UnitedHealth Group Incorporated Q2 FY2025 earnings call

• Recognized and thanked employees and leadership team for dedication and role in rebaselining outlook. - Conveyed tone of change and reform driven by mission to help people live healthier lives. - Reevaluation of businesses, with remediation actions in UnitedHealthcare (e.g., tighter networks, AI efforts) and Optum (e.g., leadership changes, clinical model improvement at Optum Health, portfolio optimization). - Focus on cultural shift, transparency, and performance discipline across segments.

UnitedHealthcare: Medicare Advantage trend expected to be ~7.5% full year 2025 vs initial ~5%, with Medicare Supplement trend over 11% vs historical 8-9%. Commercial had higher outpatient and inpatient costs, ACA business affected by morbidity mismatch. Medicaid had elevated trends including behavioral health and pharmacy/home health. Optum: Optum Health earnings ~$6.6B below expectations, driven by value-based care issues. OptumInsight adjusted outlook downward by $1B. OptumRx had high client retention, revenue growth, but earnings constrained by various factors.

• Adjusted earnings outlook at least $16 per share, revenues ~$448B growth 11% over 2024. - Medical care ratio 89.25% ±25bps. - Tax rate ~18.5%. Cash flows from operations ~$16B. Dividend increased by 5%. - 2026 outlook: Medicare pricing focused on margin recovery, commercial pricing dynamic, Medicaid expected margin compression, Optum Health margin 6-8%, OptumRx earnings growth.

• Generational Medicare funding pullback. - Unprecedented medical cost trends. - Prospects of Medicaid and exchange market contraction. - Public controversy over managed care. - Operational mistakes in pricing and processes. - Cyberattack impact on OptumInsight.

Q: AJ Rice asked about Optum Health rate increases and margin consistency.

A: Patrick Conway responded on pricing across payers, benefit reductions, and operating cost reductions mitigating headwinds.

Q: Justin Lake focused on run rate out of 2025 into 2026 and MA margins.

A: John Rex and Bobby Hunter discussed second half earnings, Medicare Advantage margins in 2025 and 2026.

Q: Josh Raskin inquired about long-term EPS growth rate and updated margins.

A: Stephen Hensley and Tim Noel commented on long-term growth outlook and Medicare margin ranges.

Q: Kevin Fischbeck asked about portfolio actions delay.

A: Stephen Hensley clarified on portfolio re-evaluation and focus on existing business performance.

Q: Lance Wilkes asked about management process and strategic review.

A: Stephen Hensley described more intensive business review and leadership engagement.

Q: Lisa Gill asked about 2026 investments.

A: Stephen Hensley, Patrick Conway, and Divya Surat Devara discussed Optum Insight, AI agenda, and product innovation.

Q: Steven Baxter asked about Optum Health margin target.

A: Patrick Conway and John Rex explained margin progression by patient cohorts and business growth.

Q: Ann Hynes asked about Medicaid margin and premium increase.

A: Michael and Dan Schumacher discussed Medicaid margins and premium increase expectations.

Q: Matthew Gillmor asked about settlement nature.

A: John Rex explained settlement items across businesses.

Q: Jessica Tassan asked about Medicare margin recovery.

A: Bobby Hunter discussed plan design, operational efficiency, and AI leverage.

Q: Ben Hendericks asked about care capabilities for VBC and Amedisys acquisition.

A: John Rex and Patrick Conway commented on Amedisys transaction and value-based care capabilities.