UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

Form 10-Q

__________________________________________________________



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

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2019~~MARCH 31, 2020



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

FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission File Number: 1-10864

__________________________________________________________

UnitedHealth Group Incorporated

(Exact name of registrant as specified in its charter)

__________________________________________________________



Delaware		41-1321939
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
UnitedHealth Group Center		55343
9900 Bren Road East
Minnetonka,	Minnesota
(Address of principal executive offices)		(Zip Code)

(952) 936-1300

(Registrant’s telephone number, including area code)

_________________________________________________________

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



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

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



Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐			Emerging growth company	☐

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 ☒

As of ~~October 31, 2019,~~April 30, 2020, there were ~~947,414,929~~948,379,502 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.

UNITEDHEALTH GROUP

Table of Contents


				Page				Page

Part I. Financial Information	Part I. Financial Information				Part I. Financial Information
Item 1.	Item 1.	Financial Statements (unaudited)		1	Item 1.	Financial Statements (unaudited)		1
		Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018		1
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018		2
		Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018		3		Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019		1
		Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2019 and 2018		4		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019		2
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018		6		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019		3
		Notes to the Condensed Consolidated Financial Statements		7		Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2020 and 2019		4
		1.	Basis of Presentation	7		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019		5
		2.	Investments	8		Notes to the Condensed Consolidated Financial Statements		6
		3.	Fair Value	10		1.	Basis of Presentation	6
		4.	Medical Costs Payable	11		2.	Investments	7
		5.	Commercial Paper and Long-Term Debt	12		3.	Fair Value	9
		6.	Dividends	13		4.	Medical Costs Payable	10
		7.	Commitments and Contingencies	13		5.	Short-Term Borrowings and Long-Term Debt	11
		8.	Business Combinations	14		6.	Commitments and Contingencies	12
		9.	Segment Financial Information	15		7.	Segment Financial Information	13
Item 2.	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		24	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.	Item 4.	Controls and Procedures		24	Item 4.	Controls and Procedures		22
Part II. Other Information	Part II. Other Information				Part II. Other Information
Item 1.	Item 1.	Legal Proceedings		25	Item 1.	Legal Proceedings		22
Item 1A.	Item 1A.	Risk Factors		25	Item 1A.	Risk Factors		22
Item 2.	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		25	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 6.	Item 6.	Exhibits		26	Item 6.	Exhibits		24
Signatures	Signatures			27	Signatures			25

PART I

ITEM 1. FINANCIAL STATEMENTS

UnitedHealth Group

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions, except per share data)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	12,363		$	10,866		$	21,569		$	10,985
Short-term investments	3,455			3,458			2,876			3,260
Accounts receivable, net	10,964			11,388			14,613			11,822
Other current receivables, net	10,152			6,862			10,275			9,640
Assets under management	3,051			3,032			2,866			3,076
Prepaid expenses and other current assets	3,556			3,086			6,608			3,851
Total current assets	43,541			38,692			58,807			42,634
Long-term investments	36,840			32,510			36,578			37,209
Property, equipment and capitalized software, net	8,501			8,458			8,173			8,704
Goodwill	65,205			58,910			65,302			65,659
Other intangible assets, net	10,521			9,325			10,199			10,349
Other assets	9,101			4,326			10,008			9,334
Total assets	$	173,709		$	152,221		$	189,067		$	173,889
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable	$	20,939		$	19,891		$	22,772		$	21,690
Accounts payable and accrued liabilities	18,570			16,705			22,845			19,005
Commercial paper and current maturities of long-term debt	6,387			1,973
Short-term borrowings and current maturities of long-term debt							15,828			3,870
Unearned revenues	2,500			2,396			2,509			2,622
Other current liabilities	14,245			12,244			14,652			14,595
Total current liabilities	62,641			53,209			78,606			61,782
Long-term debt, less current maturities	38,507			34,581			35,779			36,808
Deferred income taxes	2,902			2,474			3,030			2,993
Other liabilities	9,912			5,730			10,048			10,144
Total liabilities	113,962			95,994			127,463			111,727
Commitments and contingencies (Note 7)
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	1,991			1,908			1,741			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; 947 and 960 issued and outstanding	9			10
Common stock, $0.01 par value - 3,000 shares authorized; 947 and 948 issued and outstanding							10			9
Additional paid-in capital							—			7
Retained earnings	58,696			55,846			62,327			61,178
Accumulated other comprehensive loss	(3,709		)	(4,160		)	(5,360		)	(3,578		)
Nonredeemable noncontrolling interests	2,760			2,623			2,886			2,820
Total equity	57,756			54,319			59,863			60,436
Total liabilities, redeemable noncontrolling interests and equity	$	173,709		$	152,221		$	189,067		$	173,889

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(in millions, except per share data)	2019			2018			2019			2018			2020			2019
Revenues:
Premiums	$	47,397		$	44,613		$	142,074		$	133,155		$	50,640		$	47,513
Products	7,546			7,344			23,971			21,050			8,431			8,072
Services	4,942			4,217			13,756			12,590			4,985			4,318
Investment and other income	466			382			1,453			1,035			365			405
Total revenues	60,351			56,556			181,254			167,830			64,421			60,308
Operating costs:
Medical costs	39,041			36,158			117,164			108,448			41,000			38,939
Operating costs	8,960			8,479			25,892			25,371			10,015			8,517
Cost of products sold	6,627			6,718			21,606			19,373			7,687			7,381
Depreciation and amortization	709			611			2,002			1,791			723			639
Total operating costs	55,337			51,966			166,664			154,983			59,425			55,476
Earnings from operations	5,014			4,590			14,590			12,847			4,996			4,832
Interest expense	(449		)	(353		)	(1,267		)	(1,026		)	(437		)	(400		)
Earnings before income taxes	4,565			4,237			13,323			11,821			4,559			4,432
Provision for income taxes	(936		)	(953		)	(2,752		)	(2,603		)	(1,094		)	(875		)
Net earnings	3,629			3,284			10,571			9,218			3,465			3,557
Earnings attributable to noncontrolling interests	(91		)	(96		)	(273		)	(272		)	(83		)	(90		)
Net earnings attributable to UnitedHealth Group common shareholders	$	3,538		$	3,188		$	10,298		$	8,946		$	3,382		$	3,467
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic	$	3.73		$	3.31		$	10.82		$	9.29		$	3.56		$	3.62
Diluted	$	3.67		$	3.24		$	10.65		$	9.09		$	3.52		$	3.56
Basic weighted-average number of common shares outstanding	949			962			952			963			949			958
Dilutive effect of common share equivalents	14			21			15			21			13			17
Diluted weighted-average number of common shares outstanding	963			983			967			984			962			975
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents	12			7			10			7			10			8

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(in millions)	2019			2018			2019			2018			2020			2019
Net earnings	$	3,629		$	3,284		$	10,571		$	9,218		$	3,465		$	3,557
Other comprehensive (loss) income:
Gross unrealized gains (losses) on investment securities during the period	230			(91		)	1,243			(512		)
Gross unrealized (losses) gains on investment securities during the period													(349		)	520
Income tax effect	(53		)	21			(285		)	117			80			(119		)
Total unrealized gains (losses), net of tax	177			(70		)	958			(395		)
Gross reclassification adjustment for net realized gains included in net earnings	(69		)	(3		)	(70		)	(58		)
Total unrealized (losses) gains, net of tax													(269		)	401
Gross reclassification adjustment for net realized (gains) losses included in net earnings													(18		)	4
Income tax effect	16			—			16			13			4			(1		)
Total reclassification adjustment, net of tax	(53		)	(3		)	(54		)	(45		)	(14		)	3
Total foreign currency translation losses	(560		)	(233		)	(453		)	(1,303		)	(1,499		)	(2		)
Other comprehensive (loss) income	(436		)	(306		)	451			(1,743		)	(1,782		)	402
Comprehensive income	3,193			2,978			11,022			7,475			1,683			3,959
Comprehensive income attributable to noncontrolling interests	(91		)	(96		)	(273		)	(272		)	(83		)	(90		)
Comprehensive income attributable to UnitedHealth Group common shareholders	$	3,102		$	2,882		$	10,749		$	7,203		$	1,600		$	3,869

See Notes to the Condensed Consolidated Financial Statements

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 September 30,
(in millions)
Shares Amount Net Unrealized Gains (Losses) on Investments Foreign Currency Translation Losses
Balance at June 30, 2019 948
$ 9
$ —
$ 56,367
$ 516
$ (3,789 ) $ 2,751
$ 55,854
Net earnings 3,538
82
3,620
Other comprehensive income (loss) 124
(560 ) (436 )
Issuances of common stock,
and related tax effects 2
—
277
277
Share-based compensation 130
130
Common share repurchases (3 ) —
(415 ) (185 ) (600 )
Cash dividends paid on common shares ($1.08 per share) (1,024 ) (1,024 )
Redeemable noncontrolling interests fair value and other adjustments 8
8
Acquisition and other adjustments of nonredeemable noncontrolling interests (7 ) (7 )
Distribution to nonredeemable noncontrolling interests (66 ) (66 )
Balance at September 30, 2019 947
$ 9
$ —
$ 58,696
$ 640
$ (4,349 ) $ 2,760
$ 57,756

Balance at June 30, 2018 962
$ 10
$ —
$ 52,363
$ (356 ) $ (3,724 ) $ 2,490
$ 50,783
Net earnings 3,188
71
3,259
Other comprehensive loss (73 ) (233 ) (306 )
Issuances of common stock, and related tax effects 2
—
239
239
Share-based compensation 146
146
Common share repurchases (2 ) —
(201 ) (299 ) (500 )
Cash dividends paid on common shares ($0.90 per share) (866 ) (866 )
Redeemable noncontrolling interests fair value and other adjustments (184 ) (184 )
Acquisition and other adjustments of nonredeemable noncontrolling interests 102
102
Distribution to nonredeemable noncontrolling interests (77 ) (77 )
Balance at September 30, 2018 962
$ 10
$ —
$ 54,386
$ (429 ) $ (3,957 ) $ 2,586
$ 52,596

~~See~~ ~~Notes to the Condensed Consolidated Financial Statements~~

~~UnitedHealth Group~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Common Stock Additional Paid-In Capital Retained Earnings
Accumulated Other Comprehensive (Loss)
Income
Nonredeemable Noncontrolling Interests
Total
Equity
Nine months ended September 30,
(in millions)
Shares Amount Net Unrealized (Losses) Gains on Investments Foreign Currency Translation Losses
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 10,298
196
10,494
Other comprehensive income (loss) 904
(453 ) 451
Issuances of common stock,
and related tax effects 8
—
438
438
Share-based compensation 521
521
Common share repurchases (21 ) (1 ) (573 ) (4,527 ) (5,101 )
Cash dividends paid on common shares ($3.06 per share) (2,908 ) (2,908 )
Redeemable noncontrolling interests fair value and other adjustments (277 ) (277 )
Acquisition and other adjustments of nonredeemable noncontrolling interests (109 ) 157
48
Distribution to nonredeemable noncontrolling interests (211 ) (211 )
Balance at September 30, 2019 947
$ 9
$ —
$ 58,696
$ 640
$ (4,349 ) $ 2,760
$ 57,756

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 8,946
183
9,129
Other comprehensive loss (440 ) (1,303 ) (1,743 )
Issuances of common stock, and related tax effects 9
—
761
761
Share-based compensation 493
493
Common share repurchases (16 ) —
(2,838 ) (812 ) (3,650 )
Cash dividends paid on common shares ($2.55 per share) (2,454 ) (2,454 )
Redeemable noncontrolling interests fair value and other adjustments (119 ) (119 )
Acquisition and other adjustments of nonredeemable noncontrolling interests 518
518
Distribution to nonredeemable noncontrolling interests (172 ) (172 )
Balance at September 30, 2018 962
$ 10
$ —
$ 54,386
$ (429 ) $ (3,957 ) $ 2,586
$ 52,596



	Common Stock				Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)						Nonredeemable Noncontrolling Interests			Total Equity
	Shares		Amount		Additional Paid-In Capital			Retained Earnings			Net Unrealized Gains (Losses) on Investments			Foreign Currency Translation Losses			Nonredeemable Noncontrolling Interests			Total Equity
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								3,382									59			3,441
Other comprehensive (loss) income											(283		)	(1,499		)				(1,782		)
Issuances of common stock, and related tax effects	5		1		320															321
Share-based compensation					234															234
Common share repurchases	(6	)	—		(510		)	(1,181		)										(1,691		)
Cash dividends paid on common shares ($1.08 per share)								(1,024		)										(1,024		)
Redeemable noncontrolling interests fair value and other adjustments					(51		)													(51		)
Acquisition and other adjustments of nonredeemable noncontrolling interests																	50			50
Distribution to nonredeemable noncontrolling interests																	(43		)	(43		)
Balance at March 31, 2020	947		$	10	$	—		$	62,327		$	306		$	(5,666	)	$	2,886		$	59,863

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								3,467									60			3,527
Other comprehensive income (loss)											404			(2		)				402
Issuances of common stock, and related tax effects	5		—		56															56
Share-based compensation					239															239
Common share repurchases	(12	)	—		(34		)	(2,968		)										(3,002		)
Cash dividends paid on common shares ($0.90 per share)								(860		)										(860		)
Redeemable noncontrolling interests fair value and other adjustments					(152		)													(152		)
Acquisition and other adjustments of nonredeemable noncontrolling interests					(109		)										132			23
Distribution to nonredeemable noncontrolling interests																	(83		)	(83		)
Balance at March 31, 2019	953		$	10	$	—		$	55,472		$	140		$	(3,898	)	$	2,727		$	54,451

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
(in millions)	2019			2018			2020			2019
Operating activities
Net earnings	$	10,571		$	9,218		$	3,465		$	3,557
Noncash items:
Depreciation and amortization	2,002			1,791			723			639
Deferred income taxes	177			9			202			134
Share-based compensation	525			512			231			243
Other, net	(181		)	(136		)	45			42
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
Accounts receivable	957			(984		)	(2,652		)	(1,421		)
Other assets	(2,181		)	(1,641		)	(4,249		)	(1,495		)
Medical costs payable	223			1,745			1,120			1,125
Accounts payable and other liabilities	105			2,783			4,137			318
Unearned revenues	60			20			(79		)	92
Cash flows from operating activities	12,258			13,317			2,943			3,234
Investing activities
Purchases of investments	(13,386		)	(11,316		)	(3,866		)	(3,540		)
Sales of investments	6,198			2,872			2,170			1,510
Maturities of investments	5,160			4,715			1,726			1,711
Cash paid for acquisitions, net of cash assumed	(8,200		)	(5,824		)	(929		)	(689		)
Purchases of property, equipment and capitalized software	(1,421		)	(1,505		)	(469		)	(562		)
Other, net	338			(187		)	(165		)	154
Cash flows used for investing activities	(11,311		)	(11,245		)	(1,533		)	(1,416		)
Financing activities
Common share repurchases	(5,101		)	(3,650		)	(1,691		)	(3,002		)
Cash dividends paid	(2,908		)	(2,454		)	(1,024		)	(860		)
Proceeds from common stock issuances	740			745			557			323
Repayments of long-term debt	(1,250		)	(2,600		)	—			(1,250		)
Proceeds from (repayments of) commercial paper, net	3,998			(164		)
Proceeds from issuance of long-term debt	5,444			3,964
Proceeds from short-term borrowings, net							10,797			3,101
Customer funds administered	420			1,552			1,062			1,784
Other, net	(756		)	(1,086		)	(398		)	(368		)
Cash flows from (used for) financing activities	587			(3,693		)	9,303			(272		)
Effect of exchange rate changes on cash and cash equivalents	(37		)	(97		)	(129		)	(5		)
Increase (decrease) in cash and cash equivalents	1,497			(1,718		)
Increase in cash and cash equivalents							10,584			1,541
Cash and cash equivalents, beginning of period	10,866			11,981			10,985			10,866
Cash and cash equivalents, end of period	$	12,363		$	10,263		$	21,569		$	12,407

See Notes to the Condensed Consolidated Financial Statements

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 quarter ended March 31, 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.

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		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2019
March 31, 2020
Debt securities - available-for-sale:
U.S. government and agency obligations	$	3,591	$	83	$	(2	)	$	3,672	$	3,146	$	183	$	(1	)	$	3,328
State and municipal obligations	5,657		256		(3		)	5,910		5,724		214		(20		)	5,918
Corporate obligations	17,824		352		(9		)	18,167		17,923		182		(411		)	17,694
U.S. agency mortgage-backed securities	6,361		113		(6		)	6,468		6,508		260		—			6,768
Non-U.S. agency mortgage-backed securities	1,685		48		(1		)	1,732		1,932		28		(36		)	1,924
Total debt securities - available-for-sale	35,118		852		(21		)	35,949		35,233		867		(468		)	35,632
Debt securities - held-to-maturity:
U.S. government and agency obligations	272		2		—			274		410		9		—			419
State and municipal obligations	32		1		—			33		31		2		—			33
Corporate obligations	547		—		—			547		284		—		(1		)	283
Total debt securities - held-to-maturity	851		3		—			854		725		11		(1		)	735
Total debt securities	$	35,969	$	855	$	(21	)	$	36,803	$	35,958	$	878	$	(469	)	$	36,367
December 31, 2018
December 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations	$	3,434	$	13	$	(42	)	$	3,405	$	3,502	$	55	$	(4	)	$	3,553
State and municipal obligations	7,117		61		(57		)	7,121		5,680		251		(5		)	5,926
Corporate obligations	15,366		14		(218		)	15,162		17,910		343		(11		)	18,242
U.S. agency mortgage-backed securities	4,947		11		(106		)	4,852		6,425		109		(6		)	6,528
Non-U.S. agency mortgage-backed securities	1,376		2		(20		)	1,358		1,811		37		(3		)	1,845
Total debt securities - available-for-sale	32,240		101		(443		)	31,898		35,328		795		(29		)	36,094
Debt securities - held-to-maturity:
U.S. government and agency obligations	255		1		(2		)	254		402		2		—			404
State and municipal obligations	11		—		—			11		32		2		—			34
Corporate obligations	355		—		—			355		538		—		(1		)	537
Total debt securities - held-to-maturity	621		1		(2		)	620		972		4		(1		)	975
Total debt securities	$	32,861	$	102	$	(445	)	$	32,518	$	36,300	$	799	$	(30	)	$	37,069

The Company held $1.7 billion and $2.0 billion of equity securities as of ~~both September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019, respectively. 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 $1.4 ~~billion and $1.5~~ billion of equity method investments in operating businesses in the health care sector as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively.~~2019. The allowance for credit losses on held-to-maturity securities at March 31, 2020 was not material.

The amortized cost and fair value of debt securities as of ~~September 30, 2019,~~March 31, 2020, by contractual maturity, were as follows:


	Available-for-Sale				Held-to-Maturity				Available-for-Sale				Held-to-Maturity
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,571	$	3,577	$	313	$	313	$	3,010	$	3,011	$	319	$	320
Due after one year through five years	11,904		12,084		258		259		11,565		11,604		352		359
Due after five years through ten years	8,303		8,669		141		141		8,563		8,669		28		28
Due after ten years	3,294		3,419		139		141		3,655		3,656		26		28
U.S. agency mortgage-backed securities	6,361		6,468		—		—		6,508		6,768		—		—
Non-U.S. agency mortgage-backed securities	1,685		1,732		—		—		1,932		1,924		—		—
Total debt securities	$	35,118	$	35,949	$	851	$	854	$	35,233	$	35,632	$	725	$	735

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					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			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
September 30, 2019
March 31, 2020
Debt securities - available-for-sale:
U.S. government and agency obligations																$	56	$	(1	)	$	—	$	—		$	56	$	(1	)
State and municipal obligations																810		(20		)	—		—			810		(20		)
Corporate obligations																9,294		(382		)	391		(29		)	9,685		(411		)
Non-U.S. agency mortgage-backed securities																841		(33		)	30		(3		)	871		(36		)
Total debt securities - available-for-sale																$	11,001	$	(436	)	$	421	$	(32	)	$	11,422	$	(468	)
December 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations	$	286	$	(1	)	$	228	$	(1	)	$	514	$	(2	)	$	616	$	(4	)	$	—	$	—		$	616	$	(4	)
State and municipal obligations	296		(2		)	83		(1		)	379		(3		)	440		(5		)	—		—			440		(5		)
Corporate obligations	1,360		(5		)	1,022		(4		)	2,382		(9		)	1,903		(7		)	740		(4		)	2,643		(11		)
U.S. agency mortgage-backed securities	570		(2		)	518		(4		)	1,088		(6		)	657		(3		)	333		(3		)	990		(6		)
Non-U.S. agency mortgage-backed securities	217		(1		)	—		—			217		(1		)	406		(3		)	—		—			406		(3		)
Total debt securities - available-for-sale	$	2,729	$	(11	)	$	1,851	$	(10	)	$	4,580	$	(21	)	$	4,022	$	(22	)	$	1,073	$	(7	)	$	5,095	$	(29	)
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	)

The Company’s unrealized losses from debt securities as of ~~September 30, 2019~~March 31, 2020 were generated from ~~4,000~~approximately 10,000 positions out of a total of 32,000 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 ~~September 30, 2019,~~March 31, 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 March 31, 2020 was not material.

3. Fair Value

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

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 of Notes to the Consolidated Financial Statements 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			Quoted Prices in Active Markets (Level 1)			Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)			Total Fair and Carrying Value
September 30, 2019
March 31, 2020
Cash and cash equivalents	$	12,210		$	153		$	—		$	12,363		$	21,450		$	119		$	—		$	21,569
Debt securities - available-for-sale:
U.S. government and agency obligations	3,421			251			—			3,672			3,143			185			—			3,328
State and municipal obligations	—			5,910			—			5,910			—			5,918			—			5,918
Corporate obligations	71			17,879			217			18,167			59			17,385			250			17,694
U.S. agency mortgage-backed securities	—			6,468			—			6,468			—			6,768			—			6,768
Non-U.S. agency mortgage-backed securities	—			1,732			—			1,732			—			1,924			—			1,924
Total debt securities - available-for-sale	3,492			32,240			217			35,949			3,202			32,180			250			35,632
Equity securities	1,839			21			—			1,860			1,394			19			—			1,413
Assets under management	1,116			1,907			28			3,051			937			1,890			39			2,866
Total assets at fair value	$	18,657		$	34,321		$	245		$	53,223		$	26,983		$	34,208		$	289		$	61,480
Percentage of total assets at fair value	35		%	65		%	—		%	100		%	44		%	56		%	—		%	100		%
December 31, 2018
December 31, 2019
Cash and cash equivalents	$	10,757		$	109		$	—		$	10,866		$	10,837		$	148		$	—		$	10,985
Debt securities - available-for-sale:
U.S. government and agency obligations	3,060			345			—			3,405			3,369			184			—			3,553
State and municipal obligations	—			7,121			—			7,121			—			5,926			—			5,926
Corporate obligations	39			14,950			173			15,162			70			17,923			249			18,242
U.S. agency mortgage-backed securities	—			4,852			—			4,852			—			6,528			—			6,528
Non-U.S. agency mortgage-backed securities	—			1,358			—			1,358			—			1,845			—			1,845
Total debt securities - available-for-sale	3,099			28,626			173			31,898			3,439			32,406			249			36,094
Equity securities	1,832			13			—			1,845			1,734			22			—			1,756
Assets under management	1,086			1,938			8			3,032			1,123			1,918			35			3,076
Total assets at fair value	$	16,774		$	30,686		$	181		$	47,641		$	17,133		$	34,494		$	284		$	51,911
Percentage of total assets at fair value	35		%	65		%	—		%	100		%	33		%	66		%	1		%	100		%

There were no transfers in or out of Level 3 financial assets or liabilities during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 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		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Fair Value		Total Carrying Value
September 30, 2019
March 31, 2020
Debt securities - held-to-maturity	$	410	$	176	$	268	$	854	$	851	$	556	$	91	$	88	$	735	$	725
Long-term debt and other financing obligations	$	—	$	45,342	$	—	$	45,342	$	40,814	$	—	$	45,272	$	—	$	45,272	$	40,394
December 31, 2018
December 31, 2019
Debt securities - held-to-maturity	$	260	$	65	$	295	$	620	$	621	$	541	$	181	$	253	$	975	$	972
Long-term debt and other financing obligations	$	—	$	37,944	$	—	$	37,944	$	36,554	$	—	$	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 ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 or ~~2018~~2019.

4. Medical Costs Payable

The following table shows the components of the change in medical costs payable for the ~~nine~~three months ended ~~September 30:~~March 31:


(in millions)	2019			2018			2020			2019
Medical costs payable, beginning of period	$	19,891		$	17,871		$	21,690		$	19,891
Acquisitions	868			333			—			35
Reported medical costs:
Current year	117,624			108,658			41,580			39,239
Prior years	(460		)	(210		)	(580		)	(300		)
Total reported medical costs	117,164			108,448			41,000			38,939
Medical payments:
Payments for current year	(99,487		)	(90,348		)	(23,471		)	(22,973		)
Payments for prior years	(17,497		)	(16,454		)	(16,447		)	(14,753		)
Total medical payments	(116,984		)	(106,802		)	(39,918		)	(37,726		)
Medical costs payable, end of period	$	20,939		$	19,850		$	22,772		$	21,139

For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, prior years medical cost reserve development was primarily driven by lower than expected health system utilization. For the three months ended March 31, 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 ~~$14.2~~$14.3 billion and ~~$13.2~~$13.8 billion at ~~September 30, 2019~~March 31, 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:


	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
(in millions, except percentages)	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value
Commercial paper	$	4,082	$	4,080	$	4,080	$	—	$	—	$	—	$	1,214	$	1,213	$	1,213	$	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		499		500		500		494		497
Bank credit facilities													10,000		10,000		10,000		—		—		—
2.700% notes due July 2020	1,500		1,499		1,508		1,500		1,498		1,494		1,500		1,500		1,500		1,500		1,499		1,506
Floating rate notes due October 2020	300		300		300		300		299		298		300		300		296		300		300		300
3.875% notes due October 2020	450		450		457		450		443		456		450		452		452		450		450		455
1.950% notes due October 2020	900		898		900		900		897		884		900		899		900		900		899		900
4.700% notes due February 2021	400		404		412		400		398		412		400		406		407		400		403		410
2.125% notes due March 2021	750		748		752		750		747		734		750		749		750		750		749		753
Floating rate notes due June 2021	350		349		349		350		349		347		350		349		347		350		349		350
3.150% notes due June 2021	400		399		408		400		399		400		400		399		406		400		399		407
3.375% notes due November 2021	500		502		512		500		489		503		500		510		512		500		501		512
2.875% notes due December 2021	750		755		764		750		735		748		750		768		764		750		753		765
2.875% notes due March 2022	1,100		1,088		1,120		1,100		1,051		1,091		1,100		1,114		1,130		1,100		1,087		1,121
3.350% notes due July 2022	1,000		997		1,036		1,000		997		1,005		1,000		998		1,034		1,000		998		1,036
2.375% notes due October 2022	900		895		909		900		894		872		900		896		912		900		896		911
0.000% notes due November 2022	15		13		13		15		12		13		15		13		14		15		13		14
2.750% notes due February 2023	625		627		637		625		602		611		625		646		640		625		624		638
2.875% notes due March 2023	750		776		769		750		750		739		750		797		777		750		770		770
3.500% notes due June 2023	750		747		786		750		746		756		750		747		788		750		747		786
3.500% notes due February 2024	750		745		790		750		745		755		750		746		794		750		746		792
2.375% notes due August 2024	750		746		756		—		—		—		750		747		767		750		747		760
3.750% notes due July 2025	2,000		1,990		2,150		2,000		1,989		2,025		2,000		1,991		2,161		2,000		1,990		2,161
3.700% notes due December 2025	300		298		323		300		298		303		300		298		323		300		298		325
3.100% notes due March 2026	1,000		996		1,045		1,000		995		965		1,000		996		1,056		1,000		996		1,048
3.450% notes due January 2027	750		746		798		750		746		742		750		746		804		750		746		804
3.375% notes due April 2027	625		619		663		625		619		611		625		620		668		625		620		667
2.950% notes due October 2027	950		939		982		950		938		898		950		939		992		950		939		988
3.850% notes due June 2028	1,150		1,142		1,259		1,150		1,142		1,163		1,150		1,143		1,281		1,150		1,142		1,269
3.875% notes due December 2028	850		843		936		850		842		861		850		843		953		850		843		941
2.875% notes due August 2029	1,000		1,022		1,021		—		—		—		1,000		1,104		1,047		1,000		993		1,029
4.625% notes due July 2035	1,000		992		1,208		1,000		992		1,060		1,000		992		1,190		1,000		992		1,215
5.800% notes due March 2036	850		838		1,134		850		838		1,003		850		838		1,107		850		838		1,129
6.500% notes due June 2037	500		492		711		500		492		638		500		492		691		500		492		712
6.625% notes due November 2037	650		641		940		650		641		841		650		641		910		650		641		940
6.875% notes due February 2038	1,100		1,076		1,625		1,100		1,076		1,437		1,100		1,077		1,613		1,100		1,076		1,631
3.500% notes due August 2039	1,250		1,241		1,301		—		—		—		1,250		1,241		1,348		1,250		1,241		1,313
5.700% notes due October 2040	300		296		397		300		296		355		300		296		405		300		296		396
5.950% notes due February 2041	350		345		476		350		345		426		350		345		484		350		345		475
4.625% notes due November 2041	600		589		710		600		588		627		600		589		742		600		589		716
4.375% notes due March 2042	502		484		572		502		484		503		502		484		601		502		484		580
3.950% notes due October 2042	625		607		676		625		607		596		625		608		711		625		607		688
4.250% notes due March 2043	750		735		844		750		734		744		750		735		885		750		735		856
4.750% notes due July 2045	2,000		1,973		2,431		2,000		1,973		2,116		2,000		1,973		2,547		2,000		1,973		2,463
4.200% notes due January 2047	750		738		852		750		738		745		750		738		881		750		738		861
4.250% notes due April 2047	725		717		823		725		717		719		725		717		853		725		717		839
3.750% notes due October 2047	950		933		1,005		950		933		869		950		934		1,050		950		934		1,023
4.250% notes due June 2048	1,350		1,329		1,550		1,350		1,329		1,349		1,350		1,330		1,592		1,350		1,330		1,569
4.450% notes due December 2048	1,100		1,086		1,301		1,100		1,087		1,132		1,100		1,086		1,333		1,100		1,086		1,316
3.700% notes due August 2049	1,250		1,235		1,323		—		—		—		1,250		1,235		1,385		1,250		1,235		1,344
3.875% notes due August 2059	1,250		1,231		1,327		—		—		—		1,250		1,229		1,372		1,250		1,228		1,350
Total commercial paper and long-term debt	$	43,999	$	43,690	$	48,141	$	35,667	$	35,234	$	36,591
Total short-term borrowings and long-term debt													$	50,631	$	50,509	$	55,388	$	39,817	$	39,474	$	44,234

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 $309 million and ~~$229~~$322 million were classified as current as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

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 ~~September 30, 2019,~~March 31, 2020, the Company’s outstanding commercial paper had a weighted average annual interest rate of ~~2.2%~~2.4%.

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 September 30, 2019, 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~~As of March 31, 2020, the Company had ~~been~~ drawn $1.8 billion, $4.4 billion and $3.8 billion at annual interest rates of 1.6%, 1.6% and 1.7% on ~~the~~its $4.4 billion five-year, $4.4 billion three-year and $3.8 billion 364-day revolving bank credit facilities, ~~as of September 30, 2019, annual interest rates would have ranged from 2.7% to 2.8%.~~respectively.

Debt Covenants

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 ~~September 30, 2019.~~March 31, 2020.

6. ~~Dividends~~

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

Payment Date Amount per Share Total Amount Paid
(in millions)
March 19 $ 0.90
$ 860
June 25 1.08
1,024
September 24 1.08
1,024

7. Commitments and Contingencies

~~Leases~~

Operating lease costs were $275 million and $760 million for the three and nine months ended September 30, 2019, respectively, and included immaterial variable and short-term lease costs. Cash payments made on the Company’s operating lease liabilities were $552 million for the nine months ended September 30, 2019, which were classified within operating activities in the Condensed Consolidated Statements of Cash Flows. As of September 30, 2019, the Company’s weighted-average remaining lease term and weighted-average discount rate for its operating leases were 8.6 years and 3.9%, respectively.

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

(in millions) Future Operating Lease Payments
2019 $ 198
2020 782
2021 693
2022 580
2023 477
Thereafter 1,978
Total future minimum lease payments 4,708
Less imputed interest (758 )
Total $ 3,950

Legal Matters

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. Business Combinations~~

~~During the nine months ended September 30, 2019, the Company completed several business combinations for total cash consideration of $9.7 billion.~~

The total consideration exceeded the estimated fair value of the net tangible assets acquired by $8.6 billion, of which $2.0 billion has been allocated to finite-lived intangible assets and $6.6 billion to goodwill. The goodwill is not deductible for income tax purposes.

~~Acquired tangible assets (liabilities) at acquisition date were:~~

(in millions)
Cash and cash equivalents $ 1,537
Accounts receivable and other current assets 1,775
Property, equipment and other long-term assets 1,941
Medical costs payable (868 )
Accounts payable and other current liabilities (1,669 )
Other long-term liabilities (1,283 )
Total net tangible assets $ 1,433

The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent and tax liabilities, are finalized.

~~The acquisition date fair values and weighted-average useful lives assigned to acquired finite-lived intangible assets were:~~

(in millions, except years) Fair Value Weighted-Average Useful Life
Customer-related $ 1,670
14
Trademarks and technology 117
4
Other 164
10
Total acquired finite-lived intangible assets $ 1,951
13

The results of operations and financial condition of acquired entities have been included in the Company’s consolidated results and the results of the corresponding operating segment as of date of acquisition. Through September 30, 2019, acquired entities’ impact on revenues and net earnings was not material.

Unaudited pro forma revenues for the nine months ended September 30, 2019 and 2018 as if the acquisitions had occurred on January 1, 2018 were immaterial for both periods. The pro forma effects of the acquisitions on net earnings were immaterial for both years.

9.7. Segment Financial Information

The Company’s 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 $40.1 billion as of September 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. Total assets at OptumInsight increased to $15.1 billion as of September 30, 2019 compared to ~~$11.0 billion~~ ~~as of December 31, 2018, primarily due to goodwill and other intangibles assets from a third quarter 2019 acquisition.~~

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 September 30, 2019
Revenues - unaffiliated customers:
Premiums $ 45,557
$ 1,840
$ —
$ —
$ —
$ 1,840
$ —
$ 47,397
Products —
6
29
7,511
—
7,546
—
7,546
Services 2,274
1,487
988
193
—
2,668
—
4,942
Total revenues - unaffiliated customers 47,831
3,333
1,017
7,704
—
12,054
—
59,885
Total revenues - affiliated customers —
4,630
1,594
10,734
(441 ) 16,517
(16,517 ) —
Investment and other income 274
170
6
16
—
192
—
466
Total revenues $ 48,105
$ 8,133
$ 2,617
$ 18,454
$ (441 ) $ 28,763
$ (16,517 ) $ 60,351
Earnings from operations $ 2,655
$ 748
$ 632
$ 979
$ —
$ 2,359
$ —
$ 5,014
Interest expense —
—
—
—
—
—
(449 ) (449 )
Earnings before income taxes $ 2,655
$ 748
$ 632
$ 979
$ —
$ 2,359
$ (449 ) $ 4,565
Three Months Ended September 30, 2018
Revenues - unaffiliated customers:
Premiums $ 43,628
$ 985
$ —
$ —
$ —
$ 985
$ —
$ 44,613
Products —
13
29
7,302
—
7,344
—
7,344
Services 2,067
1,196
790
164
—
2,150
—
4,217
Total revenues - unaffiliated customers 45,695
2,194
819
7,466
—
10,479
—
56,174
Total revenues - affiliated customers —
3,733
1,431
9,960
(352 ) 14,772
(14,772 ) —
Investment and other income 242
125
4
11
—
140
—
382
Total revenues $ 45,937
$ 6,052
$ 2,254
$ 17,437
$ (352 ) $ 25,391
$ (14,772 ) $ 56,556
Earnings from operations $ 2,559
$ 622
$ 534
$ 875
$ —
$ 2,031
$ —
$ 4,590
Interest expense —
—
—
—
—
—
(353 ) (353 )
Earnings before income taxes $ 2,559
$ 622
$ 534
$ 875
$ —
$ 2,031
$ (353 ) $ 4,237


			Optum																			Optum
(in millions)	UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations			Optum		Corporate and Eliminations			Consolidated			UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations			Optum		Corporate and Eliminations			Consolidated
Nine Months Ended September 30, 2019
Three Months Ended March 31, 2020
Revenues - unaffiliated customers:
Premiums	$	138,088	$	3,986	$	—	$	—	$	—		$	3,986	$	—		$	142,074		$	48,593	$	2,047	$	—	$	—	$	—		$	2,047	$	—		$	50,640
Products	—		23		74		23,874		—			23,971		—			23,971			—		9		29		8,393		—			8,431		—			8,431
Services	6,603		4,131		2,532		490		—			7,153		—			13,756			2,278		1,548		891		268		—			2,707		—			4,985
Total revenues - unaffiliated customers	144,691		8,140		2,606		24,364		—			35,110		—			179,801			50,871		3,604		920		8,661		—			13,185		—			64,056
Total revenues - affiliated customers	—		13,366		4,522		30,786		(1,181		)	47,493		(47,493		)	—			—		5,452		1,562		12,876		(404		)	19,486		(19,486		)	—
Investment and other income	904		488		17		44		—			549		—			1,453			197		136		12		20		—			168		—			365
Total revenues	$	145,595	$	21,994	$	7,145	$	55,194	$	(1,181	)	$	83,152	$	(47,493	)	$	181,254		$	51,068	$	9,192	$	2,494	$	21,557	$	(404	)	$	32,839	$	(19,486	)	$	64,421
Earnings from operations	$	8,251	$	2,062	$	1,589	$	2,688	$	—		$	6,339	$	—		$	14,590		$	2,888	$	712	$	536	$	860	$	—		$	2,108	$	—		$	4,996
Interest expense	—		—		—		—		—			—		(1,267		)	(1,267		)	—		—		—		—		—			—		(437		)	(437		)
Earnings before income taxes	$	8,251	$	2,062	$	1,589	$	2,688	$	—		$	6,339	$	(1,267	)	$	13,323		$	2,888	$	712	$	536	$	860	$	—		$	2,108	$	(437	)	$	4,559
Nine Months Ended September 30, 2018
Three Months Ended March 31, 2019
Revenues - unaffiliated customers:
Premiums	$	130,361	$	2,794	$	—	$	—	$	—		$	2,794	$	—		$	133,155		$	46,501	$	1,012	$	—	$	—	$	—		$	1,012	$	—		$	47,513
Products	—		37		72		20,941		—			21,050		—			21,050			—		8		23		8,041		—			8,072		—			8,072
Services	6,248		3,587		2,306		449		—			6,342		—			12,590			2,141		1,274		754		149		—			2,177		—			4,318
Total revenues - unaffiliated customers	136,609		6,418		2,378		21,390		—			30,186		—			166,795			48,642		2,294		777		8,190		—			11,261		—			59,903
Total revenues - affiliated customers	—		10,979		4,115		29,062		(1,026		)	43,130		(43,130		)	—			—		4,287		1,407		9,613		(359		)	14,948		(14,948		)	—
Investment and other income	633		355		15		32		—			402		—			1,035			254		132		5		14		—			151		—			405
Total revenues	$	137,242	$	17,752	$	6,508	$	50,484	$	(1,026	)	$	73,718	$	(43,130	)	$	167,830		$	48,896	$	6,713	$	2,189	$	17,817	$	(359	)	$	26,360	$	(14,948	)	$	60,308
Earnings from operations	$	7,316	$	1,680	$	1,382	$	2,469	$	—		$	5,531	$	—		$	12,847		$	2,954	$	626	$	432	$	820	$	—		$	1,878	$	—		$	4,832
Interest expense	—		—		—		—		—			—		(1,026		)	(1,026		)	—		—		—		—		—			—		(400		)	(400		)
Earnings before income taxes	$	7,316	$	1,680	$	1,382	$	2,469	$	—		$	5,531	$	(1,026	)	$	11,821		$	2,954	$	626	$	432	$	820	$	—		$	1,878	$	(400	)	$	4,432


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 97 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 is rapidly evolving and the ultimate impact on our business, results of operations, financial condition and cash flows is uncertain and difficult to predict. For additional information regarding risks and uncertainties relating to COVID-19, see “Risk Factors” in Part II, Item 1A of this report. 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; 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 began accelerating payments to care providers, all with the aim of assisting our customers, providers and members in addressing the COVID-19 crisis. Potential economic costs, including cost of care and loss of commercial membership due to higher rates of unemployment, may initially be more than offset by temporary deferrals of elective care and increased membership in Medicaid and individual programs. Following the crisis, consumer demand for care is expected to return, resulting in potentially increased future medical costs. Depending on the pacing and intensity of the virus, as well as the duration of policies and initiatives to address COVID-19, such as stay-at-home and social distancing guidelines,the ultimate impact is uncertain.

Optum. The reduction of elective and routine procedures also impacts the Optum business. For example, most traditional procedure work at our ambulatory surgery centers has been postponed, while our capitated care delivery businesses have experienced lower care demand. 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 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 from 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 reflects~~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.

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 non-reimbursable 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.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select ~~third~~first quarter ~~2019~~2020 year-over-year operating comparisons to ~~third~~first quarter ~~2018.~~2019.

Consolidated revenues grew 7%, UnitedHealthcare revenues grew 5%4% and Optum revenues grew ~~13%~~25%.

UnitedHealthcare served ~~415,000 additional~~670,000 fewer people domestically primarily asdue to expected attrition in commercial group and the proactive withdrawal from a ~~result of acquisitions and growth in services to self-funded employers and seniors.~~Medicaid market.

Consolidated earnings from operations increased 9%3%, including ~~increases~~a decrease of 4%2% at UnitedHealthcare and ~~16%~~an increase of 12% at Optum.

Diluted earnings per common share ~~increased 13%.~~decreased 1% to $3.52.

Cash flows from operations for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 were ~~$12.3~~$2.9 billion.


•	~~Return on equity was~~ ~~26.2%~~ Return on equity was 23.6%.

RESULTS SUMMARY

The following table summarizes our consolidated results of operations and other financial information:


(in millions, except percentages and per share data)	Three Months Ended September 30,						Increase/(Decrease)					Nine Months Ended September 30,						Increase/(Decrease)					Three Months Ended March 31,						Increase/(Decrease)
(in millions, except percentages and per share data)	2019			2018			2019 vs. 2018					2019			2018			2019 vs. 2018					2020			2019			2020 vs. 2019
Revenues:
Premiums	$	47,397		$	44,613		$	2,784		6	%	$	142,074		$	133,155		$	8,919		7	%	$	50,640		$	47,513		$	3,127		7	%
Products	7,546			7,344			202			3		23,971			21,050			2,921			14		8,431			8,072			359			4
Services	4,942			4,217			725			17		13,756			12,590			1,166			9		4,985			4,318			667			15
Investment and other income	466			382			84			22		1,453			1,035			418			40		365			405			(40		)	(10	)
Total revenues	60,351			56,556			3,795			7		181,254			167,830			13,424			8		64,421			60,308			4,113			7
Operating costs:
Medical costs	39,041			36,158			2,883			8		117,164			108,448			8,716			8		41,000			38,939			2,061			5
Operating costs	8,960			8,479			481			6		25,892			25,371			521			2		10,015			8,517			1,498			18
Cost of products sold	6,627			6,718			(91		)	(1	)	21,606			19,373			2,233			12		7,687			7,381			306			4
Depreciation and amortization	709			611			98			16		2,002			1,791			211			12		723			639			84			13
Total operating costs	55,337			51,966			3,371			6		166,664			154,983			11,681			8		59,425			55,476			3,949			7
Earnings from operations	5,014			4,590			424			9		14,590			12,847			1,743			14		4,996			4,832			164			3
Interest expense	(449		)	(353		)	(96		)	27		(1,267		)	(1,026		)	(241		)	23		(437		)	(400		)	(37		)	9
Earnings before income taxes	4,565			4,237			328			8		13,323			11,821			1,502			13		4,559			4,432			127			3
Provision for income taxes	(936		)	(953		)	17			(2	)	(2,752		)	(2,603		)	(149		)	6		(1,094		)	(875		)	(219		)	25
Net earnings	3,629			3,284			345			11		10,571			9,218			1,353			15		3,465			3,557			(92		)	(3	)
Earnings attributable to noncontrolling interests	(91		)	(96		)	5			(5	)	(273		)	(272		)	(1		)	—		(83		)	(90		)	7			(8	)
Net earnings attributable to UnitedHealth Group common shareholders	$	3,538		$	3,188		$	350		11	%	$	10,298		$	8,946		$	1,352		15	%	$	3,382		$	3,467		$	(85	)	(2	)%
Diluted earnings per share attributable to UnitedHealth Group common shareholders	$	3.67		$	3.24		$	0.43		13	%	$	10.65		$	9.09		$	1.56		17	%	$	3.52		$	3.56		$	(0.04	)	(1	)%
Medical care ratio (a)	82.4		%	81.0		%	1.4		%			82.5		%	81.4		%	1.1		%			81.0		%	82.0		%	(1.0		)%
Operating cost ratio	14.8			15.0			(0.2		)			14.3			15.1			(0.8		)			15.5			14.1			1.4
Operating margin	8.3			8.1			0.2					8.0			7.7			0.3					7.8			8.0			(0.2		)
Tax rate	20.5			22.5			(2.0		)			20.7			22.0			(1.3		)			24.0			19.7			4.3
Net earnings margin (b)	5.9			5.6			0.3					5.7			5.3			0.4					5.2			5.7			(0.5		)
Return on equity (c)	26.2		%	25.9		%	0.3		%			26.0		%	24.6		%	1.4		%			23.6		%	26.8		%	(3.2		)%


(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~~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 Medicare Advantage; pricing trends; and acquisition and organic growth across the Optum business, primarily due to expansion in pharmacy care services and care ~~delivery; partially offset by the moratorium of the Health Insurance Industry Tax in 2019.~~delivery.

Medical Costs and MCR

Medical costs increased due to growth in people served through Medicare Advantage, ~~and~~ medical cost trends and calendar day impacts, partially offset by decreased people served in Medicaid due to a proactive market withdrawal and increased prior year favorable medical cost development. The MCR ~~increased~~decreased primarily due to the revenue effects of the return of the Health Insurance ~~Industry~~ Tax, ~~moratorium.~~partially offset by calendar day impacts.

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 changes in business mix, partially offset by effective operating cost management.

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.

Reportable Segments

See Note 97 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 September 30,						Increase/(Decrease)					Nine Months Ended September 30,						Increase/(Decrease)					Three Months Ended March 31,						Increase/(Decrease)
(in millions, except percentages)	2019			2018			2019 vs. 2018					2019			2018			2019 vs. 2018					2020			2019			2020 vs. 2019
Revenues
UnitedHealthcare	$	48,105		$	45,937		$	2,168		5	%	$	145,595		$	137,242		$	8,353		6	%	$	51,068		$	48,896		$	2,172		4	%
OptumHealth	8,133			6,052			2,081			34		21,994			17,752			4,242			24		9,192			6,713			2,479			37
OptumInsight	2,617			2,254			363			16		7,145			6,508			637			10		2,494			2,189			305			14
OptumRx	18,454			17,437			1,017			6		55,194			50,484			4,710			9		21,557			17,817			3,740			21
Optum eliminations	(441		)	(352		)	(89		)	25		(1,181		)	(1,026		)	(155		)	15		(404		)	(359		)	(45		)	13
Optum	28,763			25,391			3,372			13		83,152			73,718			9,434			13		32,839			26,360			6,479			25
Eliminations	(16,517		)	(14,772		)	(1,745		)	12		(47,493		)	(43,130		)	(4,363		)	10		(19,486		)	(14,948		)	(4,538		)	30
Consolidated revenues	$	60,351		$	56,556		$	3,795		7	%	$	181,254		$	167,830		$	13,424		8	%	$	64,421		$	60,308		$	4,113		7	%
Earnings from operations
UnitedHealthcare	$	2,655		$	2,559		$	96		4	%	$	8,251		$	7,316		$	935		13	%	$	2,888		$	2,954		$	(66	)	(2	)%
OptumHealth	748			622			126			20		2,062			1,680			382			23		712			626			86			14
OptumInsight	632			534			98			18		1,589			1,382			207			15		536			432			104			24
OptumRx	979			875			104			12		2,688			2,469			219			9		860			820			40			5
Optum	2,359			2,031			328			16		6,339			5,531			808			15		2,108			1,878			230			12
Consolidated earnings from operations	$	5,014		$	4,590		$	424		9	%	$	14,590		$	12,847		$	1,743		14	%	$	4,996		$	4,832		$	164		3	%
Operating margin
UnitedHealthcare	5.5		%	5.6		%	(0.1		)%			5.7		%	5.3		%	0.4		%			5.7		%	6.0		%	(0.3		)%
OptumHealth	9.2			10.3			(1.1		)			9.4			9.5			(0.1		)			7.7			9.3			(1.6		)
OptumInsight	24.1			23.7			0.4					22.2			21.2			1.0					21.5			19.7			1.8
OptumRx	5.3			5.0			0.3					4.9			4.9			—					4.0			4.6			(0.6		)
Optum	8.2			8.0			0.2					7.6			7.5			0.1					6.4			7.1			(0.7		)
Consolidated operating margin	8.3		%	8.1		%	0.2		%			8.0		%	7.7		%	0.3		%			7.8		%	8.0		%	(0.2		)%

UnitedHealthcare

The following table summarizes UnitedHealthcare revenues by business:


	Three Months Ended September 30,				Increase/(Decrease)					Nine Months Ended September 30,				Increase/(Decrease)				Three Months Ended March 31,				Increase/(Decrease)
(in millions, except percentages)	2019		2018		2019 vs. 2018					2019		2018		2019 vs. 2018				2020		2019		2020 vs. 2019
UnitedHealthcare Employer & Individual	$	14,291	$	13,734	$	557		4	%	$	42,407	$	40,856	$	1,551	4	%	$	14,280	$	14,084	$	196		1	%
UnitedHealthcare Medicare & Retirement	20,698		18,789		1,909			10		62,649		56,573		6,076		11		23,152		21,096		2,056			10
UnitedHealthcare Community & State	10,670		11,054		(384		)	(3	)	33,038		32,471		567		2		11,453		11,182		271			2
UnitedHealthcare Global	2,446		2,360		86			4		7,501		7,342		159		2		2,183		2,534		(351		)	(14	)
Total UnitedHealthcare revenues	$	48,105	$	45,937	$	2,168		5	%	$	145,595	$	137,242	$	8,353	6	%	$	51,068	$	48,896	$	2,172		4	%

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


	September 30,		Increase/(Decrease)				March 31,		Increase/(Decrease)
(in thousands, except percentages)	2019	2018	2019 vs. 2018				2020	2019	2020 vs. 2019
Commercial:
Risk-based	8,605	8,450	155		2	%	8,215	8,340	(125	)	(1	)%
Fee-based	19,230	18,365	865		5		18,825	19,175	(350	)	(2	)
Total commercial	27,835	26,815	1,020		4		27,040	27,515	(475	)	(2	)
Medicare Advantage	5,230	4,915	315		6		5,575	5,165	410		8
Medicaid	5,965	6,630	(665	)	(10	)	5,880	6,425	(545	)	(8	)
Medicare Supplement (Standardized)	4,510	4,540	(30	)	(1	)	4,440	4,500	(60	)	(1	)
Total public and senior	15,705	16,085	(380	)	(2	)	15,895	16,090	(195	)	(1	)
Total UnitedHealthcare - domestic medical	43,540	42,900	640		1		42,935	43,605	(670	)	(2	)
International	5,845	6,070	(225	)	(4	)	5,605	6,125	(520	)	(8	)
Total UnitedHealthcare - medical	49,385	48,970	415		1	%	48,540	49,730	(1,190	)	(2	)%
Supplemental Data:
Medicare Part D stand-alone	4,415	4,725	(310	)	(7	)%	4,150	4,480	(330	)	(7	)%

Fee-based and risk-based commercial ~~group~~ business ~~increased~~decreased primarily due to ~~an acquisition.~~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 ~~the Iowa~~a market as well as by states ~~adding new carriers to existing programs and~~ managing eligibility, partially offset by increases in Dual Special Needs Plans. The decrease in people served internationally is a result of our continued affordability efforts and underwriting discipline.

UnitedHealthcare’s revenue ~~and earnings from operations~~ increased due to growth in the number of individuals served through ~~Commercial and~~ Medicare Advantage, ~~including~~ a greater mix of people with higher acuity ~~needs. Revenue increases were~~needs and the return of the Health Insurance Tax, partially offset by a decrease in the number of individuals served through the commercial and Medicaid businesses. Earnings from operations decreased primarily due to the return of the Health Insurance Tax and calendar day impacts, partially offset by the ~~moratorium on the Health Insurance Industry Tax in 2019. Earnings from operations were also favorably impacted by operating cost management.~~factors impacting revenue.

Optum

Total revenues and earnings from operations increased as each segment reported increased revenues and earnings from operations as a result of productivity and overall cost management initiatives in addition to the factors discussed below.

The results by segment were as follows:

OptumHealth

Revenue and earnings from operations increased at OptumHealth primarily due to ~~organic growth and~~ acquisitions ~~in care delivery, increased care services~~ and organic growth in ~~behavioral health. Increased operating earnings were primarily due to~~ care ~~delivery and care services.~~delivery. OptumHealth served approximately 9596 million people as of ~~September 30, 2019~~March 31, 2020 compared to 9293 million people as of ~~September 30, 2018.~~March 31, 2019.

OptumInsight

Revenue and earnings from operations at OptumInsight increased primarily due to organic growth and ~~acquisition growth~~acquisitions in managed services.

OptumRx

Revenue 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 and new client wins, partially offset by an expected large client transition. Earnings from operations increased primarily due to ~~the factors that increased revenue as well as~~ improved supply chain management. OptumRx fulfilled ~~325 million and 331~~339 million adjusted scripts in the ~~third~~first quarter of 2020 and 2019, ~~and 2018, respectively. The decrease was due to~~with organic growth in adjusted scripts being offset by the expected large client transition.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES

Liquidity

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


	Nine Months Ended September 30,						Increase/(Decrease)			Three Months Ended March 31,						Increase/(Decrease)
(in millions)	2019			2018			2019 vs. 2018			2020			2019			2020 vs. 2019
Sources of cash:
Cash provided by operating activities	$	12,258		$	13,317		$	(1,059	)	$	2,943		$	3,234		$	(291	)
Issuances of commercial paper and long-term debt, net of repayments	8,192			1,200			6,992
Issuances of short-term borrowings and long-term debt, net of repayments										10,797			1,851			8,946
Proceeds from common stock issuances	740			745			(5		)	557			323			234
Customer funds administered	420			1,552			(1,132		)	1,062			1,784			(722		)
Other	338			—			338
Sales and maturities of investments, net of purchases										30			—			30
Total sources of cash	21,948			16,814						15,389			7,192
Uses of cash:
Common stock repurchases	(5,101		)	(3,650		)	(1,451		)	(1,691		)	(3,002		)	1,311
Cash paid for acquisitions, net of cash assumed	(8,200		)	(5,824		)	(2,376		)	(929		)	(689		)	(240		)
Purchases of investments, net of sales and maturities	(2,028		)	(3,729		)	1,701			—			(319		)	319
Purchases of property, equipment and capitalized software	(1,421		)	(1,505		)	84			(469		)	(562		)	93
Cash dividends paid	(2,908		)	(2,454		)	(454		)	(1,024		)	(860		)	(164		)
Other	(756		)	(1,273		)	517			(563		)	(214		)	(349		)
Total uses of cash	(20,414		)	(18,435		)				(4,676		)	(5,646		)
Effect of exchange rate changes on cash and cash equivalents	(37		)	(97		)	60			(129		)	(5		)	(124		)
Net increase (decrease) in cash and cash equivalents	$	1,497		$	(1,718	)	$	3,215
Net increase in cash and cash equivalents										$	10,584		$	1,541		$	9,043

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

Decreased cash flows provided by operating activities were primarily driven by changes in working capital ~~accounts, partially offset by higher net earnings.~~accounts. Other significant changes in sources or uses of cash year-over-year included increased ~~issuances of commercial paper~~short-term borrowings and decreased ~~net purchases of investments~~common stock repurchases, partially offset by ~~increases~~a decrease in ~~cash paid for acquisitions and common stock repurchases.~~customer funds administered.

Financial Condition

As of ~~September 30, 2019,~~March 31, 2020, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of ~~$50.4~~$58.9 billion included approximately ~~$12.4~~$21.6 billion of cash and cash equivalents (of which ~~$1.5~~$10.9 billion was available for general corporate use), ~~$35.9~~$35.6 billion of debt securities and ~~$2.0~~$1.7 billion of investments in equity securities. Cash available for general corporate use was intentionally higher than previous periods as a prudent response to more volatile financial markets. 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 ~~September 30, 2019.~~March 31, 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 ~~September 30, 2019,~~March 31, 2020, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately ~~41%~~44%.

Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, such as, to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. For more information on our long-term debt, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Credit Ratings. Our credit ratings as of ~~September 30, 2019~~March 31, 2020 were as follows:

Moody’s

S&P Global

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 ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we repurchased 216 million shares at an average price of ~~$245.18~~$271.32 per share. As of ~~September 30, 2019,~~March 31, 2020, we had Board authorization to purchase up to 7466 million shares of our common stock.

Dividends. ~~In June 2019, our Board increased our~~Our quarterly cash dividend to shareholders toreflects an annual dividend rate of $4.32 per share. ~~For more information on our dividend, see~~ ~~Note 6 of Notes to the Condensed Consolidated Financial Statements~~ ~~included in Part I, 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 ~~nine~~three months ended ~~September 30, 2019,~~March 31, 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 which are intended to take advantage of the “safe harbor” provisions of the federal securities law. The words “believe,”

~~“expect,~~ “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties.

Actual results could differ materially from those that management expects, depending on the outcome of certain factors including: risks associated with public health crises, large-scale medical emergencies and pandemics, such as the COVID-19 pandemic; our ability to effectively estimate, price for and manage medical costs; new or changes in existing health care laws or regulations, or their enforcement or application; the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in quality scores impacting revenue; reductions in revenue or delays to cash flows received under government programs; changes in Medicare, the CMS star ratings program or the application of risk adjustment data validation audits; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; cyber-attacks, other privacy/data security incidents, or our failure to comply with related regulations; risks and uncertainties associated with the pharmacy benefits management industry; competitive pressures; changes in or challenges to our public sector contract awards; our ability to contract on competitive terms with physicians, hospitals and other service providers; failure to achieve targeted operating cost productivity improvements; increases in costs and other liabilities associated with litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of strategic transactions; fluctuations in foreign currency exchange rates; downgrades in our credit ratings; our investment portfolio performance; impairment of our goodwill and intangible assets; ~~failure to maintain effective and efficient information systems or if our technology products do not operate as intended;~~ and our ability to obtain sufficient funds from our regulated subsidiaries or from external financings to fund our obligations, maintain our debt to total capital ratio at targeted levels, maintain our quarterly dividend payment cycle, or continue repurchasing shares of our common stock.

This above list is not exhaustive. We discuss these matters, and certain risks that may affect our business operations, financial condition and results of operations more fully in our filings with the SEC, including our reports on Forms 10-K, 10-Q and 8-K. By their nature, forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual results may vary materially from expectations expressed or implied in this document or any of our prior communications. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by law.

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 ~~September 30, 2019~~March 31, 2020 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):


	September 30, 2019												March 31, 2020
Increase (Decrease) in Market Interest Rate	Investment Income Per Annum			Interest Expense Per Annum			Fair Value of Financial Assets			Fair Value of Financial Liabilities			Investment Income Per Annum (a)			Interest Expense Per Annum (a)			Fair Value of Financial Assets (b)			Fair Value of Financial Liabilities
2 %	$	310		$	268		$	(2,607	)	$	(6,824	)	$	491		$	404		$	(2,514	)	$	(6,673	)
1	155			134			(1,293		)	(3,709		)	246			202			(1,250		)	(3,628		)
(1)	(155		)	(134		)	1,227			4,440			(160		)	(202		)	784			3,735
(2)	(310		)	(268		)	1,954			9,440			(160		)	(267		)	877			4,694


(a)	Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of March 31, 2020, the assumed hypothetical change in interest rates does not reflect the full 100 and 200 basis point reduction in interest income or the full 200 basis point reduction in interest expense, as the rate cannot fall below zero.


(b)	As of March 31, 2020, some of our investments had interest rates below 2% 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 ~~September 30, 2019.~~March 31, 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 ~~September 30, 2019.~~March 31, 2020.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2019~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

A description of our legal proceedings is included in and incorporated by reference to Note 76 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, which could materially affect our business, financial condition or future results. The risks described in our ~~2018~~2019 10-K and in this Item 1A, 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 disclosed in our ~~2018 10-K.~~2019 10-K except that we have added the following risk factor to provide details on our risks associated with COVID-19:

We are subject to risks associated with public health crises, large-scale medical emergencies and pandemics, such as the COVID-19 pandemic, which could have a material adverse effect on our business, results of operations, financial condition and financial performance.

The rapidly developing COVID-19 global health crisis is having major impacts on health systems, businesses, governments and customer and consumer activities. UnitedHealth Group continues to mobilize the full strength of its resources to deliver the best care for patients, support for its members and care provider partners, and deliver innovative solutions and support for the communities we serve and the entire health system. The impact to our business is primarily dependent upon the ultimate pacing, intensity and duration of the crisis, factors which we cannot predict at this time. These factors will drive the related treatment, testing, coverage and other services we provide for the people we serve. The health system has recently experienced deferrals of elective care, which impacts both the UnitedHealthcare and Optum businesses through decreased utilization of health care services. As the crisis abates, we may experience an increase in medical care costs as people seek care which was deferred during the pandemic and individuals with chronic conditions may require additional care needs resulting from missed treatments. There can be no assurance that the premiums and fees we charge will be sufficient to cover the medical and administrative costs associated with COVID-19. In addition, we may experience reduced demand for certain services Optum provides to care providers and health plans as a result of reduced clinical and claims activity and changes in business priorities resulting from COVID-19. We cannot at this time measure the impact or duration of changing customer, consumer and member behavior to our overall business.

Governmental policies and initiatives to address COVID-19 have resulted in our customers having to close or severely curtail their operations. Among other impacts, we may experience loss of commercial membership due to customer reductions in workforce and an adverse impact on the timing and collectability of premium payments. In addition, governments have modified, and may continue to modify, regulatory standards around various aspects of health care in response to COVID-19,

and these rapidly changing standards may create challenges for us to ensure timely compliance and meet various contractual obligations.

Disruptions in public and private infrastructure, including supply chains providing medical supplies and pharmaceutical products, could adversely disrupt our business operations. Additionally, the enactment of emergency powers by governments could disrupt our business operations, including restricting pharmaceuticals or other supplies, and could increase the risk of shortages of necessary items.

We have transitioned a significant number of our team members to at-home work environments in an effort to mitigate the spread of COVID-19. This transition may increase our operating costs and effectiveness, including our ability to maintain service levels and ratings, and exacerbate certain risks to our business, including demand for information technology resources, increased vulnerabilities to cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us, our customers or our members.

The COVID-19 crisis has also adversely impacted global access to capital and caused significant volatility in financial markets. Significant deterioration of the U.S. and global economies could have a significant adverse impact on our investment income, the value of our investments, or future liquidity needs.

Because of the unknown pacing, intensity and duration of this pandemic, we cannot predict the impact of its ultimate disruption to business activities, its employment and economic effects, its near and long-term impacts on the patterns of care and services across the healthcare system, or the ultimate resulting impact on our business, results of operations, financial position or cash flows.


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 ~~third~~first quarter ~~2019,~~2020, we repurchased approximately 36 million shares at an average price of ~~$233.38~~$271.32 per share. As of ~~September 30, 2019,~~March 31, 2020, we had Board authorization to purchase up to 7466 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.



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~~			~~Separation and Release Agreement, effective as of September 30, 2019, between Steven H. Nelson and United HealthCare Services, Inc.~~
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).

________________



*		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.

SIGNATURES

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	Chief Executive Officer (principal executive officer)	Dated:	~~November~~May 6, ~~2019~~2020
David S. Wichmann	Chief Executive Officer (principal executive officer)

/s/ JOHN F. REX	Executive Vice President and Chief Financial Officer (principal financial officer)	Dated:	~~November~~May 6, ~~2019~~2020
John F. Rex

/s/ THOMAS E. ROOS	Senior Vice President and Chief Accounting Officer (principal accounting officer)	Dated:	~~November~~May 6, ~~2019~~2020
Thomas E. Roos

2725



Payment Date	Amount per Share		Total Amount Paid
			(in millions)
March 19	$	0.90	$	860
June 25	1.08		1,024
September 24	1.08		1,024



(in millions)	Future Operating Lease Payments
2019	$	198
2020	782
2021	693
2022	580
2023	477
Thereafter	1,978
Total future minimum lease payments	4,708
Less imputed interest	(758		)
Total	$	3,950



(in millions)
Cash and cash equivalents	$	1,537
Accounts receivable and other current assets	1,775
Property, equipment and other long-term assets	1,941
Medical costs payable	(868		)
Accounts payable and other current liabilities	(1,669		)
Other long-term liabilities	(1,283		)
Total net tangible assets	$	1,433



(in millions, except years)	Fair Value		Weighted-Average Useful Life
Customer-related	$	1,670	14
Trademarks and technology	117		4
Other	164		10
Total acquired finite-lived intangible assets	$	1,951	13