Optum growth fuels strong quarter for UnitedHealth Group
That strong showing by the subsidiary helped UHG realize Q2 revenues that were 16% higher than the year previous, at $92.9 billion.
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Revenue growth at Optum during the second quarter helped fuel strong performance for owner UnitedHealth Group, according to a recent earnings call, with Optum growing 25% to $56.3 billion, and operating earnings growing 13% to $3.7 billion.
That strong showing by the subsidiary helped UHG realize Q2 revenues that, at $92.9 billion, were 16% higher than the year previous.
Second quarter 2023 earnings from operations were $8.1 billion, an increase of 13%, with strong contributions from both Optum and subsidiary UnitedHealthcare.
UnitedHealthcare second quarter revenues grew 13% to $70.2 billion, reflecting growth in the number of people served, and operating earnings grew 13%, to $4.4 billion, according to UHG. Year-to-date, total people served by UnitedHealthcare with medical benefits has increased by over 1.1 million, with growth across the company's commercial and public sector program offerings. The number of consumers served with commercial benefit offerings grew by nearly 500,000 in the first half of 2023.
For UHG, the second quarter 2023 medical care ratio sat at 83.2%, compared to 81.5% last year, driven by outpatient care activity and business mix. Days claims payable were 48.2, compared to 47.8 in the first quarter 2023 and 50.6 in the second quarter 2022. Favorable medical reserve development of $480 million compared to $470 million in the first quarter 2023 and $890 million in the year-ago second quarter.
The second quarter 2023 operating cost ratio of 14.9% increased from 14.6% last year. Cash flows from operations for the second quarter were $11 billion, or two times net income, and $10.4 billion or, 1.8-times net income, adjusted for the timing of payments from the Centers for Medicare and Medicaid Services.
WHAT'S THE IMPACT? OPTUM
For Q2, Optum's operating margin of 6.6% compares to 7.3% in the prior year. Optum Health revenue per consumer served increased 33% over last year, driven by growth of more than 900,000 patients served under value-based care arrangements
The Optum Insight revenue backlog increased nearly $8 billion to more than $31 billion compared to a year ago, in part due to the addition of Change Healthcare and growth in its comprehensive managed services offerings for health systems.
Optum Rx revenue growth of 15% in the second quarter, according to UHG, resulted from "strong growth" in serving new clients, expanding membership of existing clients and double-digit growth across its home delivery, specialty, infusion and community-based pharmacy offerings. Adjusted scripts grew to 381, million compared to 357 million last year.
THE LARGER TREND
UHG's $5.4 billion acquisition of home health company LHC Group formally closed in February. LHC provides healthcare services in the home for a demographic of mostly older patients dealing with chronic illnesses and injuries. It will be melded with Optum, which manages drug benefits and offers data analytics services and works with more than 100 health plans.
Optum positioned the move as helping to advance value-based care and said it would accelerate the combined companies' ability to deliver integrated care, leading to improved outcomes.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
