UnitedHealth Group (UNH)

Second quarter revenues of $1.4 billion grew 3 percent year-over-year for OptumHealth. Recent top-line trends continued, with strong year-over-year revenue growth from large scale care and behavioral health programs for state clients and increased up-selling of OptumHealth benefits and services at continuing customers mitigating revenue losses associated with the UnitedHealthcare membership decline.

OptumHealth’s second quarter earnings from operations of $142 million decreased $27 million or 16 percent year-over-year due to the impact of the membership decline at UnitedHealthcare and increased usage of dental services, as well as a reduction in investment income.

OptumHealth Financial Services, the Company’s dedicated health banking organization, ended the second quarter with $810 million in assets under management, an increase of 32 percent year-over-year, and served 1.8 million consumer accounts, up 14 percent year-over-year.

OptumHealth Financial Services has grown its connectivity network by 40,000 participants year-to-date and is now connected with 400,000 separate care providers. This business electronically transmitted $8.8 billion in medical payments to physicians and other care providers in the second quarter of 2009, a year-over-year increase of 42 percent.

During the second quarter, OptumHealth advanced two significant telehealth initiatives as part of its strategy to deliver national telehealth programs to employers, states and other health care partners. By leveraging leading innovative technology, these programs will help connect patients to care providers and care providers to one another in ways that improve access to and effectiveness of health care.

On July 1, 2009 OptumHealth initiated services for approximately one-half million people covered by the

First quarter revenues of $1.3 billion grew 2 percent year-over-year for OptumHealth. Highlights included strong new business development in large scale behavioral health programs for state clients and increased overall product penetration of OptumHealth benefits and services at continuing UnitedHealthcare customers. These mitigated revenue losses associated with the UnitedHealthcare membership decline.

OptumHealth’s first quarter earnings from operations of $158 million decreased $39 million or 20 percent year-over-year due to the impact of the membership decline at UnitedHealthcare, as well as a reduction in investment income. These factors, as well as the continued growth in lower margin public sector business, brought OptumHealth’s first quarter operating margin to 11.9 percent.

OptumHealth Financial Services, the Company’s dedicated health banking organization, ended first quarter with approximately $780 million in assets under management, an increase of 35 percent year-over-year. OptumHealth Financial Services electronically transmitted $7.4 billion in medical payments to physicians and other health care providers in the first quarter of 2009, a year-over-year increase of 29 percent.

In April 2009 OptumHealth introduced eSync, an advanced technology platform that synchronizes and delivers a person’s medical information, helping plan sponsors and physicians identify and follow through on opportunities for more effective care and care plan compliance. eSync provides patients with personalized health management support through multiple contact channels. Broad pilot testing for this system showed a 20 percent increase in sustained patient compliance with health management programs and a doubling in overall consumer use of these programs, indicating this platform helps improve care quality and compliance and lowers costs.

Full year OptumHealth revenues increased $304 million or 6 percent to $5.2 billion, including an increase of $51 million or 4 percent year-over-year in the fourth quarter. OptumHealth provided services to approximately 60 million consumers at year end, an increase of 1 million people in 2008.

Full year 2008 earnings from operations decreased by $177 million or 20 percent to $718 million. Fourth quarter earnings from operations of $177 million decreased $62 million or 26 percent year-over-year. These decreases were primarily due to the mix effect of declining commercial risk-based membership and margin pressure in the behavioral health business, partially offset by growth in lower margin public sector accounts. OptumHealth’s operating margin was 13.6 percent in the fourth quarter and 13.7 percent for full year 2008.

OptumHealth’s public sector service business continues to grow strongly, with significant benefits sales in New York, Tennessee and New Mexico each taking effect in 2008 or expected to commence in 2009.

OptumHealth Financial Services, the nation’s largest dedicated health banking organization, ended 2008 with $660 million in assets under management, an increase of 43 percent year-over-year. OptumHealth Financial Services electronically transmitted $26 billion in medical payments to physicians and other health care providers in 2008, a year-over-year increase of 38 percent.

OptumHealth closed 2008 as the market-leading operator of independent web-based health care portal services, with more than 1,000 private health portals under management, including its recently launched flagship, myoptumhealth.com.

Third quarter revenues of $1.3 billion grew $55 million or 4 percent year-over-year. OptumHealth provided services to approximately 60 million consumers as of September 30, an increase of 1.1 million people year-over-year.

In the third quarter, earnings from operations of $175 million decreased $49 million or 22 percent year-over-year, primarily due to margin pressure in its behavioral health business as well as the earnings impact of the loss of risk-based membership by OptumHealth’s largest customer, UnitedHealthcare.

The OptumHealth operating margin of 13.5 percent in the third quarter of 2008 decreased 460 basis points year-over-year, due to the mix effect of continued growth in OptumHealth’s lower margin public sector business and margin pressure within the behavioral health business.

OptumHealth Financial Services ended the third quarter as the nation’s largest dedicated health banking organization, with approximately $640 million in assets under management, an increase of 47 percent year-over-year. OptumHealth Financial Services also electronically transmitted nearly $7 billion in medical payments to physicians and other health care providers in the third quarter of 2008, a year-over-year increase of 38 percent.

Second quarter revenues of $1.3 billion grew $84 million or 7 percent year-over-year. OptumHealth provided services to more than 60 million consumers as of June 30, 2008, an increase of 2 million people year-over-year.

In the second quarter, earnings from operations of $169 million decreased $50 million or 23 percent year-over-year, primarily due to margin pressure in its behavioral health business as well as the loss of risk-based membership by OptumHealth’s largest customer, UnitedHealthcare.

OptumHealth Financial Services ended the second quarter as the nation’s largest dedicated health banking organization, with approximately $615 million in assets under management, an increase of 50 percent year-over-year. OptumHealth Financial Services managed approximately 1.6 million accounts on behalf of members served by its health plan customers, including UnitedHealthcare, as of June 30, 2008.

The OptumHealth operating margin of 12.8 percent in the second quarter of 2008 decreased 490 basis points year-over-year, due to the mix effect of continued growth in OptumHealth’s lower margin public sector business and margin pressure within its behavioral health business.

First quarter revenues rose to $1.3 billion, up $114 million or 10 percent year-over-year and up $49 million or 4 percent from the fourth quarter of 2007. OptumHealth provided services to more than 60 million consumers as of March 31, 2008, an increase of 2.6 million people year-over-year.

In the first quarter, earnings from operations of $197 million decreased $16 million or 8 percent year-over-year, primarily due to the loss of risk-based membership by OptumHealth’s largest customer, UnitedHealthcare.

OptumHealth Financial Services (formerly known as Exante) ended the first quarter as the nation’s largest dedicated health banking organization, with approximately $580 million in assets under management, an increase of 55 percent year-over-year. OptumHealth Financial Services managed approximately 1.5 million accounts on behalf of customers of UnitedHealth Group and 22 unaffiliated payers as of March 31, 2008.

The OptumHealth business generated an operating margin of 15.1 percent in the first quarter of 2008, a decrease of 280 basis points year-over-year due to the loss of UnitedHealthcare risk-based membership, combined with the mix effect of continued growth in OptumHealth’s lower margin public sector business.

OptumHealth expanded its market share in 2007 by both providing services to 2.1 million more people and by increasing product and service penetration within its established customer base. Full year OptumHealth revenues of $4.9 billion increased $579 million or 13 percent, while fourth quarter revenues rose to $1.3 billion, up $145 million or 13 percent year-over-year, and $16 million or 1 percent over third quarter 2007.

Full year earnings from operations at OptumHealth grew $86 million or 11 percent year-over-year to $895 million. In the fourth quarter, earnings from operations of $239 million increased $24 million or 11 percent year-over-year and improved $15 million or 7 percent from third quarter 2007.

The OptumHealth operating margin of 18.2 percent in 2007 compares to 18.6 percent in 2006. The year-over-year margin change reflects strong growth from public sector clients that are contributing relatively larger per client revenues at comparatively lower overall margins. OptumHealth’s fourth quarter operating margin of 19.0 percent decreased 40 basis points year-over-year but increased 90 basis points sequentially. The sequential gain in operating margin was principally due to effective operating cost management.

Optum Financial Services (Exante) reached $460 million in assets under management and served more than 1.3 million financial accounts at December 31, 2007. Optum Financial Services (Exante) moved $19 billion in payments electronically to health system providers during 2007, representing 80 percent growth in electronic payments year-over-year.

Third quarter revenues rose to $1.2 billion, up $167 million or 17 percent year-over-year, and were stable with the second quarter of 2007. OptumHealth provided services to approximately 58 million unique consumers as of September 30, 2007.

In the third quarter, earnings from operations of $222 million increased $24 million or 12 percent year-over-year and improved $9 million or 4 percent from second quarter 2007.

OptumHealth generated an operating margin of 19.1 percent in the third quarter of 2007, a decrease of 70 basis points year-over-year and up 80 basis points sequentially. The year-over-year margin change reflects strong growth from public sector clients that are contributing relatively larger per client revenues at comparatively lower overall margins. The sequential gain in operating margin was principally due to effective operating cost management.

OptumHealth Behavioral Solutions (formerly United Behavioral Health) co-authored a study, published in the Journal of the American Medical Association, along with Harvard Medical School, and Group Health Cooperative’s Center for Health Studies, finding that a systematic approach to identifying and treating depression not only improves clinical outcomes but also results in higher job retention, decreased sickness, lower work-absence and increased work productivity.