,973		2,463
4.200% notes due January 2047	750		738		820		750		738		745		4.200% notes due January 2047	750		738		951		750		738		861
4.250% notes due April 2047	725		717		797		725		717		719		4.250% notes due April 2047	725		717		931		725		717		839
3.750% notes due October 2047	950		933		974		950		933		869		3.750% notes due October 2047	950		934		1,134		950		934		1,023
4.250% notes due June 2048	1,350		1,329		1,500		1,350		1,329		1,349		4.250% notes due June 2048	1,350		1,330		1,726		1,350		1,330		1,569
4.450% notes due December 2048	1,100		1,088		1,267		1,100		1,087		1,132		4.450% notes due December 2048	1,100		1,086		1,440		1,100		1,086		1,316
Total commercial paper and long-term debt	$	41,401	$	41,085	$	44,650	$	35,667	$	35,234	$	36,591
3.700% notes due August 2049													3.700% notes due August 2049	1,250		1,235		1,479		1,250		1,235		1,344
2.900% notes due May 2050													2.900% notes due May 2050	1,250		1,208		1,320		—		—		—
3.875% notes due August 2059													3.875% notes due August 2059	1,250		1,228		1,531		1,250		1,228		1,350
3.125% notes due May 2060													3.125% notes due May 2060	1,000		967		1,072		—		—		—
Total short-term borrowings and long-term debt													Total short-term borrowings and long-term debt	$	45,190	$	44,953	$	52,740	$	39,817	$	39,474	$	44,234



(in millions)	Future Operating Lease Payments
2019	$	396
2020	760
2021	666
2022	562
2023	463
Thereafter	1,977
Total future minimum lease payments	4,824
Less imputed interest	(806		)
Total	$	4,018



	June 30, 2019
Increase (Decrease) in Market Interest Rate	Investment Income Per Annum			Interest Expense Per Annum			Fair Value of Financial Assets			Fair Value of Financial Liabilities
2 %	$	337		$	305		$	(2,456	)	$	(5,466	)
1	169			152			(1,233		)	(2,964		)
(1)	(169		)	(152		)	1,177			3,491
(2)	(337		)	(305		)	2,034			7,581


~~ITEM 2.~~	~~UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS~~



*						Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.