EXHIBIT 99
N E W S R E L E A S E
[UNITEDHEALTH GROUP LOGO]
Contacts: John S. Penshorn
Director of Capital Markets
Communications & Strategy
952-936-7214
Patrick J. Erlandson
Chief Financial Officer
952-936-5901
(For Immediate Release)
UNITEDHEALTH GROUP REPORTS RECORD
SECOND QUARTER NET EARNINGS OF $0.71 PER SHARE
o REVENUES FOR SECOND QUARTER EXCEEDED $7 BILLION, UP 17%
o OPERATING MARGIN REACHED DOUBLE DIGITS
o OPERATING CASH FLOWS OF $765 MILLION
o RETURN ON EQUITY EXCEEDED 38%
o EARNINGS PER SHARE INCREASED 39%
MINNEAPOLIS (July 17, 2003) -- UnitedHealth Group (NYSE: UNH) achieved record
results in the second quarter of 2003, reported Chairman and CEO William W.
McGuire, M.D. today. Second quarter results were driven by strong performance
across the family of UnitedHealth Group operating businesses.
[UNITEDHEALTH GROUP LOGO]
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QUARTERLY FINANCIAL PERFORMANCE
THREE MONTHS ENDED
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JUNE 30, MARCH 31, JUNE 30,
2003 2003 2002
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Revenues $7.09 billion $6.98 billion $6.08 billion
Earnings From Operations $709 million $653 million $523 million
Operating Margin 10.0% 9.4% 8.6%
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UNITEDHEALTH GROUP HIGHLIGHTS
o Second quarter earnings per share of $0.71 increased 39 percent from
$0.51 in the second quarter of 2002, and improved 6 cents or 9 percent
from the first quarter of 2003.
o Second quarter consolidated net earnings increased to $439 million, up
$114 million or 35 percent year-over-year and $36 million or 9 percent
on a sequential quarter basis.
o Consolidated revenues increased $1 billion or 17 percent
year-over-year to exceed $7.0 billion, reflecting balanced growth
across the Company's business segments.
o Operating costs were 16.9 percent of revenues in the second quarter,
an improvement of 80 basis points from the second quarter of 2002 and
30 basis points from the first quarter of 2003.
o Earnings from operations increased to $709 million in the second
quarter, up $186 million or 36 percent over the prior year, and up $56
million or 9 percent sequentially.
o Consolidated second quarter operating margin improved to 10.0 percent
from 8.6 percent in the second quarter of 2002.
UNITEDHEALTH GROUP HIGHLIGHTS -- CONTINUED
o Excluding the AARP division of Ovations,
o June 30, 2003 receivables decreased $17 million or 3 percent
sequentially to $494 million, and declined $83 million
year-over-year, even as related quarterly revenues increased $936
million year-over-year or 18 percent during this time frame. At
June 30, there were approximately seven days sales outstanding in
receivables.
o Medical costs days payable, at 68 days, increased two days in the
quarter and were at the high end of the range over the past four
years of 64 to 68 days. Medical costs payable increased $64
million or 2 percent in the second quarter, $302 million or 11
percent year-to-date, and $509 million or 19 percent
year-over-year, standing at $3.15 billion at June 30, 2003.
o During the second quarter the Company realized favorable development
of $50 million in its estimates of medical costs incurred in 2002,
bringing the year-to-date effect of changes in estimates to $110
million or 0.6 percent of the $18 billion in medical costs reported
for 2002. This marks the fifth consecutive year in which initial
medical cost estimates developed favorably. Additionally, the Company
realized $50 million in positive development related to estimates of
medical costs incurred in the first quarter of 2003. This change in
estimate of expenses incurred within the first quarter of 2003 had no
effect on year-to-date earnings of $1.36 per share.
o Cash flows from operations were $765 million for the second quarter,
up 16 percent year-over-year. Year-to-date cash flows from operations
of $1.5 billion increased 45 percent over the level achieved in the
first six months of 2002.
o The Company repurchased approximately 8 million shares in the second
quarter.
o Second quarter 2003 annualized return on equity reached 38.5 percent.
CLOSING COMMENT
"Our operating units are currently experiencing strong new business sales for
2004 and have significant sales opportunities still emerging. The resulting
market share gains, coupled with our continuing service and quality advances,
business process improvements, care delivery network strength and distinctive
clinical services lead us to expect strong revenue, operating margin, cash flow
and return on capital performance over the balance of 2003 and in 2004," Dr.
McGuire concluded. "Specifically, we expect full-year 2003 earnings growth of
around 34 percent to approximately $2.85 per share, and we now foresee growth in
earnings per share in 2004 of 18 percent to 20 percent on this expanded earnings
base."
BUSINESS DESCRIPTION
UnitedHealth Group is a diversified health and well-being company that provides
a broad spectrum of resources and services to help people improve their health
and well-being through all stages of life. Consolidated UnitedHealth Group
operating results include the operating performance of the Company's four
reportable business segments -- Health Care Services (which includes the results
of UnitedHealthcare, AmeriChoice and Ovations), Uniprise, Specialized Care
Services and Ingenix.
FORWARD-LOOKING STATEMENTS
This news release may contain statements, estimates or projections 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. By their nature,
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from our historical experience and our
present expectations or projections. A list and description of some of the 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. 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.
EARNINGS CONFERENCE CALL
As previously announced, UnitedHealth Group will discuss the Company's second
quarter results, strategy and future outlook on a conference call with investors
at 8:45 a.m. Eastern time today. UnitedHealth Group will host a live webcast of
this conference call from the Company's Web site
(http://www.unitedhealthgroup.com). The conference call webcast is open to all
interested parties.
[UNITEDHEALTHCARE(R) LOGO] [OVATIONS LOGO]
A UnitedHealth Group Company A UnitedHealth Group Company
[AMERICHOICE LOGO]
A UnitedHealth Group Company
BUSINESS DESCRIPTION -- HEALTH CARE SERVICES
The Health Care Services segment consists of the UnitedHealthcare, AmeriChoice
and Ovations business units. UnitedHealthcare coordinates network-based health
and well-being services on behalf of local employers and consumers. AmeriChoice
facilitates and manages health care services for state Medicaid programs and
their beneficiaries. Ovations delivers health and well-being services to
Americans over the age of 50, including the administration of supplemental
health insurance coverage on behalf of AARP.
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QUARTERLY FINANCIAL PERFORMANCE
THREE MONTHS ENDED
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JUNE 30, MARCH 31, JUNE 30,
2003 2003 2002
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Revenues $6.11 billion $6.01 billion $5.24 billion
Earnings From Operations $450 million $402 million $314 million
Operating Margin 7.4% 6.7% 6.0%
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KEY DEVELOPMENTS FOR HEALTH CARE SERVICES
o Revenues for Health Care Services grew $864 million or 16 percent
year-over-year in the second quarter of 2003.
o Second quarter Health Care Services operating earnings of $450 million
increased $136 million or 43 percent year-over-year and $48 million or
12 percent sequentially.
o Second quarter operating margin of 7.4 percent expanded 140 basis
points year-over-year and 70 basis points sequentially.
KEY DEVELOPMENTS FOR HEALTH CARE SERVICES -- CONTINUED
o Second quarter revenues of $3.8 billion for UnitedHealthcare increased
14 percent year-over-year.
o UnitedHealthcare commercial membership was essentially flat during the
second quarter as growth in new customers served offset the effects of
employment attrition at existing customers due to weak business
conditions in the U.S. economy. Over the past 12 months
UnitedHealthcare expanded its business to more than 200,000 new
people, bringing total individuals served to 7.8 million.
o UnitedHealthcare's commercial medical care ratio of 80.7 percent was
slightly lower than 81.6 percent in the second quarter of 2002 and
81.5 percent in the first quarter of 2003.
o AmeriChoice increased enrollment by 25,000 in the second quarter of
2003, and now serves nearly 1.1 million people.
o The AmeriChoice business generated strong operational performance in
the second quarter of 2003, as the application of its Personal Care
Model continued to drive effective and appropriate use of clinical
resources while the operating cost profile of the business improved.
o Ovations reported record revenues of $1.6 billion in the second
quarter, up $75 million or 5 percent year-over-year and $23 million or
1 percent from first quarter 2003.
o The actively marketed standardized Medicare supplement program,
managed by Ovations on behalf of AARP, realized a net 60,000 increase
in subscribers in the second quarter of 2003. The active program
subscriber growth rate has continued to accelerate and reached 14
percent on a year-over-year basis.
[UNIPRISE(R) LOGO]
A UnitedHealth Group Company
BUSINESS DESCRIPTION
Uniprise provides network-based health and well-being services,
business-to-business transaction processing services, consumer connectivity, and
technology support services to large employers and health plans.
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QUARTERLY FINANCIAL PERFORMANCE
THREE MONTHS ENDED
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JUNE 30, MARCH 31, JUNE 30,
2003 2003 2002
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Revenues $775 million $769 million $662 million
Earnings From Operations $153 million $152 million $129 million
Operating Margin 19.7% 19.8% 19.5%
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KEY DEVELOPMENTS
o Second quarter revenues of $775 million increased 17 percent over second
quarter 2002, principally due to new business growth.
o Uniprise directly serves 9.2 million people in the national multi-location
employer segment, having added a net total of 565,000 individuals in the
past 12 months, despite overall weakness in U.S. corporate employment.
Economy-related losses impacted Uniprise membership by more than 50,000
individuals in the second quarter; additionally, there was a loss of one
client due to carrier consolidation and another due to a business merger.
o Operating margin of 19.7 percent expanded 20 basis points year-over-year
and decreased 10 basis points sequentially. Advances in customer service
and operational productivity, coupled with growth, contributed to the
ongoing strong profitability of the business.
o The combination of top-line growth and margin expansion drove second
quarter operating income to $153 million, an increase of $24 million or 19
percent year-over-year, and up $1 million or 1 percent from the first
quarter of 2003.
[SPECIALIZED CARE SERVICES]
A UnitedHealth Group Company
BUSINESS DESCRIPTION
Specialized Care Services offers a comprehensive array of specialized benefits,
networks, services and resources to help consumers improve their health and
well-being.
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QUARTERLY FINANCIAL PERFORMANCE
THREE MONTHS ENDED
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JUNE 30, MARCH 31, JUNE 30,
2003 2003 2002
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Revenues $463 million $454 million $375 million
Earnings From Operations $93 million $88 million $68 million
Operating Margin 20.1% 19.4% 18.1%
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KEY DEVELOPMENTS
o Second quarter revenues rose to $463 million, up $88 million or 23 percent
year-over-year, and up $9 million or 2 percent from the first quarter of
2003, with strong customer growth across the portfolio of companies in this
segment.
o Every business unit contributed to year-over-year revenue growth, led by
very strong performances from Dental Benefit Providers, Spectera, United
Behavioral Health, ACN Group and Unimerica.
o The Specialized Care Services operating margin of 20.1 percent expanded 2
percentage points from the second quarter of 2002 and 70 basis points
sequentially. The operating margin improvement reflected a continuation of
the segment's significant progress in aligning assets, technology and
operating platforms to improve performance.
o In the second quarter, operating earnings of $93 million increased $25
million or 37 percent year-over-year and $5 million or 6 percent
sequentially.
[INGENIX LOGO]
A UnitedHealth Group Company
BUSINESS DESCRIPTION
Ingenix is an international leader in the field of health care data, analysis
and application. Ingenix serves multiple health care market segments on a
business-to-business basis, including pharmaceutical companies, health insurers
and other payers, care providers, large employers and governments.
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QUARTERLY FINANCIAL PERFORMANCE
THREE MONTHS ENDED
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JUNE 30, MARCH 31, JUNE 30,
2003 2003 2002
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Revenues $126 million $121 million $109 million
Earnings From Operations $13 million $11 million $12 million
Operating Margin 10.3% 9.1% 11.0%
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KEY DEVELOPMENTS
o Ingenix revenues increased 16 percent year-over-year or $17 million to $126
million in the second quarter of 2003.
o Second quarter revenues increased $5 million from the first quarter of 2003
as sales grew sequentially even during the weakest seasonal sales quarter
for the Ingenix segment.
o Ingenix operating earnings increased $1 million or 8 percent year-over-year
and $2 million or 18 percent over first quarter 2003 results, as Ingenix
Pharmaceutical Services results showed modest sequential improvement in
earnings contribution in the second quarter.
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