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 SEPTEMBERJune 30, 20192020
or
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
__________________________________________________________ 
unh-20200630_g1.jpg
UnitedHealth Group Incorporated
(Exact name of registrant as specified in its charter)
 __________________________________________________________ 
Delaware41-1321939
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
UnitedHealth Group Center55343
9900 Bren Road East
Minnetonka,Minnesota
(Address of principal executive offices)(Zip Code)
(952) (952) 936-1300
(Registrant’s telephone number, including area code)
_________________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueUNHNYSE
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 filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging 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,July 30, 2020, there were 947,414,929950,335,762 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.




UNITEDHEALTH GROUP
Table of Contents
 
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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
Assets    
Current assets:    
Cash and cash equivalents $12,363
 $10,866
Short-term investments 3,455
 3,458
Accounts receivable, net 10,964
 11,388
Other current receivables, net 10,152
 6,862
Assets under management 3,051
 3,032
Prepaid expenses and other current assets 3,556
 3,086
Total current assets 43,541
 38,692
Long-term investments 36,840
 32,510
Property, equipment and capitalized software, net 8,501
 8,458
Goodwill 65,205
 58,910
Other intangible assets, net 10,521
 9,325
Other assets 9,101
 4,326
Total assets $173,709
 $152,221
Liabilities, redeemable noncontrolling interests and equity    
Current liabilities:    
Medical costs payable $20,939
 $19,891
Accounts payable and accrued liabilities 18,570
 16,705
Commercial paper and current maturities of long-term debt 6,387
 1,973
Unearned revenues 2,500
 2,396
Other current liabilities 14,245
 12,244
Total current liabilities 62,641
 53,209
Long-term debt, less current maturities 38,507
 34,581
Deferred income taxes 2,902
 2,474
Other liabilities 9,912
 5,730
Total liabilities 113,962
 95,994
Commitments and contingencies (Note 7) 


 


Redeemable noncontrolling interests 1,991
 1,908
Equity:    
Preferred stock, $0.001 par value - 10 shares authorized; no shares issued or outstanding 
 
Common stock, $0.01 par value - 3,000 shares authorized; 947 and 960 issued and outstanding 9
 10
Retained earnings 58,696
 55,846
Accumulated other comprehensive loss (3,709) (4,160)
Nonredeemable noncontrolling interests 2,760
 2,623
Total equity 57,756
 54,319
Total liabilities, redeemable noncontrolling interests and equity $173,709
 $152,221

(in millions, except per share data)June 30,
2020
December 31,
2019
Assets
Current assets:
Cash and cash equivalents$22,327  $10,985  
Short-term investments3,266  3,260  
Accounts receivable, net12,546  11,822  
Other current receivables, net11,430  9,640  
Assets under management3,417  3,076  
Prepaid expenses and other current assets5,932  3,851  
Total current assets58,918  42,634  
Long-term investments36,778  37,209  
Property, equipment and capitalized software, net8,126  8,704  
Goodwill67,872  65,659  
Other intangible assets, net10,552  10,349  
Other assets10,237  9,334  
Total assets$192,483  $173,889  
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable$19,200  $21,690  
Accounts payable and accrued liabilities25,423  19,005  
Short-term borrowings and current maturities of long-term debt6,156  3,870  
Unearned revenues2,299  2,622  
Other current liabilities16,805  14,595  
Total current liabilities69,883  61,782  
Long-term debt, less current maturities39,901  36,808  
Deferred income taxes3,286  2,993  
Other liabilities11,056  10,144  
Total liabilities124,126  111,727  
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests1,842  1,726  
Equity:
Preferred stock, $0.001 par value - 10 shares authorized; no shares issued or outstanding—  —  
Common stock, $0.01 par value - 3,000 shares authorized; 950 and 948 issued and outstanding10   
Additional paid-in capital388   
Retained earnings67,776  61,178  
Accumulated other comprehensive loss(4,550) (3,578) 
Nonredeemable noncontrolling interests2,891  2,820  
Total equity66,515  60,436  
Total liabilities, redeemable noncontrolling interests and equity$192,483  $173,889  

1

UnitedHealth Group
Condensed Consolidated Statements of Operations
(Unaudited)
  Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share data) 2019 2018 2019 2018
Revenues:        
Premiums $47,397
 $44,613
 $142,074
 $133,155
Products 7,546
 7,344
 23,971
 21,050
Services 4,942
 4,217
 13,756
 12,590
Investment and other income 466
 382
 1,453
 1,035
Total revenues 60,351
 56,556
 181,254
 167,830
Operating costs:        
Medical costs 39,041
 36,158
 117,164
 108,448
Operating costs 8,960
 8,479
 25,892
 25,371
Cost of products sold 6,627
 6,718
 21,606
 19,373
Depreciation and amortization 709
 611
 2,002
 1,791
Total operating costs 55,337
 51,966
 166,664
 154,983
Earnings from operations 5,014
 4,590
 14,590
 12,847
Interest expense (449) (353) (1,267) (1,026)
Earnings before income taxes 4,565
 4,237
 13,323
 11,821
Provision for income taxes (936) (953) (2,752) (2,603)
Net earnings 3,629
 3,284
 10,571
 9,218
Earnings attributable to noncontrolling interests (91) (96) (273) (272)
Net earnings attributable to UnitedHealth Group common shareholders $3,538
 $3,188
 $10,298
 $8,946
Earnings per share attributable to UnitedHealth Group common shareholders:        
Basic $3.73
 $3.31
 $10.82
 $9.29
Diluted $3.67
 $3.24
 $10.65
 $9.09
Basic weighted-average number of common shares outstanding 949
 962
 952
 963
Dilutive effect of common share equivalents 14
 21
 15
 21
Diluted weighted-average number of common shares outstanding 963
 983
 967
 984
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents 12
 7
 10
 7

 Three Months Ended
June 30,
Six Months Ended
June 30,
(in millions, except per share data)2020201920202019
Revenues:
Premiums$49,394  $47,164  $100,034  $94,677  
Products8,247  8,353  16,678  16,425  
Services4,156  4,496  9,141  8,814  
Investment and other income341  582  706  987  
Total revenues62,138  60,595  126,559  120,903  
Operating costs:
Medical costs34,678  39,184  75,678  78,123  
Operating costs10,001  8,415  20,016  16,932  
Cost of products sold7,501  7,598  15,188  14,979  
Depreciation and amortization717  654  1,440  1,293  
Total operating costs52,897  55,851  112,322  111,327  
Earnings from operations9,241  4,744  14,237  9,576  
Interest expense(430) (418) (867) (818) 
Earnings before income taxes8,811  4,326  13,370  8,758  
Provision for income taxes(2,115) (941) (3,209) (1,816) 
Net earnings6,696  3,385  10,161  6,942  
Earnings attributable to noncontrolling interests(59) (92) (142) (182) 
Net earnings attributable to UnitedHealth Group common shareholders6,637  3,293  $10,019  $6,760  
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic$6.99  $3.47  $10.56  $7.09  
Diluted$6.91  $3.42  $10.43  $6.97  
Basic weighted-average number of common shares outstanding949  950  949  954  
Dilutive effect of common share equivalents11  14  12  16  
Diluted weighted-average number of common shares outstanding960  964  961  970  
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents11  11  11   

2

UnitedHealth Group
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019 2018 2019 2018
Net earnings $3,629
 $3,284
 $10,571
 $9,218
Other comprehensive (loss) income:        
Gross unrealized gains (losses) on investment securities during the period 230
 (91) 1,243
 (512)
Income tax effect (53) 21
 (285) 117
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)
Income tax effect 16
 
 16
 13
Total reclassification adjustment, net of tax (53) (3) (54) (45)
Total foreign currency translation losses (560) (233) (453) (1,303)
Other comprehensive (loss) income (436) (306) 451
 (1,743)
Comprehensive income 3,193
 2,978
 11,022
 7,475
Comprehensive income attributable to noncontrolling interests (91) (96) (273) (272)
Comprehensive income attributable to UnitedHealth Group common shareholders $3,102
 $2,882
 $10,749
 $7,203

 Three Months Ended June 30,Six Months Ended June 30,
(in millions)2020201920202019
Net earnings$6,696  $3,385  $10,161  $6,942  
Other comprehensive income (loss):
Gross unrealized gains on investment securities during the period1,120  493  771  1,013  
Income tax effect(257) (113) (177) (232) 
Total unrealized gains, net of tax863  380  594  781  
Gross reclassification adjustment for net realized gains included in net earnings(11) (5) (29) (1) 
Income tax effect   —  
Total reclassification adjustment, net of tax(8) (4) (22) (1) 
Total foreign currency translation (losses) gains(45) 109  (1,544) 107  
Other comprehensive income (loss)810  485  (972) 887  
Comprehensive income7,506  3,870  9,189  7,829  
Comprehensive income attributable to noncontrolling interests(59) (92) (142) (182) 
Comprehensive income attributable to UnitedHealth Group common shareholders$7,447  $3,778  $9,047  $7,647  

3


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

Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive
Income (Loss)
Nonredeemable Noncontrolling InterestsTotal
Equity
Three months ended June 30,SharesAmountNet Unrealized Gains on InvestmentsForeign Currency Translation (Losses)
Gains
Balance at March 31, 2020947  $10  $—  $62,327  $306  $(5,666) $2,886  $59,863  
Net earnings6,637  38  6,675  
Other comprehensive income (loss)855  (45) 810  
Issuances of common stock, and related tax effects —  287  287  
Share-based compensation144  144  
Common share repurchases—  —  —  —  —  
Cash dividends paid on common shares ($1.25 per share)(1,188) (1,188) 
Redeemable noncontrolling interests fair value and other adjustments(43) (43) 
Distribution to nonredeemable noncontrolling interests(33) (33) 
Balance at June 30, 2020950  $10  $388  $67,776  $1,161  $(5,711) $2,891  $66,515  
Balance at March 31, 2019953  $10  $—  $55,472  $140  $(3,898) $2,727  $54,451  
Net earnings3,293  54  3,347  
Other comprehensive income376  109  485  
Issuances of common stock, and related tax effects —  105  105  
Share-based compensation152  152  
Common share repurchases(6) (1) (124) (1,374) (1,499) 
Cash dividends paid on common shares ($1.08 per share)(1,024) (1,024) 
Redeemable noncontrolling interests fair value and other adjustments(133) (133) 
Acquisition and other adjustments of nonredeemable noncontrolling interests32  32  
Distribution to nonredeemable noncontrolling interests(62) (62) 
Balance at June 30, 2019948  $ $—  $56,367  $516  $(3,789) $2,751  $55,854  

4

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 StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive
Income (Loss)
Nonredeemable Noncontrolling InterestsTotal
Equity
Six months ended June 30,SharesAmountNet Unrealized Gains (Losses) on InvestmentsForeign Currency Translation (Losses) Gains
Balance at January 1, 2020948  $ $ $61,178  $589  $(4,167) $2,820  $60,436  
Adjustment to adopt ASU 2016-13(28) (28) 
Net earnings10,019  97  10,116  
Other comprehensive income (loss)572  (1,544) (972) 
Issuances of common stock, and related tax effects  607  608  
Share-based compensation378  378  
Common share repurchases(6) —  (510) (1,181) (1,691) 
Cash dividends paid on common shares ($2.33 per share)(2,212) (2,212) 
Redeemable noncontrolling interests fair value and other adjustments(94) (94) 
Acquisition and other adjustments of nonredeemable noncontrolling interests50  50  
Distribution to nonredeemable noncontrolling interests(76) (76) 
Balance at June 30, 2020950  $10  $388  $67,776  $1,161  $(5,711) $2,891  $66,515  
Balance at January 1, 2019960  $10  $—  $55,846  $(264) $(3,896) $2,623  $54,319  
Adjustment to adopt ASU 2016-02(13) (5) (18) 
Net earnings6,760  114  6,874  
Other comprehensive income780  107  887  
Issuances of common stock, and related tax effects —  161  161  
Share-based compensation391  391  
Common share repurchases(18) (1) (158) (4,342) (4,501) 
Cash dividends paid on common shares ($1.98 per share)(1,884) (1,884) 
Redeemable noncontrolling interests fair value and other adjustments(285) (285) 
Acquisition and other adjustments of nonredeemable noncontrolling interests(109) 164  55  
Distribution to nonredeemable noncontrolling interests(145) (145) 
Balance at June 30, 2019948  $ $—  $56,367  $516  $(3,789) $2,751  $55,854  

5

UnitedHealth Group
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Nine Months Ended September 30,
(in millions) 2019 2018
Operating activities    
Net earnings $10,571
 $9,218
Noncash items:    
Depreciation and amortization 2,002
 1,791
Deferred income taxes 177
 9
Share-based compensation 525
 512
Other, net (181) (136)
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:    
Accounts receivable 957
 (984)
Other assets (2,181) (1,641)
Medical costs payable 223
 1,745
Accounts payable and other liabilities 105
 2,783
Unearned revenues 60
 20
Cash flows from operating activities 12,258

13,317
Investing activities    
Purchases of investments (13,386) (11,316)
Sales of investments 6,198
 2,872
Maturities of investments 5,160
 4,715
Cash paid for acquisitions, net of cash assumed (8,200) (5,824)
Purchases of property, equipment and capitalized software (1,421) (1,505)
Other, net 338
 (187)
Cash flows used for investing activities (11,311) (11,245)
Financing activities    
Common share repurchases (5,101) (3,650)
Cash dividends paid (2,908) (2,454)
Proceeds from common stock issuances 740
 745
Repayments of long-term debt (1,250) (2,600)
Proceeds from (repayments of) commercial paper, net 3,998
 (164)
Proceeds from issuance of long-term debt 5,444
 3,964
Customer funds administered 420
 1,552
Other, net (756) (1,086)
Cash flows from (used for) financing activities 587
 (3,693)
Effect of exchange rate changes on cash and cash equivalents (37) (97)
Increase (decrease) in cash and cash equivalents 1,497
 (1,718)
Cash and cash equivalents, beginning of period 10,866
 11,981
Cash and cash equivalents, end of period $12,363
 $10,263
     

 Six Months Ended June 30,
(in millions)20202019
Operating activities
Net earnings$10,161  $6,942  
Noncash items:
Depreciation and amortization1,440  1,293  
Deferred income taxes114  195  
Share-based compensation388  398  
Other, net124  (127) 
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
Accounts receivable(439) 2,196  
Other assets(3,784) (1,774) 
Medical costs payable(2,353) 447  
Accounts payable and other liabilities7,591  (33) 
Unearned revenues(296) (429) 
Cash flows from operating activities12,946  9,108  
Investing activities
Purchases of investments(6,412) (7,649) 
Sales of investments3,548  2,680  
Maturities of investments3,437  3,315  
Cash paid for acquisitions, net of cash assumed(3,952) (4,751) 
Purchases of property, equipment and capitalized software(920) (977) 
Other, net(186) 504  
Cash flows used for investing activities(4,485) (6,878) 
Financing activities
Common share repurchases(1,691) (4,501) 
Cash dividends paid(2,212) (1,884) 
Proceeds from common stock issuances870  448  
Repayments of long-term debt—  (1,250) 
Proceeds from short-term borrowings, net351  6,924  
Proceeds from issuance of long-term debt4,864  —  
Customer funds administered1,263  1,435  
Other, net(421) (529) 
Cash flows from financing activities3,024  643  
Effect of exchange rate changes on cash and cash equivalents(143)  
Increase in cash and cash equivalents11,342  2,879  
Cash and cash equivalents, beginning of period10,985  10,866  
Cash and cash equivalents, end of period$22,327  $13,745  

6

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, 20182019 as filed with the SEC (2018(2019 10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly.
Use of Estimates
These Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates include medical costs payable and goodwill. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the period in which the estimate is adjusted.
Revenue from Products
For the three and six months ended June 30, 2020, the Company recognized revenue and cost of products sold for retail pharmacy co-payments related to its OptumRx business. Revenue recognized in prior periods related to retail pharmacy transactions excludes the member’s applicable co-payment. There was no impact on earnings from operations, net earnings, earnings per share or total equity.
Recently Adopted Accounting Standards
In FebruaryJune 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02, “Leases2016-13, “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 2016-022016-13 on January 1, 2020 using a cumulative-effectcumulative 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 2016-022016-13 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 requiredevaluates 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 overextent to which fair value is less than amortized cost, the lease term, which includes all fixed obligations arising fromfinancial 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 forintends to sell an impaired security, or will likely be required to sell a period that closely matchessecurity before recovery of the lease term.
The Company’s ROU assets areentire 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.

7

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
September 30, 2019        
Debt securities - available-for-sale:        
U.S. government and agency obligations $3,591
 $83
 $(2) $3,672
State and municipal obligations 5,657
 256
 (3) 5,910
Corporate obligations 17,824
 352
 (9) 18,167
U.S. agency mortgage-backed securities 6,361
 113
 (6) 6,468
Non-U.S. agency mortgage-backed securities 1,685
 48
 (1) 1,732
Total debt securities - available-for-sale 35,118
 852
 (21) 35,949
Debt securities - held-to-maturity:        
U.S. government and agency obligations 272
 2
 
 274
State and municipal obligations 32
 1
 
 33
Corporate obligations 547
 
 
 547
Total debt securities - held-to-maturity 851
 3
 
 854
Total debt securities $35,969
 $855
 $(21) $36,803
December 31, 2018        
Debt securities - available-for-sale:        
U.S. government and agency obligations $3,434
 $13
 $(42) $3,405
State and municipal obligations 7,117
 61
 (57) 7,121
Corporate obligations 15,366
 14
 (218) 15,162
U.S. agency mortgage-backed securities 4,947
 11
 (106) 4,852
Non-U.S. agency mortgage-backed securities 1,376
 2
 (20) 1,358
Total debt securities - available-for-sale 32,240
 101
 (443) 31,898
Debt securities - held-to-maturity:        
U.S. government and agency obligations 255
 1
 (2) 254
State and municipal obligations 11
 
 
 11
Corporate obligations 355
 
 
 355
Total debt securities - held-to-maturity 621
 1
 (2) 620
Total debt securities $32,861
 $102
 $(445) $32,518

(in millions)Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
June 30, 2020
Debt securities - available-for-sale:
U.S. government and agency obligations$3,402  $178  $—  $3,580  
State and municipal obligations5,872  330  (3) 6,199  
Corporate obligations17,324  728  (68) 17,984  
U.S. agency mortgage-backed securities6,005  274  —  6,279  
Non-U.S. agency mortgage-backed securities1,875  83  (14) 1,944  
Total debt securities - available-for-sale34,478  1,593  (85) 35,986  
Debt securities - held-to-maturity:
U.S. government and agency obligations421   —  429  
State and municipal obligations31   —  33  
Corporate obligations285  —  —  285  
Total debt securities - held-to-maturity737  10  —  747  
Total debt securities$35,215  $1,603  $(85) $36,733  
December 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations$3,502  $55  $(4) $3,553  
State and municipal obligations5,680  251  (5) 5,926  
Corporate obligations17,910  343  (11) 18,242  
U.S. agency mortgage-backed securities6,425  109  (6) 6,528  
Non-U.S. agency mortgage-backed securities1,811  37  (3) 1,845  
Total debt securities - available-for-sale35,328  795  (29) 36,094  
Debt securities - held-to-maturity:
U.S. government and agency obligations402   —  404  
State and municipal obligations32   —  34  
Corporate obligations538  —  (1) 537  
Total debt securities - held-to-maturity972   (1) 975  
Total debt securities$36,300  $799  $(30) $37,069  
The Company held $2.0 billion of equity securities as of both SeptemberJune 30, 20192020 and December 31, 2018.2019. The Company’s investments in equity securities primarily consist of employee savings plan related investments and shares of Brazilian real denominated fixed-income funds and dividend paying stocks with readily determinable fair values. Additionally, the Company’s investments included $1.4 billion and $1.5 billion of equity method investments in operating businesses in the health care sector as of SeptemberJune 30, 20192020 and December 31, 2018, respectively.2019. The allowance for credit losses on held-to-maturity securities at June 30, 2020 was not material.

8

The amortized cost and fair value of debt securities as of SeptemberJune 30, 2019,2020, by contractual maturity, were as follows:
  Available-for-Sale Held-to-Maturity
(in millions) 
Amortized
Cost
 
Fair
Value
 Amortized
Cost
 Fair
Value
Due in one year or less $3,571
 $3,577
 $313
 $313
Due after one year through five years 11,904
 12,084
 258
 259
Due after five years through ten years 8,303
 8,669
 141
 141
Due after ten years 3,294
 3,419
 139
 141
U.S. agency mortgage-backed securities 6,361
 6,468
 
 
Non-U.S. agency mortgage-backed securities 1,685
 1,732
 
 
Total debt securities $35,118
 $35,949
 $851
 $854

Available-for-SaleHeld-to-Maturity
(in millions)Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Due in one year or less$3,414  $3,433  $429  $429  
Due after one year through five years10,974  11,365  255  261  
Due after five years through ten years8,481  9,083  31  33  
Due after ten years3,729  3,882  22  24  
U.S. agency mortgage-backed securities6,005  6,279  —  —  
Non-U.S. agency mortgage-backed securities1,875  1,944  —  —  
Total debt securities$34,478  $35,986  $737  $747  
The fair value of available-for-sale debt securities with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:
  Less Than 12 Months 12 Months or Greater  Total
(in millions) 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 Gross
Unrealized
Losses
 
Fair
Value
 Gross
Unrealized
Losses
September 30, 2019            
Debt securities - available-for-sale:            
U.S. government and agency obligations $286
 $(1) $228
 $(1) $514
 $(2)
State and municipal obligations 296
 (2) 83
 (1) 379
 (3)
Corporate obligations 1,360
 (5) 1,022
 (4) 2,382
 (9)
U.S. agency mortgage-backed securities 570
 (2) 518
 (4) 1,088
 (6)
Non-U.S. agency mortgage-backed securities 217
 (1) 
 
 217
 (1)
Total debt securities - available-for-sale $2,729
 $(11) $1,851
 $(10) $4,580
 $(21)
December 31, 2018            
Debt securities - available-for-sale:            
U.S. government and agency obligations $998
 $(7) $1,425
 $(35) $2,423
 $(42)
State and municipal obligations 1,334
 (11) 2,491
 (46) 3,825
 (57)
Corporate obligations 8,105
 (109) 4,239
 (109) 12,344
 (218)
U.S. agency mortgage-backed securities 1,296
 (22) 2,388
 (84) 3,684
 (106)
Non-U.S. agency mortgage-backed securities 622
 (7) 459
 (13) 1,081
 (20)
Total debt securities - available-for-sale $12,355
 $(156) $11,002
 $(287) $23,357
 $(443)

 Less Than 12 Months12 Months or Greater Total
(in millions)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
June 30, 2020
Debt securities - available-for-sale:
State and municipal obligations$284  $(3) $—  $—  $284  $(3) 
Corporate obligations1,908  (58) 375  (10) 2,283  (68) 
Non-U.S. agency mortgage-backed securities249  (12) 42  (2) 291  (14) 
Total debt securities - available-for-sale$2,441  $(73) $417  $(12) $2,858  $(85) 
December 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations$616  $(4) $—  $—  $616  $(4) 
State and municipal obligations440  (5) —  —  440  (5) 
Corporate obligations1,903  (7) 740  (4) 2,643  (11) 
U.S. agency mortgage-backed securities657  (3) 333  (3) 990  (6) 
Non-U.S. agency mortgage-backed securities406  (3) —  —  406  (3) 
Total debt securities - available-for-sale$4,022  $(22) $1,073  $(7) $5,095  $(29) 
The Company’s unrealized losses from debt securities as of SeptemberJune 30, 20192020 were generated from 4,000approximately 3,000 positions out of a total of 32,00031,000 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 SeptemberJune 30, 2019,2020, the Company did not have the intent to sell any of the available-for-sale debt securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary. The allowance for credit losses on available-for-sale debt securities at June 30, 2020 was not material.

9

Table of Contents
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 20182019 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
September 30, 2019        
Cash and cash equivalents $12,210
 $153
 $
 $12,363
Debt securities - available-for-sale:        
U.S. government and agency obligations 3,421
 251
 
 3,672
State and municipal obligations 
 5,910
 
 5,910
Corporate obligations 71
 17,879
 217
 18,167
U.S. agency mortgage-backed securities 
 6,468
 
 6,468
Non-U.S. agency mortgage-backed securities 
 1,732
 
 1,732
Total debt securities - available-for-sale 3,492
 32,240
 217
 35,949
Equity securities 1,839
 21
 
 1,860
Assets under management 1,116
 1,907
 28
 3,051
Total assets at fair value
$18,657
 $34,321
 $245
 $53,223
Percentage of total assets at fair value 35% 65% % 100%
December 31, 2018        
Cash and cash equivalents $10,757
 $109
 $
 $10,866
Debt securities - available-for-sale:        
U.S. government and agency obligations 3,060
 345
 
 3,405
State and municipal obligations 
 7,121
 
 7,121
Corporate obligations 39
 14,950
 173
 15,162
U.S. agency mortgage-backed securities 
 4,852
 
 4,852
Non-U.S. agency mortgage-backed securities 
 1,358
 
 1,358
Total debt securities - available-for-sale 3,099
 28,626
 173
 31,898
Equity securities 1,832
 13
 
 1,845
Assets under management 1,086
 1,938
 8
 3,032
Total assets at fair value $16,774
 $30,686
 $181
 $47,641
Percentage of total assets at fair value 35% 65% % 100%

(in millions)Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Total
Fair and Carrying
Value
June 30, 2020
Cash and cash equivalents$22,215  $112  $—  $22,327  
Debt securities - available-for-sale:
U.S. government and agency obligations3,419  161  —  3,580  
State and municipal obligations—  6,199  —  6,199  
Corporate obligations63  17,654  267  17,984  
U.S. agency mortgage-backed securities—  6,279  —  6,279  
Non-U.S. agency mortgage-backed securities—  1,944  —  1,944  
Total debt securities - available-for-sale3,482  32,237  267  35,986  
Equity securities1,530  23  —  1,553  
Assets under management1,441  1,932  44  3,417  
Total assets at fair value$28,668  $34,304  $311  $63,283  
Percentage of total assets at fair value45 %54 %%100 %
December 31, 2019
Cash and cash equivalents$10,837  $148  $—  $10,985  
Debt securities - available-for-sale:
U.S. government and agency obligations3,369  184  —  3,553  
State and municipal obligations—  5,926  —  5,926  
Corporate obligations70  17,923  249  18,242  
U.S. agency mortgage-backed securities—  6,528  —  6,528  
Non-U.S. agency mortgage-backed securities—  1,845  —  1,845  
Total debt securities - available-for-sale3,439  32,406  249  36,094  
Equity securities1,734  22  —  1,756  
Assets under management1,123  1,918  35  3,076  
Total assets at fair value$17,133  $34,494  $284  $51,911  
Percentage of total assets at fair value33 %66 %%100 %
There were no transfers in or out of Level 3 financial assets or liabilities during the ninesix months ended SeptemberJune 30, 20192020 or 2018.2019.

10

Table of Contents
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
September 30, 2019          
Debt securities - held-to-maturity $410
 $176
 $268
 $854
 $851
Long-term debt and other financing obligations $
 $45,342
 $
 $45,342
 $40,814
December 31, 2018          
Debt securities - held-to-maturity $260
 $65
 $295
 $620
 $621
Long-term debt and other financing obligations $
 $37,944
 $
 $37,944
 $36,554

(in millions)Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Total
Fair
Value
Total Carrying Value
June 30, 2020
Debt securities - held-to-maturity$566  $96  $85  $747  $737  
Long-term debt and other financing obligations$—  $53,119  $—  $53,119  $45,284  
December 31, 2019
Debt securities - held-to-maturity$541  $181  $253  $975  $972  
Long-term debt and other financing obligations$—  $45,078  $—  $45,078  $40,278  
Nonfinancial assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded during either the ninesix months ended SeptemberJune 30, 20192020 or 2018.2019.
4. Medical Costs Payable
The following table shows the components of the change in medical costs payable for the ninesix months ended SeptemberJune 30:
(in millions) 2019 2018
Medical costs payable, beginning of period $19,891
 $17,871
Acquisitions 868
 333
Reported medical costs:    
Current year 117,624
 108,658
Prior years (460) (210)
Total reported medical costs 117,164
 108,448
Medical payments:    
Payments for current year (99,487) (90,348)
Payments for prior years (17,497) (16,454)
Total medical payments (116,984) (106,802)
Medical costs payable, end of period $20,939
 $19,850

(in millions)20202019
Medical costs payable, beginning of period$21,690  $19,891  
Acquisitions41  522  
Reported medical costs:
Current year76,338  78,523  
Prior years(660) (400) 
Total reported medical costs75,678  78,123  
Medical payments:
Payments for current year(59,482) (60,707) 
Payments for prior years(18,727) (16,922) 
Total medical payments(78,209) (77,629) 
Medical costs payable, end of period$19,200  $20,907  
For the ninesix months ended SeptemberJune 30, 2020, prior years medical cost reserve development was primarily driven by lower than expected health system utilization. For the six months ended June 30, 2019, and 2018, the prior years medical cost reserve development included no individual factors that were significant. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of $14.2$13.7 billion and $13.2$13.8 billion at SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.

11

Table of Contents
5. Commercial PaperShort-Term Borrowings and Long-Term Debt
Commercial paperShort-term borrowings and senior unsecured long-term debt consisted of the following:
 September 30, 2019 December 31, 2018 June 30, 2020December 31, 2019
(in millions, except percentages) Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value(in millions, except percentages)Par ValueCarrying ValueFair ValuePar ValueCarrying ValueFair Value
Commercial paper $4,082
 $4,080
 $4,080
 $
 $
 $
Commercial paper$773  $773  $773  $400  $400  $400  
1.700% notes due February 2019 
 
 
 750
 750
 749
1.625% notes due March 2019 
 
 
 500
 500
 499
2.300% notes due December 2019 500
 499
 500
 500
 494
 497
2.700% notes due July 2020 1,500
 1,499
 1,508
 1,500
 1,498
 1,494
2.700% notes due July 20201,500  1,500  1,501  1,500  1,499  1,506  
Floating rate notes due October 2020 300
 300
 300
 300
 299
 298
Floating rate notes due October 2020300  300  300  300  300  300  
3.875% notes due October 2020 450
 450
 457
 450
 443
 456
3.875% notes due October 2020450  452  451  450  450  455  
1.950% notes due October 2020 900
 898
 900
 900
 897
 884
1.950% notes due October 2020900  900  904  900  899  900  
4.700% notes due February 2021 400
 404
 412
 400
 398
 412
4.700% notes due February 2021400  405  406  400  403  410  
2.125% notes due March 2021 750
 748
 752
 750
 747
 734
2.125% notes due March 2021750  749  759  750  749  753  
Floating rate notes due June 2021 350
 349
 349
 350
 349
 347
Floating rate notes due June 2021350  350  350  350  349  350  
3.150% notes due June 2021 400
 399
 408
 400
 399
 400
3.150% notes due June 2021400  399  411  400  399  407  
3.375% notes due November 2021 500
 502
 512
 500
 489
 503
3.375% notes due November 2021500  511  517  500  501  512  
2.875% notes due December 2021 750
 755
 764
 750
 735
 748
2.875% notes due December 2021750  768  778  750  753  765  
2.875% notes due March 2022 1,100
 1,088
 1,120
 1,100
 1,051
 1,091
2.875% notes due March 20221,100  1,117  1,139  1,100  1,087  1,121  
3.350% notes due July 2022 1,000
 997
 1,036
 1,000
 997
 1,005
3.350% notes due July 20221,000  998  1,061  1,000  998  1,036  
2.375% notes due October 2022 900
 895
 909
 900
 894
 872
2.375% notes due October 2022900  897  942  900  896  911  
0.000% notes due November 2022 15
 13
 13
 15
 12
 13
0.000% notes due November 202215  13  14  15  13  14  
2.750% notes due February 2023 625
 627
 637
 625
 602
 611
2.750% notes due February 2023625  648  659  625  624  638  
2.875% notes due March 2023 750
 776
 769
 750
 750
 739
2.875% notes due March 2023750  798  799  750  770  770  
3.500% notes due June 2023 750
 747
 786
 750
 746
 756
3.500% notes due June 2023750  748  817  750  747  786  
3.500% notes due February 2024 750
 745
 790
 750
 745
 755
3.500% notes due February 2024750  746  825  750  746  792  
2.375% notes due August 2024 750
 746
 756
 
 
 
2.375% notes due August 2024750  747  801  750  747  760  
3.750% notes due July 2025 2,000
 1,990
 2,150
 2,000
 1,989
 2,025
3.750% notes due July 20252,000  1,991  2,279  2,000  1,990  2,161  
3.700% notes due December 2025 300
 298
 323
 300
 298
 303
3.700% notes due December 2025300  298  344  300  298  325  
1.250% notes due January 20261.250% notes due January 2026500  496  509  —  —  —  
3.100% notes due March 2026 1,000
 996
 1,045
 1,000
 995
 965
3.100% notes due March 20261,000  996  1,116  1,000  996  1,048  
3.450% notes due January 2027 750
 746
 798
 750
 746
 742
3.450% notes due January 2027750  746  855  750  746  804  
3.375% notes due April 2027 625
 619
 663
 625
 619
 611
3.375% notes due April 2027625  620  712  625  620  667  
2.950% notes due October 2027 950
 939
 982
 950
 938
 898
2.950% notes due October 2027950  940  1,060  950  939  988  
3.850% notes due June 2028 1,150
 1,142
 1,259
 1,150
 1,142
 1,163
3.850% notes due June 20281,150  1,143  1,360  1,150  1,142  1,269  
3.875% notes due December 2028 850
 843
 936
 850
 842
 861
3.875% notes due December 2028850  843  1,017  850  843  941  
2.875% notes due August 2029 1,000
 1,022
 1,021
 
 
 
2.875% notes due August 20291,000  1,111  1,116  1,000  993  1,029  
2.000% notes due May 20302.000% notes due May 20301,250  1,233  1,309  —  —  —  
4.625% notes due July 2035 1,000
 992
 1,208
 1,000
 992
 1,060
4.625% notes due July 20351,000  992  1,308  1,000  992  1,215  
5.800% notes due March 2036 850
 838
 1,134
 850
 838
 1,003
5.800% notes due March 2036850  838  1,202  850  838  1,129  
6.500% notes due June 2037 500
 492
 711
 500
 492
 638
6.500% notes due June 2037500  492  761  500  492  712  
6.625% notes due November 2037 650
 641
 940
 650
 641
 841
6.625% notes due November 2037650  641  994  650  641  940  
6.875% notes due February 2038 1,100
 1,076
 1,625
 1,100
 1,076
 1,437
6.875% notes due February 20381,100  1,077  1,713  1,100  1,076  1,631  
3.500% notes due August 2039 1,250
 1,241
 1,301
 
 
 
3.500% notes due August 20391,250  1,241  1,454  1,250  1,241  1,313  
2.750% notes due May 20402.750% notes due May 20401,000  963  1,071  —  —  —  
5.700% notes due October 2040 300
 296
 397
 300
 296
 355
5.700% notes due October 2040300  296  438  300  296  396  
5.950% notes due February 2041 350
 345
 476
 350
 345
 426
5.950% notes due February 2041350  345  521  350  345  475  
4.625% notes due November 2041 600
 589
 710
 600
 588
 627
4.625% notes due November 2041600  589  787  600  589  716  
4.375% notes due March 2042 502
 484
 572
 502
 484
 503
4.375% notes due March 2042502  484  642  502  484  580  
3.950% notes due October 2042 625
 607
 676
 625
 607
 596
3.950% notes due October 2042625  608  749  625  607  688  
4.250% notes due March 2043 750
 735
 844
 750
 734
 744
4.250% notes due March 2043750  735  938  750  735  856  
4.750% notes due July 2045 2,000
 1,973
 2,431
 2,000
 1,973
 2,116
4.750% notes due July 20452,000  1,973  2,694  2,000  1,973  2,463  
4.200% notes due January 2047 750
 738
 852
 750
 738
 745
4.200% notes due January 2047750  738  951  750  738  861  
4.250% notes due April 2047 725
 717
 823
 725
 717
 719
4.250% notes due April 2047725  717  931  725  717  839  
3.750% notes due October 2047 950
 933
 1,005
 950
 933
 869
3.750% notes due October 2047950  934  1,134  950  934  1,023  
4.250% notes due June 2048 1,350
 1,329
 1,550
 1,350
 1,329
 1,349
4.250% notes due June 20481,350  1,330  1,726  1,350  1,330  1,569  
4.450% notes due December 2048 1,100
 1,086
 1,301
 1,100
 1,087
 1,132
4.450% notes due December 20481,100  1,086  1,440  1,100  1,086  1,316  
3.700% notes due August 2049 1,250
 1,235
 1,323
 
 
 
3.700% notes due August 20491,250  1,235  1,479  1,250  1,235  1,344  
2.900% notes due May 20502.900% notes due May 20501,250  1,208  1,320  —  —  —  
3.875% notes due August 2059 1,250
 1,231
 1,327
 
 
 
3.875% notes due August 20591,250  1,228  1,531  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
3.125% notes due May 20603.125% notes due May 20601,000  967  1,072  —  —  —  
Total short-term borrowings and long-term debtTotal short-term borrowings and long-term debt$45,190  $44,953  $52,740  $39,817  $39,474  $44,234  


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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$328 million and $229$322 million were classified as current as of SeptemberJune 30, 20192020 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 SeptemberJune 30, 2019,2020, the Company’s outstanding commercial paper had a weighted average annual interest rate of 2.2%0.3%.
The Company has $3.5$4.4 billion five-year, $3.5$4.4 billion three-year and $3.0$3.8 billion 364-day revolving bank credit facilities with 2625 banks, which mature in December 2023,2024, December 20212022 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 SeptemberJune 30, 2019,2020, no amounts had been drawn on any of the bank credit facilities. The annual interest rates, which are variable based on term, are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. If amounts had been drawn on the bank credit facilities as of SeptemberJune 30, 2019,2020, annual interest rates would have ranged from 2.7%0.8% to 2.8%1.1%.
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 SeptemberJune 30, 2019.2020.
6. Dividends
In June 2019,2020, the Company’s Board of Directors increased the Company’s annualquarterly cash dividend rate to shareholders to $4.32an annual rate of $5.00 compared to $3.60$4.32 per share, which the Company had paid since June 2018.2019. Declaration and payment of future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions change.
The following table provides details of the Company’s 20192020 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

Payment DateAmount per ShareTotal Amount Paid
(in millions)
March 24$1.08$1,024  
June 30$1.251,188  
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.
13

Table of Contents
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. 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 20182019 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)UnitedHealthcareOptumHealthOptumInsightOptumRxOptum EliminationsOptumCorporate and
Eliminations
Consolidated
Three Months Ended June 30, 2020
Revenues - unaffiliated customers:
Premiums$47,039  $2,355  $—  $—  $—  $2,355  $—  $49,394  
Products—   27  8,213  —  8,247  —  8,247  
Services1,895  1,225  764  272  —  2,261  —  4,156  
Total revenues - unaffiliated customers48,934  3,587  791  8,485  —  12,863  —  61,797  
Total revenues - affiliated customers—  5,423  1,823  12,865  (447) 19,664  (19,664) —  
Investment and other income173  129  18  21  —  168  —  341  
Total revenues$49,107  $9,139  $2,632  $21,371  $(447) $32,695  $(19,664) $62,138  
Earnings from operations$7,007  $841  $561  $832  $—  $2,234  $—  $9,241  
Interest expense—  —  —  —  —  —  (430) (430) 
Earnings before income taxes$7,007  $841  $561  $832  $—  $2,234  $(430) $8,811  
Three Months Ended June 30, 2019
Revenues - unaffiliated customers:
Premiums$46,030  $1,134  $—  $—  $—  $1,134  $—  $47,164  
Products—   22  8,322  —  8,353  —  8,353  
Services2,188  1,370  790  148  —  2,308  —  4,496  
Total revenues - unaffiliated customers48,218  2,513  812  8,470  —  11,795  —  60,013  
Total revenues - affiliated customers—  4,449  1,521  10,439  (381) 16,028  (16,028) —  
Investment and other income376  186   14  —  206  —  582  
Total revenues$48,594  $7,148  $2,339  $18,923  $(381) $28,029  $(16,028) $60,595  
Earnings from operations$2,642  $688  $525  $889  $—  $2,102  $—  $4,744  
Interest expense—  —  —  —  —  —  (418) (418) 
Earnings before income taxes$2,642  $688  $525  $889  $—  $2,102  $(418) $4,326  
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Table of Contents
   Optum    Optum
(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Optum Eliminations Optum 
Corporate and
Eliminations
 Consolidated(in millions)UnitedHealthcareOptumHealthOptumInsightOptumRxOptum EliminationsOptumCorporate and EliminationsConsolidated
Three Months Ended September 30, 2019                
Six Months Ended June 30, 2020Six Months Ended June 30, 2020
Revenues - unaffiliated customers:                Revenues - unaffiliated customers:
Premiums $45,557
 $1,840
 $
 $
 $
 $1,840
 $
 $47,397
Premiums$95,632  $4,402  $—  $—  $—  $4,402  $—  $100,034  
Products 
 6
 29
 7,511
 
 7,546
 
 7,546
Products—  16  56  16,606  —  16,678  —  16,678  
Services 2,274
 1,487
 988
 193
 
 2,668
 
 4,942
Services4,173  2,773  1,655  540  —  4,968  —  9,141  
Total revenues - unaffiliated customers 47,831
 3,333
 1,017
 7,704
 
 12,054
 
 59,885
Total revenues - unaffiliated customers99,805  7,191  1,711  17,146  —  26,048  —  125,853  
Total revenues - affiliated customers 
 4,630
 1,594
 10,734
 (441) 16,517
 (16,517) 
Total revenues - affiliated customers—  10,875  3,385  25,741  (851) 39,150  (39,150) —  
Investment and other income 274
 170
 6
 16
 
 192
 
 466
Investment and other income370  265  30  41  —  336  —  706  
Total revenues $48,105
 $8,133
 $2,617
 $18,454
 $(441) $28,763
 $(16,517) $60,351
Total revenues$100,175  $18,331  $5,126  $42,928  $(851) $65,534  $(39,150) $126,559  
Earnings from operations $2,655
 $748
 $632
 $979
 $
 $2,359
 $
 $5,014
Earnings from operations$9,895  $1,553  $1,097  $1,692  $—  $4,342  $—  $14,237  
Interest expense 
 
 
 
 
 
 (449) (449)Interest expense—  —  —  —  —  —  (867) (867) 
Earnings before income taxes $2,655
 $748
 $632
 $979
 $
 $2,359
 $(449) $4,565
Earnings before income taxes$9,895  $1,553  $1,097  $1,692  $—  $4,342  $(867) $13,370  
Three Months Ended September 30, 2018                
Six Months Ended June 30, 2019Six Months Ended June 30, 2019
Revenues - unaffiliated customers:                Revenues - unaffiliated customers:
Premiums $43,628
 $985
 $
 $
 $
 $985
 $
 $44,613
Premiums$92,531  $2,146  $—  $—  $—  $2,146  $—  $94,677  
Products 
 13
 29
 7,302
 
 7,344
 
 7,344
Products—  17  45  16,363  —  16,425  —  16,425  
Services 2,067
 1,196
 790
 164
 
 2,150
 
 4,217
Services4,329  2,644  1,544  297  —  4,485  —  8,814  
Total revenues - unaffiliated customers 45,695
 2,194
 819
 7,466
 
 10,479
 
 56,174
Total revenues - unaffiliated customers96,860  4,807  1,589  16,660  —  23,056  —  119,916  
Total revenues - affiliated customers 
 3,733
 1,431
 9,960
 (352) 14,772
 (14,772) 
Total revenues - affiliated customers—  8,736  2,928  20,052  (740) 30,976  (30,976) —  
Investment and other income 242
 125
 4
 11
 
 140
 
 382
Investment and other income630  318  11  28  —  357  —  987  
Total revenues $45,937
 $6,052
 $2,254
 $17,437
 $(352) $25,391
 $(14,772) $56,556
Total revenues$97,490  $13,861  $4,528  $36,740  $(740) $54,389  $(30,976) $120,903  
Earnings from operations $2,559
 $622
 $534
 $875
 $
 $2,031
 $
 $4,590
Earnings from operations$5,596  $1,314  $957  $1,709  $—  $3,980  $—  $9,576  
Interest expense 
 
 
 
 
 
 (353) (353)Interest expense—  —  —  —  —  —  (818) (818) 
Earnings before income taxes $2,559
 $622
 $534
 $875
 $
 $2,031
 $(353) $4,237
Earnings before income taxes$5,596  $1,314  $957  $1,709  $—  $3,980  $(818) $8,758  
    Optum    
(in millions) UnitedHealthcare OptumHealth OptumInsight OptumRx Optum Eliminations Optum Corporate and
Eliminations
 Consolidated
Nine Months Ended September 30, 2019                
Revenues - unaffiliated customers:                
Premiums $138,088
 $3,986
 $
 $
 $
 $3,986
 $
 $142,074
Products 
 23
 74
 23,874
 
 23,971
 
 23,971
Services 6,603
 4,131
 2,532
 490
 
 7,153
 
 13,756
Total revenues - unaffiliated customers 144,691
 8,140
 2,606
 24,364
 
 35,110
 
 179,801
Total revenues - affiliated customers 
 13,366
 4,522
 30,786
 (1,181) 47,493
 (47,493) 
Investment and other income 904
 488
 17
 44
 
 549
 
 1,453
Total revenues $145,595
 $21,994
 $7,145
 $55,194
 $(1,181) $83,152
 $(47,493) $181,254
Earnings from operations $8,251
 $2,062
 $1,589
 $2,688
 $
 $6,339
 $
 $14,590
Interest expense 
 
 
 
 
 
 (1,267) (1,267)
Earnings before income taxes $8,251
 $2,062
 $1,589
 $2,688
 $
 $6,339
 $(1,267) $13,323
Nine Months Ended September 30, 2018                
Revenues - unaffiliated customers:                
Premiums $130,361
 $2,794
 $
 $
 $
 $2,794
 $
 $133,155
Products 
 37
 72
 20,941
 
 21,050
 
 21,050
Services 6,248
 3,587
 2,306
 449
 
 6,342
 
 12,590
Total revenues - unaffiliated customers 136,609
 6,418
 2,378
 21,390
 
 30,186
 
 166,795
Total revenues - affiliated customers 
 10,979
 4,115
 29,062
 (1,026) 43,130
 (43,130) 
Investment and other income 633
 355
 15
 32
 
 402
 
 1,035
Total revenues $137,242
 $17,752
 $6,508
 $50,484
 $(1,026) $73,718
 $(43,130) $167,830
Earnings from operations $7,316
 $1,680
 $1,382
 $2,469
 $
 $5,531
 $
 $12,847
Interest expense 
 
 
 
 
 
 (1,026) (1,026)
Earnings before income taxes $7,316
 $1,680
 $1,382
 $2,469
 $
 $5,531
 $(1,026) $11,821
15


Table of Contents

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read together with the accompanying Condensed Consolidated Financial Statements and Notes and with our 20182019 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 20182019 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 20182019 10-K and additional information on our segments can be found in this Item 2 and in Note 98 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
COVID-19 Trends and Uncertainties
The COVID-19 pandemic continues to evolve and the ultimate impact on our business, results of operations, financial condition and cash flows remains uncertain and difficult to predict. During the quarter, the global health system experienced unprecedented levels of care deferral, which meaningfully impacted all of our businesses. As the pandemic advanced, access to and demand for care was most constrained from mid-March through April, began to recover in May and approached more typical levels by the end of the second quarter. The temporary deferral of care may cause care patterns to moderately exceed normal baselines in the second half of this year as utilization of health system capacity continues to increase. Health system capacity may be subject to possible increased volatility due to the pandemic from time to time. Specific trends and uncertainties related to our two business platforms are as follows:

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


16

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

Business Trends
Our businesses participate in the United States, South American and certain other international health markets. In the United States, health care spending has grown consistently for many years and comprises approximately 18% of gross domestic product. Overall spending on health care is impacted by inflation; utilization; medical technology and pharmaceutical advancement; regulatory requirements; demographic trends in the populationpopulation; 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 impactpotential impacts from COVID-19 and the Health Insurance Industry Tax. We frequently evaluate and adjust our approach in each of the local markets we serve, considering all relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio (MLR) thresholds. We will continue seeking to balance growth and profitability across all of these dimensions.
The commercial risk market remains highly competitive in both the small group and large group segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs amid reform changes. Pricing for contracts that cover some portion of calendar year 2020 reflects2021 will reflect the returnpermanent repeal of the Health Insurance Industry Tax after a moratorium in 2019.Tax.
Government programs in the public and senior sector tend to receive lower rates of increase than the commercial market due to governmental budget pressures and lower cost trends.
Medical Cost Trends. Our medical cost trends primarily relate to changes in unit costs, health system utilization and prescription drug costs. We endeavor to mitigate those increases by engaging physicians and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve high quality, affordable care. The uncertain impact of COVID-19 may impact our ability to estimate medical costs payable, which could result in increased variability to medical cost reserve development in future periods. As a result of higher than expected care deferrals, favorable reserve development of $1.4 billion occurred in the second quarter.
Regulatory Trends and Uncertainties
Following is a summary of management’s view of regulatory trends and uncertainties. For additional information regarding regulatory trends and uncertainties, see Part I, Item 1 “Business - Government Regulation,” Part 1, Item 1A, “Risk Factors” andFactors,” 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 20202021 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 IndustryAffordable Care Act (ACA) Tax. There isAfter a one year moratorium onin 2019, the industry-wide amount of the Health Insurance Industry Tax in 2019. This moratoriumfor 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.
17


SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS
The following summarizes select thirdsecond quarter 20192020 year-over-year operating comparisons to thirdsecond quarter 2018.2019, which were significantly impacted by the effects of COVID-19 on the health system.
Consolidated revenues grew 7%3%, UnitedHealthcare revenues grew 5%1% and Optum revenues grew 13%17%.
UnitedHealthcare served 415,000 additional425,000 fewer people domestically primarily asdue to increased unemployment and expected attrition in commercial group benefits and the proactive withdrawal from a result of acquisitions and growth in services to self-funded employers and seniors.Medicaid market.
Consolidated earnings from operations increased, 9%,primarily due to temporary care deferrals caused by COVID-19, including increases of 4% at UnitedHealthcare and 16% at Optum.
Diluted earnings per common share increased 13%.to $6.91.
Cash flows from operations for the ninesix months ended SeptemberJune 30, 20192020 were $12.3$12.9 billion.
Return on equity was 26.2%Return on equity was 44.0%.

RESULTS SUMMARY
The following table summarizes our consolidated results of operations and other financial information:
(in millions, except percentages and per share data)Three Months Ended June 30,Increase/(Decrease)Six Months Ended
June 30,
Increase/(Decrease)
202020192020 vs. 2019202020192020 vs. 2019
Revenues:
Premiums$49,394  $47,164  $2,230  %$100,034  $94,677  $5,357  %
Products8,247  8,353  (106) (1) 16,678  16,425  253   
Services4,156  4,496  (340) (8) 9,141  8,814  327   
Investment and other income341  582  (241) (41) 706  987  (281) (28) 
Total revenues62,138  60,595  1,543   126,559  120,903  5,656   
Operating costs:
Medical costs34,678  39,184  (4,506) (11) 75,678  78,123  (2,445) (3) 
Operating costs10,001  8,415  1,586  19  20,016  16,932  3,084  18  
Cost of products sold7,501  7,598  (97) (1) 15,188  14,979  209   
Depreciation and amortization717  654  63  10  1,440  1,293  147  11  
Total operating costs52,897  55,851  (2,954) (5) 112,322  111,327  995   
Earnings from operations9,241  4,744  4,497  95  14,237  9,576  4,661  49  
Interest expense(430) (418) (12)  (867) (818) (49)  
Earnings before income taxes8,811  4,326  4,485  104  13,370  8,758  4,612  53  
Provision for income taxes(2,115) (941) (1,174) 125  (3,209) (1,816) (1,393) 77  
Net earnings6,696  3,385  3,311  98  10,161  6,942  3,219  46  
Earnings attributable to noncontrolling interests(59) (92) 33  (36) (142) (182) 40  (22) 
Net earnings attributable to UnitedHealth Group common shareholders$6,637  $3,293  $3,344  102 %$10,019  $6,760  $3,259  48 %
Diluted earnings per share attributable to UnitedHealth Group common shareholders$6.91  $3.42  $3.49  102 %$10.43  $6.97  $3.46  50 %
Medical care ratio (a)70.2 %83.1 %(12.9)%75.7 %82.5 %(6.8)%
Operating cost ratio16.1  13.9  2.2  15.8  14.0  1.8  
Operating margin14.9  7.8  7.1  11.2  7.9  3.3  
Tax rate24.0  21.8  2.2  24.0  20.7  3.3  
Net earnings margin (b)10.7  5.4  5.3  7.9  5.6  2.3  
Return on equity (c)44.0 %25.1 %18.9 %33.7 %25.9 %7.8 %
(a)
(in millions, except percentages and per share data) Three Months Ended September 30, Increase/(Decrease) Nine Months Ended September 30, Increase/(Decrease)
 2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
Revenues:                
Premiums $47,397
 $44,613
 $2,784
 6% $142,074
 $133,155
 $8,919
 7%
Products 7,546
 7,344
 202
 3
 23,971
 21,050
 2,921
 14
Services 4,942
 4,217
 725
 17
 13,756
 12,590
 1,166
 9
Investment and other income 466
 382
 84
 22
 1,453
 1,035
 418
 40
Total revenues 60,351
 56,556
 3,795
 7
 181,254
 167,830
 13,424
 8
Operating costs:                
Medical costs 39,041
 36,158
 2,883
 8
 117,164
 108,448
 8,716
 8
Operating costs 8,960
 8,479
 481
 6
 25,892
 25,371
 521
 2
Cost of products sold 6,627
 6,718
 (91) (1) 21,606
 19,373
 2,233
 12
Depreciation and amortization 709
 611
 98
 16
 2,002
 1,791
 211
 12
Total operating costs 55,337
 51,966
 3,371
 6
 166,664
 154,983
 11,681
 8
Earnings from operations 5,014
 4,590
 424
 9
 14,590
 12,847
 1,743
 14
Interest expense (449) (353) (96) 27
 (1,267) (1,026) (241) 23
Earnings before income taxes 4,565
 4,237
 328
 8
 13,323
 11,821
 1,502
 13
Provision for income taxes (936) (953) 17
 (2) (2,752) (2,603) (149) 6
Net earnings 3,629
 3,284
 345
 11
 10,571
 9,218
 1,353
 15
Earnings attributable to noncontrolling interests (91) (96) 5
 (5) (273) (272) (1) 
Net earnings attributable to UnitedHealth Group common shareholders $3,538
 $3,188
 $350
 11 % $10,298
 $8,946
 $1,352
 15%
Diluted earnings per share attributable to UnitedHealth Group common shareholders $3.67
 $3.24
 $0.43
 13 % $10.65
 $9.09
 $1.56
 17%
Medical care ratio (a) 82.4% 81.0% 1.4 %   82.5% 81.4% 1.1 %  
Operating cost ratio 14.8
 15.0
 (0.2)   14.3
 15.1
 (0.8)  
Operating margin 8.3
 8.1
 0.2
   8.0
 7.7
 0.3
  
Tax rate 20.5
 22.5
 (2.0)   20.7
 22.0
 (1.3)  
Net earnings margin (b) 5.9
 5.6
 0.3
   5.7
 5.3
 0.4
  
Return on equity (c) 26.2% 25.9% 0.3 %   26.0% 24.6% 1.4 %  
Medical care ratio is calculated as medical costs divided by premium revenue.
(b)Net earnings margin attributable to UnitedHealth Group shareholders.
(a)Medical care ratio is calculated as medical costs divided by premium revenue.
(b)Net earnings margin attributable to UnitedHealth Group shareholders.
(c)Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.
2019(c)Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.
18

2020 RESULTS OF OPERATIONS COMPARED TO 20182019 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;delivery. The increases were partially offset by the moratoriumdecreased individuals served through our Medicaid, commercial and Global benefits businesses; decreases in our fee-for-service care delivery and other volume-based businesses, primarily as a result of the Health Insurance Industry Tax in 2019.impacts of COVID-19 on the economy and health system; and certain customer assistance programs.
Medical Costs and MCR
Medical costs increaseddecreased as a result of the temporary deferral of care due to COVID-19 and decreased people served in Medicaid, commercial and Global, partially offset by growth in people served through Medicare Advantage and medical cost trends, partially offset by increased prior year favorable medical cost development.trends. The MCR increaseddecreased primarily due to the temporary deferral of care and the revenue effects of the return of the Health Insurance Industry Tax moratorium.Tax.
Operating Cost Ratio
The operating cost ratio decreasedincreased primarily due to the impact of the return of the Health Insurance Industry Tax moratorium and effective operating cost management.

the Company’s COVID-19 response efforts.
Income Tax Rate
Our effective tax rate decreasedincreased primarily due to the impact of the moratoriumreturn of the nondeductible Health Insurance Industry Tax.
19

Reportable Segments
See Note 98 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 June 30,Increase/(Decrease)Six Months Ended
June 30,
Increase/(Decrease)
(in millions, except percentages) 2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018(in millions, except percentages)202020192020 vs. 2019202020192020 vs. 2019
Revenues                Revenues
UnitedHealthcare $48,105
 $45,937
 $2,168
 5% $145,595
 $137,242
 $8,353
 6%UnitedHealthcare$49,107  $48,594  $513  %$100,175  $97,490  $2,685  %
OptumHealth 8,133
 6,052
 2,081
 34
 21,994
 17,752
 4,242
 24
OptumHealth9,139  7,148  1,991  28  18,331  13,861  4,470  32  
OptumInsight 2,617
 2,254
 363
 16
 7,145
 6,508
 637
 10
OptumInsight2,632  2,339  293  13  5,126  4,528  598  13  
OptumRx 18,454
 17,437
 1,017
 6
 55,194
 50,484
 4,710
 9
OptumRx21,371  18,923  2,448  13  42,928  36,740  6,188  17  
Optum eliminations (441) (352) (89) 25
 (1,181) (1,026) (155) 15
Optum eliminations(447) (381) (66) 17  (851) (740) (111) 15  
Optum 28,763
 25,391
 3,372
 13
 83,152
 73,718
 9,434
 13
Optum32,695  28,029  4,666  17  65,534  54,389  11,145  20  
Eliminations (16,517) (14,772) (1,745) 12
 (47,493) (43,130) (4,363) 10
Eliminations(19,664) (16,028) (3,636) 23  (39,150) (30,976) (8,174) 26  
Consolidated revenues $60,351
 $56,556
 $3,795
 7% $181,254
 $167,830
 $13,424
 8%Consolidated revenues$62,138  $60,595  $1,543  %$126,559  $120,903  $5,656  %
Earnings from operations                Earnings from operations
UnitedHealthcare $2,655
 $2,559
 $96
 4% $8,251
 $7,316
 $935
 13%UnitedHealthcare$7,007  $2,642  $4,365  165 %$9,895  $5,596  $4,299  77 %
OptumHealth 748
 622
 126
 20
 2,062
 1,680
 382
 23
OptumHealth841  688  153  22  1,553  1,314  239  18  
OptumInsight 632
 534
 98
 18
 1,589
 1,382
 207
 15
OptumInsight561  525  36   1,097  957  140  15  
OptumRx 979
 875
 104
 12
 2,688
 2,469
 219
 9
OptumRx832  889  (57) (6) 1,692  1,709  (17) (1) 
Optum 2,359
 2,031
 328
 16
 6,339
 5,531
 808
 15
Optum2,234  2,102  132   4,342  3,980  362   
Consolidated earnings from operations $5,014
 $4,590
 $424
 9% $14,590
 $12,847
 $1,743
 14%Consolidated earnings from operations$9,241  $4,744  $4,497  95 %$14,237  $9,576  $4,661  49 %
Operating margin                Operating margin
UnitedHealthcare 5.5% 5.6% (0.1)%   5.7% 5.3% 0.4 %  UnitedHealthcare14.3 %5.4 %8.9 %9.9 %5.7 %4.2 %
OptumHealth 9.2
 10.3
 (1.1)   9.4
 9.5
 (0.1)  OptumHealth9.2  9.6  (0.4) 8.5  9.5  (1.0) 
OptumInsight 24.1
 23.7
 0.4
   22.2
 21.2
 1.0
  OptumInsight21.3  22.4  (1.1) 21.4  21.1  0.3  
OptumRx 5.3
 5.0
 0.3
   4.9
 4.9
 
  OptumRx3.9  4.7  (0.8) 3.9  4.7  (0.8) 
Optum 8.2
 8.0
 0.2
   7.6
 7.5
 0.1
  Optum6.8  7.5  (0.7) 6.6  7.3  (0.7) 
Consolidated operating margin 8.3% 8.1% 0.2 %   8.0% 7.7% 0.3 %  Consolidated operating margin14.9 %7.8 %7.1 %11.2 %7.9 %3.3 %
UnitedHealthcare
The following table summarizes UnitedHealthcare revenues by business:
 Three Months Ended June 30,Increase/(Decrease)Six Months Ended June 30,Increase/(Decrease)
(in millions, except percentages)202020192020 vs. 2019202020192020 vs. 2019
UnitedHealthcare Employer & Individual$12,963  $14,032  $(1,069) (8)%$27,243  $28,116  $(873) (3)%
UnitedHealthcare Medicare & Retirement22,855  20,855  2,000  10  46,007  41,951  4,056  10  
UnitedHealthcare Community & State11,523  11,186  337   22,976  22,368  608   
UnitedHealthcare Global1,766  2,521  (755) (30) 3,949  5,055  (1,106) (22) 
Total UnitedHealthcare revenues$49,107  $48,594  $513  %$100,175  $97,490  $2,685  %
20

Table of Contents
  Three Months Ended September 30, Increase/(Decrease) Nine Months Ended September 30, Increase/(Decrease)
(in millions, except percentages) 2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
UnitedHealthcare Employer & Individual $14,291
 $13,734
 $557
 4 % $42,407
 $40,856
 $1,551
 4%
UnitedHealthcare Medicare & Retirement 20,698
 18,789
 1,909
 10
 62,649
 56,573
 6,076
 11
UnitedHealthcare Community & State 10,670
 11,054
 (384) (3) 33,038
 32,471
 567
 2
UnitedHealthcare Global 2,446
 2,360
 86
 4
 7,501
 7,342
 159
 2
Total UnitedHealthcare revenues $48,105
 $45,937
 $2,168
 5 % $145,595
 $137,242
 $8,353
 6%

The following table summarizes the number of individuals served by our UnitedHealthcare businesses, by major market segment and funding arrangement:
 September 30, Increase/(Decrease)June 30,Increase/(Decrease)
(in thousands, except percentages) 2019 2018 2019 vs. 2018(in thousands, except percentages)202020192020 vs. 2019
Commercial:        Commercial:
Risk-based 8,605
 8,450
 155
 2 %Risk-based8,065  8,325  (260) (3)%
Fee-based 19,230
 18,365
 865
 5
Fee-based18,705  19,090  (385) (2) 
Total commercial 27,835
 26,815
 1,020
 4
Total commercial26,770  27,415  (645) (2) 
Medicare Advantage 5,230
 4,915
 315
 6
Medicare Advantage5,605  5,190  415   
Medicaid 5,965
 6,630
 (665) (10)Medicaid6,210  6,360  (150) (2) 
Medicare Supplement (Standardized) 4,510
 4,540
 (30) (1)Medicare Supplement (Standardized)4,450  4,495  (45) (1) 
Total public and senior 15,705
 16,085
 (380) (2)Total public and senior16,265  16,045  220   
Total UnitedHealthcare - domestic medical 43,540
 42,900
 640
 1
Total UnitedHealthcare - domestic medical43,035  43,460  (425) (1) 
International 5,845
 6,070
 (225) (4)
GlobalGlobal5,365  6,070  (705) (12) 
Total UnitedHealthcare - medical 49,385
 48,970
 415
 1 %Total UnitedHealthcare - medical48,400  49,530  (1,130) (2)%
Supplemental Data:        Supplemental Data:
Medicare Part D stand-alone 4,415
 4,725
 (310) (7)%Medicare Part D stand-alone4,120  4,430  (310) (7)%
Fee-based and risk-based commercial group business increaseddecreased primarily due to an acquisition.increased unemployment and expected attrition. Medicare Advantage increased due to growth in people served through individual and employer-sponsored group Medicare Advantage plans. The decrease in people served through Medicaid was primarily driven by the proactive withdrawal from the Iowaa market as well as by states adding new carriers to existing programs and managing eligibility, partially offset by increases in Dual Special Needs Plans.Plans and states easing redetermination requirements. The decrease in people served by UnitedHealthcare Global is a result of our continued affordability efforts, underwriting discipline and increased unemployment.
UnitedHealthcare’s revenue and earnings from operations increased due to growth in the number of individuals served through Commercial and Medicare Advantage, including a greater mix of people with higher acuity needs. Revenue increases wereneeds and the return of the Health Insurance Tax, partially offset by a decrease in the number of individuals served through the commercial, Medicaid and Global businesses and foreign currency impacts. Earnings from operations increased due to the deferral of care caused by COVID-19 on the health system and the factors impacting revenue, partially offset by the moratorium onreturn of the Health Insurance Industry Tax, in 2019. Earnings from operations were also favorably impacted by operating cost management.COVID-19 treatment and testing costs and customer assistance programs.
Optum
Total revenues and earnings from operations increased as each segment reported revenue growth. Earnings from operations increased revenuesdue to growth at OptumHealth and OptumInsight, partially offset by decreased earnings from operations as a result of productivity and overall cost management initiatives in addition to the factors discussed below.at OptumRx.
The results by segment were as follows:
OptumHealth
Revenue increasedand earnings at OptumHealth increased primarily due to organic growth and acquisitions in care delivery, increased care services and organic growth in behavioral health. Increased operating earnings were primarilyrisk-based care delivery, partially offset by reduced care volumes in fee-for-service arrangements as a result of COVID-19. Earnings from operations also increased at our risk-based business due to the deferral of care delivery and care services.caused by COVID-19. OptumHealth served approximately 97 million people as of June 30, 2020 compared to 95 million people as of SeptemberJune 30, 2019 compared to 92 million people as of September 30, 2018.2019.
OptumInsight
Revenue and earnings from operations at OptumInsight increased primarily due to organic growth and acquisitions in managed services, partially offset by decreased activity levels in volume-based services due to the impact of COVID-19 on payer and care provider clients.

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OptumRx
Revenue at OptumRx and the corresponding eliminations increased due to 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 acquisition growth in managed services.
OptumRx
Revenue at OptumRx increased primarily due to acquisitionsspecialty pharmacy and organic growth in specialty pharmacy,new client wins, partially offset by an expected large client transition.transition and lower script volumes driven by COVID-19 related care deferral, primarily related to first fill script volumes. Earnings from operations increaseddecreased primarily due to the factors that increased revenue as well asimpact of lower script volumes, partially offset by improved supply chain management. OptumRx fulfilled 325316 million and 331343 million adjusted scripts in the third quartersecond quarters of 20192020 and 2018,2019, respectively. The decrease was due to the expected large client transition.transition and lower script volumes due to the impacts of COVID-19, partially offset by organic growth.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES
Liquidity
Summary of our Major Sources and Uses of Cash and Cash Equivalents
 Nine Months Ended September 30, Increase/(Decrease) Six Months Ended June 30,Increase/(Decrease)
(in millions) 2019 2018 2019 vs. 2018(in millions)202020192020 vs. 2019
Sources of cash:      Sources of cash:
Cash provided by operating activities $12,258
 $13,317
 $(1,059)Cash provided by operating activities$12,946  $9,108  $3,838  
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 repaymentsIssuances of short-term borrowings and long-term debt, net of repayments5,215  5,674  (459) 
Proceeds from common stock issuances 740
 745
 (5)Proceeds from common stock issuances870  448  422  
Customer funds administered 420
 1,552
 (1,132)Customer funds administered1,263  1,435  (172) 
Sales and maturities of investments, net of purchasesSales and maturities of investments, net of purchases573  —  573  
Other 338
 
 338
Other—  504  (504) 
Total sources of cash 21,948
 16,814
  Total sources of cash20,867  17,169  
Uses of cash:      Uses of cash:
Common stock repurchases (5,101) (3,650) (1,451)Common stock repurchases(1,691) (4,501) 2,810  
Cash paid for acquisitions, net of cash assumed (8,200) (5,824) (2,376)Cash paid for acquisitions, net of cash assumed(3,952) (4,751) 799  
Purchases of investments, net of sales and maturities (2,028) (3,729) 1,701
Purchases of investments, net of sales and maturities—  (1,654) 1,654  
Purchases of property, equipment and capitalized software (1,421) (1,505) 84
Purchases of property, equipment and capitalized software(920) (977) 57  
Cash dividends paid (2,908) (2,454) (454)Cash dividends paid(2,212) (1,884) (328) 
Other (756) (1,273) 517
Other(607) (529) (78) 
Total uses of cash (20,414) (18,435)  Total uses of cash(9,382) (14,296) 
Effect of exchange rate changes on cash and cash equivalents (37) (97) 60
Effect of exchange rate changes on cash and cash equivalents(143)  (149) 
Net increase (decrease) in cash and cash equivalents $1,497
 $(1,718) $3,215
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents$11,342  $2,879  $8,463  
20192020 Cash Flows Compared to 20182019 Cash Flows
DecreasedIncreased cash flows provided by operating activities were primarily driven by changesincreased net earnings as a result of the temporary deferral of care experienced at our benefits businesses related to COVID-19 and the timing of federal income tax payments, which will be paid in working capital accounts, partially offset by higher net earnings.the third quarter. Other significant changes in sources or uses of cash year-over-year included increased issuances of commercial paperdecreased common stock repurchases and decreased net purchases of investments partially offset by increases in cash paid for acquisitions and common stock repurchases.investments.
Financial Condition
As of SeptemberJune 30, 2019,2020, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of $50.4$60.3 billion included approximately $12.4$22.3 billion of cash and cash equivalents (of which $1.5$4.2 billion was available for general corporate use), $35.9$36.0 billion of debt securities and $2.0 billion of investments in equity securities. Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. Our available-for-sale debt portfolio had a weighted-average duration of 3.33.5 years and a weighted-average credit rating of “Double A” as of SeptemberJune 30, 2019.2020. When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.
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Capital Resources and Uses of Liquidity
In addition to cash flows from operations and cash and cash equivalent balances available for general corporate use, our capital resources and uses of liquidity are as follows:
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-partyindependent 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 SeptemberJune 30, 2019,2020, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately 41%39%.

Long-Term Debt. 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 SeptemberJune 30, 20192020 were as follows:
  
Moody’sS&P GlobalFitchFitchA.M. Best
RatingsOutlookRatingsOutlookRatingsOutlookRatingsOutlook
Senior unsecured debtA3StableA+StableA-AStableA-StablePositive
Commercial paperP-2n/aA-1n/aF1n/aAMB-1n/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, aconditions, 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 ninesix months ended SeptemberJune 30, 2019,2020, we repurchased 216 million shares at an average price of $245.18$271.32 per share. As of SeptemberJune 30, 2019,2020, we had Board authorization to purchase up to 7466 million shares of our common stock.
Dividends. In June 2019, our2020, the Company’s Board of Directors increased ourthe Company’s quarterly cash dividend to shareholders to an annual dividend rate of $5.00 compared to $4.32 per share. For more information on our dividend, see Note 6 of Notes to the Condensed Consolidated FinancialFinancial Statements included in Part I,1, Item 1 of this report.
For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our 20182019 10-K.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
A summary of future obligations under our various contractual obligations and commitments as of December 31, 20182019 was disclosed in our 20182019 10-K. During the ninesix months ended SeptemberJune 30, 2019,2020, there were no material changes to this previously disclosed information outside the ordinary course of business. However, we continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and acquisitions.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 1 of Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a discussion of new accounting pronouncements that affect us.

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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 20182019 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 20182019 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.
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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 SeptemberJune 30, 20192020 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):
June 30, 2020
Increase (Decrease) in Market Interest RateInvestment
Income Per
Annum (a)
Interest
Expense Per
Annum (a)
Fair Value of
Financial Assets (b)
Fair Value of
Financial Liabilities
2 %$504  $200  $(2,567) $(8,573) 
1252  100  (1,271) (4,715) 
(1)(80) (16) 623  4,676  
(2)(80) (16) 657  6,214  
(a)  Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of June 30, 2020, the assumed hypothetical change in interest rates does not reflect the full 100 and 200 basis point reduction in interest income or interest expense, as the rate cannot fall below zero.
  September 30, 2019
Increase (Decrease) in Market Interest Rate 
Investment
Income Per
Annum
 
Interest
Expense Per
Annum
 Fair Value of
Financial Assets
 
Fair Value of
Financial Liabilities
2 % $310
 $268
 $(2,607) $(6,824)
1 155
 134
 (1,293) (3,709)
(1) (155) (134) 1,227
 4,440
(2) (310) (268) 1,954
 9,440


(b)  As of June 30, 2020, some of our investments had interest rates below 1% so the assumed hypothetical change in the fair value of investments does not reflect the full 100 and 200 basis point reduction.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this quarterly report on Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of SeptemberJune 30, 2019.2020. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of SeptemberJune 30, 2019.2020.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting during the quarter ended SeptemberJune 30, 20192020 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
ITEM 1. LEGAL PROCEEDINGS
A description of our legal proceedings is included in and incorporated by reference to Note 7 of Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report.
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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 20182019 10-K and Part II, Item 1A, “Risk Factors” of our 10-Q for the quarterly period ended March 31, 2020 (“2020 First Quarter 10-Q”), which could materially affect our business, financial condition or future results. The risks described in our 20182019 10-K and 2020 First Quarter 10-Q, are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
There have been no other material changes to the risk factors as disclosed in our 2018 10-K.2019 10-K and 2020 First Quarter 10-Q.
ITEM 2.UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
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 thirdsecond quarter 2019,2020, we repurchased approximately 3 milliondid not repurchase any shares at an average price of $233.38 per share.our common stock. As of SeptemberJune 30, 2019,2020, we had Board authorization to purchase up to 7466 million shares of our common stock.

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ITEM 6.EXHIBITS*

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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.









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.

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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 6, 2019July 31, 2020
David S. Wichmann
/s/ JOHN F. REX
Executive Vice President and

Chief Financial Officer
(principal financial officer)
Dated:November 6, 2019July 31, 2020
John F. Rex
/s/ THOMAS E. ROOS
Senior Vice President and

Chief Accounting Officer
(principal accounting officer)
Dated:November 6, 2019July 31, 2020
Thomas E. Roos


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