UnitedHealth (UNH) 8-K The Strategically Adaptive Enterprise

The Strategically Adaptive Enterprise

Stephen J. Hemsley

Chief Executive Officer

“It is not the strongest of the species that survives, nor the

most intelligent that survives. It is the one that is the most

adaptable to change.”

Charles Darwin, Origin of Species

Exhibit 99.1

January 10, 2007

On November 7, 2006, UNH announced that due solely to the stock option

matter, all previously issued financial information should no longer be relied upon

The 2006 and 2007 Outlook provided today includes the current estimated range

of additional non-cash charges  for stock-based compensation expense for each

applicable year arising from the stock option review

These estimates are not yet final and subject to change based upon

completion of restatement of historic financial statements

The outlook does not reflect any adjustment for any non-operating cash charges

which may be required in connection with the resolution of stock

option related

tax matters, litigation and regulatory matters, the amount and timing of which are

uncertain but which are likely to be material

The outlook is also subject to other risks and uncertainties described in our

"Forward-Looking Statements“

Share repurchases have been temporarily suspended until UNH becomes current

in its filings with the SEC

Important qualifications.

We are…

Cultivating a highly adaptive organization

To optimize a highly attractive, fast growing and evolving              

$2 trillion social/commercial health care environment

We cultivate

adaptive skills

and

capabilities…

To participate in the multiple sub-markets of health care

To seek advantages that allow us to thrive in existing sub-markets

that are mature or crowded (e.g. CDHP in insured market)

To rapidly expand into new sub-markets that are emerging or

unformed (e.g. technology and banking)

To drive proactive evolution by setting an aggressive pace for

innovation and change (e.g. predictive modeling)

The result 

will be…

A strong vehicle to fundamentally improve health care delivery

A unique investment opportunity that will methodically capitalize on

the best returns in the vast health care environment

UnitedHealth Group

The Adaptive Enterprise.

UnitedHealth is Well Positioned In

Attractive Markets

85

88

83

64

80

73

95

87

96

82

99

98

15

12

17

36

20

27

5

13

4

18

1

2

Mbrs

(M)

Total

Fully

Insured

ASO

CDHP

MA

PDP

Medi-

caid

Behavioral

Dental

Vision

CRO

HCIT

171

79

92

5

7.5

16.6

29

236

168

97

$15 B

$45 B

Specialty Markets

Government

Sponsored Markets

Commercial

Benefits

Business to

Business

Sources:  Kaiser Family Foundation; BCG; UNH 10-Q; ICDC; Open Minds; NADP; HIMSS; Equity Research Reports

UNH (%)

Others (%)

Significant Market Share Potential

2,016

4,043

915

1,927

51

146

109

37

706

1,397

We Believe Evolution Provides an 

Extraordinary Growth Opportunity

15

101

249

421

2005

2015

U.S. Health

Spend

Government Sponsored

Markets

Commercial

Benefits

Out-of-Pocket

Spend

Size ($B)

Total

Medicare

Advantage

Part D*

Total

CDHP

Total

CAGR

7%

8%

7%

21%

11%

11%

5%

Sources:  CMS National Health Expenditures; Kaiser Family Foundation; CBO; ICDC

* Initial Part D number is for 2006.

Large and growing market environments over the next 10 years.

0

10

20

30

40

50

60

1919

1936

1950

1961

1973

1985

1997

2003

Food and clothing

are declining

1.4% per year

Health care, pensions,

and insurance are

growing 2.1% per year

% of Household Spending

Source: Bureau of Labor Statistics

Growth in the Sector is Driven by

Unprecedented Social Change

88.1

94.5

103.8

A dramatic increase in age…

Growth in the Sector is Driven by

Unprecedented Social Change

67.2

76.3

87.3

Evolution of 55+ Population (M)

…with a resulting increase in health spending

2005

2010

2015

Lives Covered by Government Programs (M)

A steady rise in the population

covered by government programs…

2005

2010

2015

…and an employer base with a changing

social contract about benefits

Consumers are the central theme in the transformation of health care.

Sources: Census Bureau; Mature Market Institute; CMS; HHS; Kaiser/Hewitt 2004 Survey; Mercer HR Consulting; Watson Wyatt; CPS March Supplement

15

25

35

45

55

1993

95

97

99

01

03

500+ Employers Offering Retiree Health Benefits (%)

Pre-65

65+

4.5%

4.9%

6.9%

35-45

45-54

55-64

Consumer Health Care Expenditures by Age (%)

%

Millions

Millions

Consumers Are Driving A Dramatic

Evolution In Health Care

They are

changing behavior

They are

changing technology

They are

changing products

They are

changing distribution

channels

They are

changing cost and

quality drivers

Intuitive and interactive

Consumer Integrated

Information transparency

Simpler –

modular

Self customized –

“my product”

Broad price sensitivity range

Break-down of group, broker

and consultant channels

Internet Channels

Cost and price transparency

Decision support tools

Pay-for-performance

Quality measurement and

transparency

Provider differential networks

Consumers are reshaping and expanding the health care environment.

Consumers will demand

the same simplicity and

reliability they experience

through other consumer

technologies

Consumers will “melt”

the

legacy boundaries of health

care —

opening market

solutions and opportunities

Consumers as the focal point

of everything we do

Thrives on change

Explicit behaviors

Social responsibility

Market-leading ethics and

governance

Information

Facilitation

Affordability

Technology

Consumer financial services

Industrial financial services

Toward Consumers/

End Users

Toward

Diversification

Toward Effective

Consumer Technologies

Where Will We Take This Highly

Adaptive Organization?

Six clear directions for further adaptation.

Toward Healthcare

Financial Services

Toward the Re-cultivation

of Competencies

Toward an

Enlightened Culture

Shareholders will participate in diverse growth

opportunities across the health care market.

Consumer

Integration

Toward Consumers –

An “End User”

View of Every  

Market Need

Validates our focus on

Affordability

Access to quality

Consumer simplicity

Will cause the redefinition and

reformation of:

Care delivery relationships

Service experience

Direction of technology investment

Decision-making information

models

The clinical relationship and role in

consumer education and coaching

13.9

13.3

Unprecedented historic forces are transforming health care

the same way they transformed sectors like food and transportation.

Consumer Spending

(% of Household Income)

Sources:  Bureau of Labor Statistics

18.9

18.0

Food

Transportation

Health Care

1996

2004

5.2

5.9

Provider services 

Government services

Financial services

New distribution channels

Global pharma and device services

Toward Diversification –

Consumers Will Define New Services

Consumers will “melt”

the legacy boundaries of health care —

opening up market

solutions and opportunities

Global Pharma

Services

Working Uninsured

Singles Ages 34-54

Micro Diversification

Macro Diversification

Ethnic markets / demographic niches

New group aggregations

New product types —

product elements

Product consolidation and customization

Horizontal and vertical growth opportunities.

Toward Effective Consumer

Technology –

Intuitive and Reliable

User Experience

More “front-end”

consumer applications

Engaging –

intuitive –

personalized

Achieves integration and navigation

Informational

Financial

Clinical

Operational

Consumer

Reduced technology costs

360°

transparency

Anchors consumer relationship and

loyalty

New distribution channel and

technologies

Building consumer loyalty.

Toward Healthcare Financial Services

Real Time and Really Easy

Consumer financial services

100% card-based products

In all geographies

For all payment options

With line of credit services

New distribution for consumer

information

More consumer market

segmentation approches

1,250,000 financial

accounts

15,000 active employer

groups

260,000 HSA accounts

with $400M in assets

Environmental forces are driving the growth of health care     

financial services for consumers.

2007P

Toward Healthcare Financial Services

Real Time and Really Easy

Health industry financial services

Industry payment system

Industry credit / financial

services

Transactional clearinghouse

Real-time payment interchange

Information distribution

Real-time adjudication –

10 second processing

Clinical segmentation

New distribution channels

$1.7 billion in electronic payments/month by

year end

50,000 provider groups (TIN’s) accepting

electronic payment

Provider Payments Example

Environmental forces are driving the growth of health care financial services

for the health industry.

2007P

Toward Continued Re-Cultivation of

Core Competencies

Information

Consumer connectivity

and loyalty

Quality / effectiveness

Informed consumption

Personalization

Integration

Clinical

Informational

Operational

Financial

Technological

Consumer

Technologies

Consumer applications

Low-cost scale and

development

Interactive engagement

Putting

it

all

together

–

For

the

Consumer.

Toward an Enlightened Culture

Tone at the top

Positive explicit behaviors inside and out

Social responsibility

Market-leading ethics and governance

Relationship equity

Health care policy formation

Public / Private partnerships

For-profit / Not-for-profit partnerships

Thrives on change

High performance with high integrity.

a

Employee Giving

From 2000

Diversified consumer-

driven business model

Solutions for evolving

consumer healthcare

needs

Broadly diversified

across micro/macro

markets

Distinctive social image

and public reputation

Enables the industry with

consumer services and

information

Diversified business model

All product, all payer

National scope / Matrix

More open philosophies

All products / groups

Broader choice and

option

Full spectrum care

approaches

Broadest spectrum of 

products and price

points

Single

product

–

group

HMO

HMO-centric networks

Geographic HMO

confederacy

Open market philosophies

Access

Choice

Care coordination

Rich benefits

What Will That Look and Feel Like?

The transition and adaptation will accelerate…

To Transition 2006

To Consumer-Driven 2010

A diversified consumer-driven health enterprise.

Financial Overview

$79.5

$71.5

2006E

2007P

Revenue

2006E

2007P

Operating Margin

2006E

2007P

Operating Earnings

2007 Outlook

Management Outlook

Well-positioned for growth

$ in billions

$6.0

2006E

2007P

Operating Cash Flows

$6.95 -

$6.98

$6.0 -

$6.2

9.7% -

9.8%

$7.95 -

$8.02

10.0% -

10.1%

14.1

14.8

15.3

10.5

10.9

11.2

2.8

3.2

4.5

5.0

Government

(Medicare / Medicaid)

Uniprise

UnitedHealthcare

Total

27.0

2005

33.0

2006E

34.7

2007P

Expected

to

serve

30

million

medical

members

Note: Health Care Services and Uniprise

enrollment only; excludes Evercare Medicare, Evercare Medicaid and AARP

2007 Outlook

Total Medical and Part D Enrollment

Stand-alone Part D

Enrollment in millions

2.4

0.7

0.6

0.7

1.0

0.8

1.2

0.5

0.4

3.0

3.6

0.7

M&A Adds

Organic

Growth

Total

1.2

2002

1.0

2003

3.7

2004

4.6

2005

1.5

2006E

1.2

2007P

Balanced

growth

–

12

million

lives

added

since

2002

Note: Health Care Services and Uniprise

enrollment only; excludes Part D, Evercare Medicare, Evercare Medicaid and AARP

2007 Outlook

Medical Enrollment Growth

Enrollment in millions

Consumer Affordability

Focus Areas

Two principle areas of focus:

Higher

quality,

more

affordable

and

more

accessible

health care

Operating

efficiencies

and

productivity

gains

0

150,000

300,000

450,000

600,000

0

1,000

2,000

3,000

4,000

5,000

Affordability

Network Overview

National scope, local presence

One national network

Clinically integrated approach

Focused on quality and efficiency

More choice for consumers

4,700

hospitals

More

than

500,000

physicians

and other health care

professionals

Stable and growing

One system with a common data set

National Choice Plus Network

(Hospitals)

2003

2004

2005

2006E

National Choice Plus Network

(Physicians / Other Health Care Professionals)

2003

2004

2005

2006E

36 Month

Growth:

31%

36 Month

Growth:

29%

Affordability

UHC Commercial Medical Trends

Net Trends

Health Care Affordability Initiatives

$ in millions

Total Net Trends

2006E

2007P

Physician

5.0%

5.0%

Inpatient

8.5% - 9.0%

8.0% - 9.0%

Outpatient

9.0%

8.5% - 9.0%

Pharmacy

6.5% - 7.0%

7.0% - 7.5%

Net Trends

Unit Cost / Price

5.0%

5.0%

Utilization

2.0%

2.5%

Net Trend

7.0% - 

7.5%

7.5%      

+/- 50 bps

Employer Cost

Shifting

(150) to (250) bps

+

Programs

2006E

2007P

Clinical Management

Programs

$60

$200

Network

Management

180

195

Operations

Effectiveness

150

160

Pharmacy

70

100

Other Programs

150

95

Total

$610

$750

Pricing in-line with expected medical trends –

Stable UHC medical care ratio

Affordability

Operating Cost Management

Enterprise-wide focus on efficiencies and productivity gains

2004 –

2006E

Focused Management Actions & Operating Efficiencies

2007P

Productivity Management

$750 million in savings

Estimated $200 -

$300

million in savings

A comprehensive enterprise wide

metric-based approach at the

business and

functional levels

Expect double-digit productivity

gains enterprise-wide

Driving down unit costs and

increasing output

Operating platform consolidation

Business process efficiencies

Workforce productivity

Workforce management

Print / postage eliminations

Technology investment returns

Discretionary spending limits

Vendor management

Professional fees

Reduced square footage

Voice network repatriation

and transport network optimization

Mainframe, distributed and data

network repatriation

Technology utilization

13.5%

+/- 

30bps

14.5%

+/- 

30bps

Affordability

Operating Cost Ratio

Effective cost management

Numerous specific “quality based”

initiatives to fundamentally reduce

labor content and improve

performance for customers in 2007

Focus on consumer quality

Data and technology leverage

Driving operational efficiencies

Focused management actions

Focus on quality driven

productivity management

Expect continued productivity

advancements in 2008 and beyond

2006E

2007P

Operating Cost Ratio

Operating Cost Ratio

(Excluding Prescription Solutions COGS)

2006E

2007P

14.8% -

14.9%

14.2% -

14.3%

What Will Not Change?

A commitment to facilitate and improve the performance of the health

system

Respect for the central patient / physician relationship

A commitment to consumer choice and access

The pursuit of clinical excellence

A commitment to evidence-based care

Disciplined pricing to our cost

Continued executional performance

Demanding a return on capital

15%

EPS

growth

/

strong

cash

flows

–

at

a

minimum

Execution –

Making Commitments

Cautionary Statement

Forward-Looking

Statements

This

presentation

may

contain

statements,

estimates,

projections,

guidance

or

outlook

that

constitute

“forward-looking”

statements

as

defined

under

U.S.

federal

securities

laws. 

Generally

the

words

“believe,”

“expect,”

“intend,”

“estimate,”

“anticipate,”

“project,”

“will”

and

similar

expressions,

identify

forward-looking

statements,

which

generally

are

not

historical

in

nature.

These

statements

may

contain

information

about

financial

prospects,

economic

conditions,

trends

and

unknown

certainties.

We

caution

that

actual

results

could

differ

materially

from

those

that

management

expects,

depending

on

the

outcome

of

certain

factors.

These

forward-looking

statements

involve

risks

and

uncertainties

that

may

cause

our

actual

results

to

differ

materially

from

the

results

discussed

in

the

forward-

looking

statements.

Some

factors

that

could

cause

results

to

differ

materially

from

the

forward-looking

statements

include:

the

potential

consequences

of

the

findings

announced

on

October

15,

2006

of

the

investigation

by

an

Independent

Committee

of

directors

of

our

stock

option

programs

(including

the

consequences

of

our

determination

that

the

Company’s

financial

statements

for

the

years

ended

1994

to

2005,

the

interim

periods

contained

therein,

the

quarter

ended

March

31,

2006

and

all

earnings

and

press

releases,

including

for

the

quarters

ended

June

30,

2006

and

September

30,

2006,

and

similar

communications

issued

by

the

Company

for

such

periods

and

the

related

reports

of

the

Company’s

independent

registered

public

accounting

firm

should

not

be

relied

upon,

the

consequences

of

the

resulting

restatement

of

our

financial

statements

for

those

periods,

and

delays

in

filing

our

quarterly

reports

on

Form

10-Q

for

the

second

and

third

quarters

of

2006),

related

governmental

reviews

by

the

SEC,

IRS,

U.S.

Senate

Finance

Committee,

U.S.

Attorney

for

the

Southern

District

of

New

York

and

Minnesota

Attorney

General,

related

review

of

the

Special

Litigation

Committee

of

the

Company,

and

related

shareholder

derivative

actions,

shareholder

demands

and

purported

securities

class

actions,

the

resolution

of

matters

currently

subject

to

an

injunction

issued

by

the

United

States

District

Court

for

the

District

of

Minnesota,

a

purported

notice

of

acceleration

with

respect

to

certain

of

the

Company’s

debt

securities

based

upon

an

alleged

event

of

default

under

the

indenture

governing

such

securities,

and

recent

management

and

director

changes,

and

the

potential

impact

of

each

of

these

matters

on

our

business,

credit

ratings

and

debt;

Cautionary Statement

(Continued)

increases

in

health

care

costs

that

are

higher

than

we

anticipated

in

establishing

our

premium

rates,

including

increased

consumption

of

or

costs

of

medical

services;

heightened

competition

as

a

result

of

new

entrants

into

our

market,

and

consolidation

of

health

care

companies

and

suppliers;

events

that

may

negatively

affect

our

contract

with

AARP;

uncertainties

regarding

changes

in

Medicare,

including

coordination

of

information

systems

and

accuracy

of

certain

assumptions;

funding

risks

with

respect

to

revenues

received

from

Medicare

and

Medicaid

programs;

increases

in

costs

and

other

liabilities

associated

with

increased

litigation,

legislative

activity

and

government

regulation

and

review

of

our

industry;

our

ability

to

execute

contracts

on

competitive

terms

with

physicians,

hospitals

and

other

service

providers;

regulatory

and

other

risks

associated

with

the

pharmacy

benefits

management

industry;

failure

to

maintain

effective

and

efficient

information

systems,

which

could

result

in

the

loss

of

existing

customers,

difficulties

in

attracting

new

customers,

difficulties

in

determining

medical

costs

estimates

and

appropriate

pricing,

customer

and

physician

and

health

care

provider

disputes,

regulatory

violations,

increases

in

operating

costs,

or

other

adverse

consequences;

possible

impairment

of

the

value

of

our

intangible

assets

if

future

results

do

not

adequately

support

goodwill

and

intangible

assets

recorded

for

businesses

that

we

acquire;

potential

noncompliance

by

our

business

associates

with

patient

privacy

data;

misappropriation

of

our

proprietary

technology;

and

anticipated

benefits

of

acquiring

PacifiCare

that

may

not

be

realized. 

This

list

of

important

factors

is

not

intended

to

be

exhaustive.

A

further

list

and

description

of

some

of

these

risks

and

uncertainties

can

be

found

in

our

reports

filed

with

the

Securities

and

Exchange

Commission

from

time

to

time,

including

our

annual

reports

on

Form

10-K,

quarterly

reports

on

Form

10-Q

and

current

reports

on

Form

8-K.

Any

or

all

forward-looking

statements

we

make

may

turn

out

to

be

wrong.

You

should

not

place

undue

reliance

on

forward-looking

statements,

which

speak

only

as

of

the

date

they

are

made.

Except

to

the

extent

otherwise

required

by

federal

securities

laws,

we

do

not

undertake

to

publicly

update

or

revise

any

forward-looking

statements.