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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-1321939
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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UnitedHealth Group Center
9900 Bren Road East
Minnetonka, Minnesota
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55343
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Page
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8
.
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|||
|
||||
(in millions, except per share data)
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
8,650
|
|
|
$
|
7,495
|
|
Short-term investments
|
|
1,780
|
|
|
1,741
|
|
||
Accounts receivable, net
|
|
5,040
|
|
|
4,252
|
|
||
Other current receivables, net
|
|
5,346
|
|
|
5,498
|
|
||
Assets under management
|
|
2,921
|
|
|
2,962
|
|
||
Deferred income taxes
|
|
405
|
|
|
556
|
|
||
Prepaid expenses and other current assets
|
|
2,632
|
|
|
1,052
|
|
||
Total current assets
|
|
26,774
|
|
|
23,556
|
|
||
Long-term investments
|
|
19,416
|
|
|
18,827
|
|
||
Property, equipment and capitalized software, net
|
|
4,245
|
|
|
4,418
|
|
||
Goodwill
|
|
32,782
|
|
|
32,940
|
|
||
Other intangible assets, net
|
|
3,441
|
|
|
3,669
|
|
||
Other assets
|
|
3,061
|
|
|
2,972
|
|
||
Total assets
|
|
$
|
89,719
|
|
|
$
|
86,382
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Medical costs payable
|
|
$
|
13,537
|
|
|
$
|
12,040
|
|
Accounts payable and accrued liabilities
|
|
10,518
|
|
|
9,247
|
|
||
Other policy liabilities
|
|
6,392
|
|
|
5,965
|
|
||
Commercial paper and current maturities of long-term debt
|
|
2,797
|
|
|
1,399
|
|
||
Unearned revenues
|
|
1,734
|
|
|
1,972
|
|
||
Total current liabilities
|
|
34,978
|
|
|
30,623
|
|
||
Long-term debt, less current maturities
|
|
15,577
|
|
|
16,007
|
|
||
Future policy benefits
|
|
2,483
|
|
|
2,488
|
|
||
Deferred income taxes
|
|
2,056
|
|
|
2,065
|
|
||
Other liabilities
|
|
1,295
|
|
|
1,357
|
|
||
Total liabilities
|
|
56,389
|
|
|
52,540
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
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Redeemable noncontrolling interests
|
|
1,452
|
|
|
1,388
|
|
||
Shareholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.001 par value - 10 shares authorized; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value - 3,000 shares authorized;
952 and 954 issued and outstanding
|
|
10
|
|
|
10
|
|
||
Retained earnings
|
|
34,153
|
|
|
33,836
|
|
||
Accumulated other comprehensive loss
|
|
(2,285
|
)
|
|
(1,392
|
)
|
||
Total shareholders’ equity
|
|
31,878
|
|
|
32,454
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
89,719
|
|
|
$
|
86,382
|
|
|
|
Three Months Ended March 31,
|
||||||
(in millions, except per share data)
|
|
2015
|
|
2014
|
||||
Revenues:
|
|
|
|
|
||||
Premiums
|
|
$
|
31,674
|
|
|
$
|
28,115
|
|
Services
|
|
2,706
|
|
|
2,404
|
|
||
Products
|
|
1,230
|
|
|
998
|
|
||
Investment and other income
|
|
146
|
|
|
191
|
|
||
Total revenues
|
|
35,756
|
|
|
31,708
|
|
||
Operating costs:
|
|
|
|
|
||||
Medical costs
|
|
25,689
|
|
|
23,208
|
|
||
Operating costs
|
|
5,949
|
|
|
5,194
|
|
||
Cost of products sold
|
|
1,100
|
|
|
892
|
|
||
Depreciation and amortization
|
|
378
|
|
|
360
|
|
||
Total operating costs
|
|
33,116
|
|
|
29,654
|
|
||
Earnings from operations
|
|
2,640
|
|
|
2,054
|
|
||
Interest expense
|
|
(150
|
)
|
|
(160
|
)
|
||
Earnings before income taxes
|
|
2,490
|
|
|
1,894
|
|
||
Provision for income taxes
|
|
(1,077
|
)
|
|
(795
|
)
|
||
Net earnings
|
|
$
|
1,413
|
|
|
$
|
1,099
|
|
Earnings per share:
|
|
|
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|
||||
Basic
|
|
$
|
1.48
|
|
|
$
|
1.12
|
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Diluted
|
|
$
|
1.46
|
|
|
$
|
1.10
|
|
Basic weighted-average number of common shares outstanding
|
|
954
|
|
|
983
|
|
||
Dilutive effect of common share equivalents
|
|
15
|
|
|
13
|
|
||
Diluted weighted-average number of common shares outstanding
|
|
969
|
|
|
996
|
|
||
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents
|
|
9
|
|
|
9
|
|
||
Cash dividends declared per common share
|
|
$
|
0.3750
|
|
|
$
|
0.2800
|
|
|
||||||||
|
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Three Months Ended March 31,
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Net earnings
|
|
$
|
1,413
|
|
|
$
|
1,099
|
|
Other comprehensive (loss) income:
|
|
|
|
|
||||
Gross unrealized gains on investment securities during the period
|
|
105
|
|
|
166
|
|
||
Income tax effect
|
|
(37
|
)
|
|
(61
|
)
|
||
Total unrealized gains, net of tax
|
|
68
|
|
|
105
|
|
||
Gross reclassification adjustment for net realized gains included in net earnings
|
|
(3
|
)
|
|
(46
|
)
|
||
Income tax effect
|
|
1
|
|
|
17
|
|
||
Total reclassification adjustment, net of tax
|
|
(2
|
)
|
|
(29
|
)
|
||
Total foreign currency translation (losses) gains
|
|
(959
|
)
|
|
259
|
|
||
Other comprehensive (loss) income
|
|
(893
|
)
|
|
335
|
|
||
Comprehensive income
|
|
$
|
520
|
|
|
$
|
1,434
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Total Shareholders’
Equity
|
|||||||||||||||||
(in millions)
|
|
Shares
|
|
Amount
|
|
|
|
Net Unrealized Gains on Investments
|
|
Foreign Currency Translation (Losses) Gains
|
|
||||||||||||||||
Balance at January 1, 2015
|
|
954
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
33,836
|
|
|
$
|
223
|
|
|
$
|
(1,615
|
)
|
|
$
|
32,454
|
|
Net earnings
|
|
|
|
|
|
|
|
1,413
|
|
|
|
|
|
|
1,413
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
66
|
|
|
(959
|
)
|
|
(893
|
)
|
||||||||||
Issuances of common shares, and related tax effects
|
|
6
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Share-based compensation, and related tax benefits
|
|
|
|
|
|
206
|
|
|
|
|
|
|
|
|
206
|
|
|||||||||||
Noncontrolling interests fair value and other adjustments
|
|
|
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
(49
|
)
|
|||||||||||
Common share repurchases
|
|
(8
|
)
|
|
—
|
|
|
(157
|
)
|
|
(739
|
)
|
|
|
|
|
|
(896
|
)
|
||||||||
Cash dividends paid on common shares
|
|
|
|
|
|
|
|
(357
|
)
|
|
|
|
|
|
(357
|
)
|
|||||||||||
Balance at March 31, 2015
|
|
952
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
34,153
|
|
|
$
|
289
|
|
|
$
|
(2,574
|
)
|
|
$
|
31,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at January 1, 2014
|
|
988
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
33,047
|
|
|
$
|
54
|
|
|
$
|
(962
|
)
|
|
$
|
32,149
|
|
Net earnings
|
|
|
|
|
|
|
|
1,099
|
|
|
|
|
|
|
1,099
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
76
|
|
|
259
|
|
|
335
|
|
||||||||||
Issuances of common shares, and related tax effects
|
|
8
|
|
|
—
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
(6
|
)
|
|||||||||
Share-based compensation, and related tax benefits
|
|
|
|
|
|
159
|
|
|
|
|
|
|
|
|
159
|
|
|||||||||||
Common share repurchases
|
|
(12
|
)
|
|
—
|
|
|
(153
|
)
|
|
(758
|
)
|
|
|
|
|
|
(911
|
)
|
||||||||
Cash dividends paid on common shares
|
|
|
|
|
|
|
|
(276
|
)
|
|
|
|
|
|
(276
|
)
|
|||||||||||
Balance at March 31, 2014
|
|
984
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
33,112
|
|
|
$
|
130
|
|
|
$
|
(703
|
)
|
|
$
|
32,549
|
|
|
|
Three Months Ended
March 31,
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Operating activities
|
|
|
|
|
||||
Net earnings
|
|
$
|
1,413
|
|
|
$
|
1,099
|
|
Noncash items:
|
|
|
|
|
||||
Depreciation and amortization
|
|
378
|
|
|
360
|
|
||
Deferred income taxes
|
|
122
|
|
|
99
|
|
||
Share-based compensation
|
|
125
|
|
|
105
|
|
||
Other, net
|
|
(44
|
)
|
|
(65
|
)
|
||
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
|
|
|
|
|
||||
Accounts receivable
|
|
(758
|
)
|
|
(990
|
)
|
||
Other assets
|
|
(2,162
|
)
|
|
(1,281
|
)
|
||
Medical costs payable
|
|
1,610
|
|
|
387
|
|
||
Accounts payable and other liabilities
|
|
1,648
|
|
|
1,665
|
|
||
Other policy liabilities
|
|
154
|
|
|
(203
|
)
|
||
Unearned revenues
|
|
(217
|
)
|
|
232
|
|
||
Cash flows from operating activities
|
|
2,269
|
|
|
1,408
|
|
||
Investing activities
|
|
|
|
|
||||
Purchases of investments
|
|
(1,891
|
)
|
|
(2,914
|
)
|
||
Sales of investments
|
|
503
|
|
|
2,235
|
|
||
Maturities of investments
|
|
843
|
|
|
825
|
|
||
Cash paid for acquisitions, net of cash assumed
|
|
(575
|
)
|
|
(345
|
)
|
||
Purchases of property, equipment and capitalized software
|
|
(373
|
)
|
|
(353
|
)
|
||
Other, net
|
|
(32
|
)
|
|
(51
|
)
|
||
Cash flows used for investing activities
|
|
(1,525
|
)
|
|
(603
|
)
|
||
Financing activities
|
|
|
|
|
||||
Common stock repurchases
|
|
(896
|
)
|
|
(911
|
)
|
||
Cash dividends paid
|
|
(357
|
)
|
|
(276
|
)
|
||
Proceeds from common stock issuances
|
|
192
|
|
|
216
|
|
||
Repayments of long-term debt
|
|
(416
|
)
|
|
(172
|
)
|
||
Proceeds from commercial paper, net
|
|
1,194
|
|
|
9
|
|
||
Customer funds administered
|
|
1,049
|
|
|
818
|
|
||
Other, net
|
|
(270
|
)
|
|
(257
|
)
|
||
Cash flows from (used for) financing activities
|
|
496
|
|
|
(573
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(85
|
)
|
|
6
|
|
||
Increase in cash and cash equivalents
|
|
1,155
|
|
|
238
|
|
||
Cash and cash equivalents, beginning of period
|
|
7,495
|
|
|
7,276
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
8,650
|
|
|
$
|
7,514
|
|
(in millions)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
March 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
$
|
1,663
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
1,682
|
|
State and municipal obligations
|
|
6,464
|
|
|
232
|
|
|
(3
|
)
|
|
6,693
|
|
||||
Corporate obligations
|
|
7,668
|
|
|
158
|
|
|
(10
|
)
|
|
7,816
|
|
||||
U.S. agency mortgage-backed securities
|
|
2,011
|
|
|
48
|
|
|
(3
|
)
|
|
2,056
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
858
|
|
|
16
|
|
|
(2
|
)
|
|
872
|
|
||||
Total debt securities - available-for-sale
|
|
18,664
|
|
|
473
|
|
|
(18
|
)
|
|
19,119
|
|
||||
Equity securities - available-for-sale
|
|
1,526
|
|
|
37
|
|
|
(33
|
)
|
|
1,530
|
|
||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
178
|
|
|
4
|
|
|
—
|
|
|
182
|
|
||||
State and municipal obligations
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Corporate obligations
|
|
354
|
|
|
—
|
|
|
—
|
|
|
354
|
|
||||
Total debt securities - held-to-maturity
|
|
547
|
|
|
4
|
|
|
—
|
|
|
551
|
|
||||
Total investments
|
|
$
|
20,737
|
|
|
$
|
514
|
|
|
$
|
(51
|
)
|
|
$
|
21,200
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
$
|
1,614
|
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
$
|
1,620
|
|
State and municipal obligations
|
|
6,456
|
|
|
217
|
|
|
(5
|
)
|
|
6,668
|
|
||||
Corporate obligations
|
|
7,241
|
|
|
112
|
|
|
(26
|
)
|
|
7,327
|
|
||||
U.S. agency mortgage-backed securities
|
|
2,022
|
|
|
39
|
|
|
(5
|
)
|
|
2,056
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
872
|
|
|
12
|
|
|
(4
|
)
|
|
880
|
|
||||
Total debt securities - available-for-sale
|
|
18,205
|
|
|
387
|
|
|
(41
|
)
|
|
18,551
|
|
||||
Equity securities - available-for-sale
|
|
1,511
|
|
|
36
|
|
|
(25
|
)
|
|
1,522
|
|
||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
178
|
|
|
2
|
|
|
—
|
|
|
180
|
|
||||
State and municipal obligations
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||
Corporate obligations
|
|
298
|
|
|
—
|
|
|
—
|
|
|
298
|
|
||||
Total debt securities - held-to-maturity
|
|
495
|
|
|
2
|
|
|
—
|
|
|
497
|
|
||||
Total investments
|
|
$
|
20,211
|
|
|
$
|
425
|
|
|
$
|
(66
|
)
|
|
$
|
20,570
|
|
(in millions)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
|
|
$
|
1,856
|
|
|
$
|
1,862
|
|
Due after one year through five years
|
|
6,927
|
|
|
7,035
|
|
||
Due after five years through ten years
|
|
5,205
|
|
|
5,387
|
|
||
Due after ten years
|
|
1,807
|
|
|
1,907
|
|
||
U.S. agency mortgage-backed securities
|
|
2,011
|
|
|
2,056
|
|
||
Non-U.S. agency mortgage-backed securities
|
|
858
|
|
|
872
|
|
||
Total debt securities - available-for-sale
|
|
$
|
18,664
|
|
|
$
|
19,119
|
|
(in millions)
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in one year or less
|
|
$
|
127
|
|
|
$
|
127
|
|
Due after one year through five years
|
|
207
|
|
|
209
|
|
||
Due after five years through ten years
|
|
109
|
|
|
110
|
|
||
Due after ten years
|
|
104
|
|
|
105
|
|
||
Total debt securities - held-to-maturity
|
|
$
|
547
|
|
|
$
|
551
|
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
(in millions)
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized Losses |
|
Fair
Value
|
|
Gross
Unrealized Losses |
||||||||||||
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
State and municipal obligations
|
|
$
|
481
|
|
|
$
|
(2
|
)
|
|
$
|
27
|
|
|
$
|
(1
|
)
|
|
$
|
508
|
|
|
$
|
(3
|
)
|
Corporate obligations
|
|
1,509
|
|
|
(7
|
)
|
|
235
|
|
|
(3
|
)
|
|
1,744
|
|
|
(10
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
151
|
|
|
(1
|
)
|
|
133
|
|
|
(2
|
)
|
|
284
|
|
|
(3
|
)
|
||||||
Non-U.S. agency mortgage-backed securities
|
|
186
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
186
|
|
|
(2
|
)
|
||||||
Total debt securities - available-for-sale
|
|
$
|
2,327
|
|
|
$
|
(12
|
)
|
|
$
|
395
|
|
|
$
|
(6
|
)
|
|
$
|
2,722
|
|
|
$
|
(18
|
)
|
Equity securities - available-for-sale
|
|
$
|
76
|
|
|
$
|
(7
|
)
|
|
$
|
83
|
|
|
$
|
(26
|
)
|
|
$
|
159
|
|
|
$
|
(33
|
)
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agency obligations
|
|
$
|
420
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
420
|
|
|
$
|
(1
|
)
|
State and municipal obligations
|
|
711
|
|
|
(4
|
)
|
|
99
|
|
|
(1
|
)
|
|
810
|
|
|
(5
|
)
|
||||||
Corporate obligations
|
|
2,595
|
|
|
(17
|
)
|
|
464
|
|
|
(9
|
)
|
|
3,059
|
|
|
(26
|
)
|
||||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
—
|
|
|
272
|
|
|
(5
|
)
|
|
272
|
|
|
(5
|
)
|
||||||
Non-U.S. agency mortgage-backed securities
|
|
254
|
|
|
(2
|
)
|
|
114
|
|
|
(2
|
)
|
|
368
|
|
|
(4
|
)
|
||||||
Total debt securities - available-for-sale
|
|
$
|
3,980
|
|
|
$
|
(24
|
)
|
|
$
|
949
|
|
|
$
|
(17
|
)
|
|
$
|
4,929
|
|
|
$
|
(41
|
)
|
Equity securities - available-for-sale
|
|
$
|
107
|
|
|
$
|
(6
|
)
|
|
$
|
88
|
|
|
$
|
(19
|
)
|
|
$
|
195
|
|
|
$
|
(25
|
)
|
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Total OTTI
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
Portion of loss recognized in other comprehensive income
|
|
—
|
|
|
—
|
|
||
Net OTTI recognized in earnings
|
|
(1
|
)
|
|
(3
|
)
|
||
Gross realized losses from sales
|
|
(6
|
)
|
|
(10
|
)
|
||
Gross realized gains from sales
|
|
10
|
|
|
59
|
|
||
Net realized gains (included in investment and other income on the Condensed Consolidated Statements of Operations)
|
|
3
|
|
|
46
|
|
||
Income tax effect (included in provision for income taxes on the Condensed Consolidated Statements of Operations)
|
|
(1
|
)
|
|
(17
|
)
|
||
Realized gains, net of taxes
|
|
$
|
2
|
|
|
$
|
29
|
|
3.
|
Fair Value
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
Fair and Carrying
Value
|
||||||||
March 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
8,617
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
8,650
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
1,466
|
|
|
216
|
|
|
—
|
|
|
1,682
|
|
||||
State and municipal obligations
|
|
—
|
|
|
6,693
|
|
|
—
|
|
|
6,693
|
|
||||
Corporate obligations
|
|
7
|
|
|
7,736
|
|
|
73
|
|
|
7,816
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
2,056
|
|
|
—
|
|
|
2,056
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
866
|
|
|
6
|
|
|
872
|
|
||||
Total debt securities - available-for-sale
|
|
1,473
|
|
|
17,567
|
|
|
79
|
|
|
19,119
|
|
||||
Equity securities - available-for-sale
|
|
1,209
|
|
|
12
|
|
|
309
|
|
|
1,530
|
|
||||
Interest rate swap assets
|
|
—
|
|
|
230
|
|
|
—
|
|
|
230
|
|
||||
Total assets at fair value
|
|
$
|
11,299
|
|
|
$
|
17,842
|
|
|
$
|
388
|
|
|
$
|
29,529
|
|
Percentage of total assets at fair value
|
|
38
|
%
|
|
61
|
%
|
|
1
|
%
|
|
100
|
%
|
||||
Interest rate swap liabilities
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
7,472
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
7,495
|
|
Debt securities - available-for-sale:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agency obligations
|
|
1,427
|
|
|
193
|
|
|
—
|
|
|
1,620
|
|
||||
State and municipal obligations
|
|
—
|
|
|
6,668
|
|
|
—
|
|
|
6,668
|
|
||||
Corporate obligations
|
|
2
|
|
|
7,257
|
|
|
68
|
|
|
7,327
|
|
||||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
2,056
|
|
|
—
|
|
|
2,056
|
|
||||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
874
|
|
|
6
|
|
|
880
|
|
||||
Total debt securities - available-for-sale
|
|
1,429
|
|
|
17,048
|
|
|
74
|
|
|
18,551
|
|
||||
Equity securities - available-for-sale
|
|
1,200
|
|
|
12
|
|
|
310
|
|
|
1,522
|
|
||||
Interest rate swap assets
|
|
—
|
|
|
62
|
|
|
—
|
|
|
62
|
|
||||
Total assets at fair value
|
|
$
|
10,101
|
|
|
$
|
17,145
|
|
|
$
|
384
|
|
|
$
|
27,630
|
|
Percentage of total assets at fair value
|
|
37
|
%
|
|
62
|
%
|
|
1
|
%
|
|
100
|
%
|
||||
Interest rate swap liabilities
|
|
$
|
—
|
|
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
55
|
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
Fair
Value
|
|
Total Carrying Value
|
||||||||||
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agency obligations
|
|
$
|
182
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
182
|
|
|
$
|
178
|
|
State and municipal obligations
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|||||
Corporate obligations
|
|
93
|
|
|
10
|
|
|
251
|
|
|
354
|
|
|
354
|
|
|||||
Total debt securities - held-to-maturity
|
|
$
|
275
|
|
|
$
|
10
|
|
|
$
|
266
|
|
|
$
|
551
|
|
|
$
|
547
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
490
|
|
|
$
|
—
|
|
|
$
|
490
|
|
|
$
|
489
|
|
Long-term debt and other financing obligations
|
|
$
|
—
|
|
|
$
|
18,826
|
|
|
$
|
—
|
|
|
$
|
18,826
|
|
|
$
|
16,859
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt securities - held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agency obligations
|
|
$
|
180
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
180
|
|
|
$
|
178
|
|
State and municipal obligations
|
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
|
19
|
|
|||||
Corporate obligations
|
|
46
|
|
|
10
|
|
|
242
|
|
|
298
|
|
|
298
|
|
|||||
Total debt securities - held-to-maturity
|
|
$
|
226
|
|
|
$
|
10
|
|
|
$
|
261
|
|
|
$
|
497
|
|
|
$
|
495
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
478
|
|
|
$
|
—
|
|
|
$
|
478
|
|
|
$
|
484
|
|
Long-term debt and other financing obligations
|
|
$
|
—
|
|
|
$
|
18,863
|
|
|
$
|
—
|
|
|
$
|
18,863
|
|
|
$
|
17,085
|
|
|
|
March 31, 2015
|
|
March 31, 2014
|
||||||||||||||||||||
(in millions)
|
|
Debt
Securities
|
|
Equity
Securities
|
|
Total
|
|
Debt
Securities
|
|
Equity
Securities
|
|
Total
|
||||||||||||
Balance at beginning of period
|
|
$
|
74
|
|
|
$
|
310
|
|
|
$
|
384
|
|
|
$
|
42
|
|
|
$
|
269
|
|
|
$
|
311
|
|
Purchases
|
|
4
|
|
|
4
|
|
|
8
|
|
|
3
|
|
|
44
|
|
|
47
|
|
||||||
Sales
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Net unrealized gains (losses) in accumulated other comprehensive income
|
|
1
|
|
|
(5
|
)
|
|
(4
|
)
|
|
1
|
|
|
4
|
|
|
5
|
|
||||||
Net realized gains in investment and other income
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at end of period
|
|
$
|
79
|
|
|
$
|
309
|
|
|
$
|
388
|
|
|
$
|
46
|
|
|
$
|
313
|
|
|
$
|
359
|
|
|
|
|
|
|
|
|
|
Range
|
||||
(in millions)
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Low
|
|
High
|
||
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||
Equity securities - available-for-sale
|
|
|
|
|
|
|
|
|
|
|
||
Venture capital portfolios
|
|
$
|
259
|
|
|
Market approach - comparable companies
|
|
Revenue multiple
|
|
1.0
|
|
7.0
|
|
|
|
|
|
|
EBITDA
multiple
|
|
8.0
|
|
10.0
|
||
|
|
50
|
|
|
Market approach - recent transactions
|
|
Inactive market transactions
|
|
N/A
|
|
N/A
|
|
Total equity securities
available-for-sale
|
|
$
|
309
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Total
Fair and Carrying
Value
|
||||||
March 31, 2015
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
262
|
|
|
$
|
—
|
|
|
$
|
262
|
|
Debt securities:
|
|
|
|
|
|
|
||||||
U.S. government and agency obligations
|
|
407
|
|
|
214
|
|
|
621
|
|
|||
State and municipal obligations
|
|
—
|
|
|
96
|
|
|
96
|
|
|||
Corporate obligations
|
|
—
|
|
|
1,279
|
|
|
1,279
|
|
|||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
375
|
|
|
375
|
|
|||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
203
|
|
|
203
|
|
|||
Total debt securities
|
|
407
|
|
|
2,167
|
|
|
2,574
|
|
|||
Other investments
|
|
—
|
|
|
85
|
|
|
85
|
|
|||
Total assets at fair value
|
|
$
|
669
|
|
|
$
|
2,252
|
|
|
$
|
2,921
|
|
Other liabilities
|
|
$
|
8
|
|
|
$
|
24
|
|
|
$
|
32
|
|
December 31, 2014
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
415
|
|
|
$
|
—
|
|
|
$
|
415
|
|
Debt securities:
|
|
|
|
|
|
|
||||||
U.S. government and agency obligations
|
|
409
|
|
|
245
|
|
|
654
|
|
|||
State and municipal obligations
|
|
—
|
|
|
95
|
|
|
95
|
|
|||
Corporate obligations
|
|
—
|
|
|
1,200
|
|
|
1,200
|
|
|||
U.S. agency mortgage-backed securities
|
|
—
|
|
|
340
|
|
|
340
|
|
|||
Non-U.S. agency mortgage-backed securities
|
|
—
|
|
|
177
|
|
|
177
|
|
|||
Total debt securities
|
|
409
|
|
|
2,057
|
|
|
2,466
|
|
|||
Other investments
|
|
—
|
|
|
81
|
|
|
81
|
|
|||
Total assets at fair value
|
|
$
|
824
|
|
|
$
|
2,138
|
|
|
$
|
2,962
|
|
Other liabilities
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
18
|
|
4.
|
Medicare Part D Pharmacy Benefits
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
(in millions)
|
|
Subsidies
|
|
Drug Discount
|
|
Risk-Share
|
|
Subsidies
|
|
Drug Discount
|
|
Risk-Share
|
||||||||||||
Other current receivables
|
|
$
|
1,448
|
|
|
$
|
239
|
|
|
$
|
46
|
|
|
$
|
1,801
|
|
|
$
|
719
|
|
|
$
|
20
|
|
Other policy liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
302
|
|
|
—
|
|
5.
|
Medical Costs Reserve Development
|
6.
|
Health Insurance Industry Tax
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
(in millions, except percentages)
|
|
Par
Value
|
|
Carrying
Value
|
|
Fair
Value
|
|
Par
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||||||
Commercial paper
|
|
$
|
1,515
|
|
|
$
|
1,515
|
|
|
$
|
1,515
|
|
|
$
|
321
|
|
|
$
|
321
|
|
|
$
|
321
|
|
4.875% notes due March 2015 (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
416
|
|
|
419
|
|
|
419
|
|
||||||
0.850% notes due October 2015 (a)
|
|
625
|
|
|
626
|
|
|
626
|
|
|
625
|
|
|
625
|
|
|
627
|
|
||||||
5.375% notes due March 2016 (a)
|
|
601
|
|
|
620
|
|
|
627
|
|
|
601
|
|
|
623
|
|
|
634
|
|
||||||
1.875% notes due November 2016 (a)
|
|
400
|
|
|
400
|
|
|
407
|
|
|
400
|
|
|
397
|
|
|
406
|
|
||||||
5.360% notes due November 2016
|
|
95
|
|
|
95
|
|
|
102
|
|
|
95
|
|
|
95
|
|
|
103
|
|
||||||
6.000% notes due June 2017 (a)
|
|
441
|
|
|
467
|
|
|
488
|
|
|
441
|
|
|
466
|
|
|
489
|
|
||||||
1.400% notes due October 2017 (a)
|
|
625
|
|
|
624
|
|
|
631
|
|
|
625
|
|
|
616
|
|
|
624
|
|
||||||
6.000% notes due November 2017 (a)
|
|
156
|
|
|
165
|
|
|
175
|
|
|
156
|
|
|
164
|
|
|
175
|
|
||||||
1.400% notes due December 2017 (a)
|
|
750
|
|
|
755
|
|
|
756
|
|
|
750
|
|
|
745
|
|
|
749
|
|
||||||
6.000% notes due February 2018 (a)
|
|
1,100
|
|
|
1,120
|
|
|
1,245
|
|
|
1,100
|
|
|
1,106
|
|
|
1,238
|
|
||||||
1.625% notes due March 2019 (a)
|
|
500
|
|
|
506
|
|
|
501
|
|
|
500
|
|
|
496
|
|
|
493
|
|
||||||
2.300% notes due December 2019 (a)
|
|
500
|
|
|
508
|
|
|
510
|
|
|
500
|
|
|
496
|
|
|
502
|
|
||||||
3.875% notes due October 2020 (a)
|
|
450
|
|
|
463
|
|
|
492
|
|
|
450
|
|
|
450
|
|
|
477
|
|
||||||
4.700% notes due February 2021 (a)
|
|
400
|
|
|
424
|
|
|
456
|
|
|
400
|
|
|
413
|
|
|
450
|
|
||||||
3.375% notes due November 2021 (a)
|
|
500
|
|
|
512
|
|
|
534
|
|
|
500
|
|
|
496
|
|
|
519
|
|
||||||
2.875% notes due December 2021 (a)
|
|
750
|
|
|
773
|
|
|
770
|
|
|
750
|
|
|
748
|
|
|
759
|
|
||||||
2.875% notes due March 2022 (a)
|
|
1,100
|
|
|
1,082
|
|
|
1,119
|
|
|
1,100
|
|
|
1,042
|
|
|
1,104
|
|
||||||
0.000% notes due November 2022
|
|
15
|
|
|
10
|
|
|
11
|
|
|
15
|
|
|
10
|
|
|
11
|
|
||||||
2.750% notes due February 2023 (a)
|
|
625
|
|
|
628
|
|
|
631
|
|
|
625
|
|
|
604
|
|
|
613
|
|
||||||
2.875% notes due March 2023 (a)
|
|
750
|
|
|
806
|
|
|
768
|
|
|
750
|
|
|
777
|
|
|
745
|
|
||||||
5.800% notes due March 2036
|
|
850
|
|
|
845
|
|
|
1,096
|
|
|
850
|
|
|
845
|
|
|
1,052
|
|
||||||
6.500% notes due June 2037
|
|
500
|
|
|
495
|
|
|
703
|
|
|
500
|
|
|
495
|
|
|
670
|
|
||||||
6.625% notes due November 2037
|
|
650
|
|
|
646
|
|
|
927
|
|
|
650
|
|
|
646
|
|
|
888
|
|
||||||
6.875% notes due February 2038
|
|
1,100
|
|
|
1,085
|
|
|
1,584
|
|
|
1,100
|
|
|
1,085
|
|
|
1,544
|
|
||||||
5.700% notes due October 2040
|
|
300
|
|
|
298
|
|
|
387
|
|
|
300
|
|
|
298
|
|
|
378
|
|
||||||
5.950% notes due February 2041
|
|
350
|
|
|
348
|
|
|
471
|
|
|
350
|
|
|
348
|
|
|
455
|
|
||||||
4.625% notes due November 2041
|
|
600
|
|
|
593
|
|
|
677
|
|
|
600
|
|
|
593
|
|
|
646
|
|
||||||
4.375% notes due March 2042
|
|
502
|
|
|
486
|
|
|
553
|
|
|
502
|
|
|
486
|
|
|
536
|
|
||||||
3.950% notes due October 2042
|
|
625
|
|
|
611
|
|
|
640
|
|
|
625
|
|
|
611
|
|
|
621
|
|
||||||
4.250% notes due March 2043
|
|
750
|
|
|
740
|
|
|
811
|
|
|
750
|
|
|
740
|
|
|
786
|
|
||||||
Total commercial paper and long-term debt
|
|
$
|
18,125
|
|
|
$
|
18,246
|
|
|
$
|
20,213
|
|
|
$
|
17,347
|
|
|
$
|
17,256
|
|
|
$
|
19,034
|
|
(a)
|
Fixed-rate debt instruments hedged with interest rate swap contracts. See below for more information on the Company’s interest rate swaps.
|
Type of Fair Value Hedge
|
|
Notional Amount
|
|
Fair Value
|
|
Balance Sheet Location
|
||||
|
|
(in billions)
|
|
(in millions)
|
|
|
||||
March 31, 2015
|
|
|
|
|
|
|
||||
Interest rate swap contracts
|
|
$
|
10.3
|
|
|
$
|
2
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
228
|
|
|
Other assets
|
|||
|
|
|
|
1
|
|
|
Other liabilities
|
|||
December 31, 2014
|
|
|
|
|
|
|
||||
Interest rate swap contracts
|
|
$
|
10.7
|
|
|
$
|
62
|
|
|
Other assets
|
|
|
|
|
55
|
|
|
Other liabilities
|
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Hedge - interest rate swap gain recognized in interest expense
|
|
$
|
222
|
|
|
$
|
66
|
|
Hedged item - long-term debt loss recognized in interest expense
|
|
(222
|
)
|
|
(66
|
)
|
||
Net impact on the Company’s Condensed Consolidated Statements of Operations
|
|
$
|
—
|
|
|
$
|
—
|
|
8.
|
Share-Based Compensation
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic Value
|
||||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
||||||
Outstanding at beginning of period
|
33
|
|
|
$
|
53
|
|
|
|
|
|
|||
Granted
|
8
|
|
|
109
|
|
|
|
|
|
||||
Exercised
|
(4
|
)
|
|
52
|
|
|
|
|
|
||||
Outstanding at end of period
|
37
|
|
|
66
|
|
|
6.3
|
|
|
$
|
1,959
|
|
|
Exercisable at end of period
|
19
|
|
|
47
|
|
|
3.8
|
|
|
1,368
|
|
||
Vested and expected to vest, end of period
|
36
|
|
|
65
|
|
|
6.2
|
|
|
1,920
|
|
(shares in millions)
|
|
Shares
|
|
Weighted-Average
Grant Date
Fair Value
per Share
|
|||
Nonvested at beginning of period
|
|
9
|
|
|
$
|
61
|
|
Granted
|
|
2
|
|
|
109
|
|
|
Vested
|
|
(4
|
)
|
|
57
|
|
|
Nonvested at end of period
|
|
7
|
|
|
78
|
|
(in millions, except per share amounts)
|
|
Three Months Ended
March 31,
|
||||||
|
2015
|
|
2014
|
|||||
Stock Options and SARs
|
|
|
|
|
||||
Weighted-average grant date fair value of shares granted, per share
|
|
$
|
23
|
|
|
$
|
22
|
|
Total intrinsic value of stock options and SARs exercised
|
|
221
|
|
|
212
|
|
||
Restricted Shares
|
|
|
|
|
||||
Weighted-average grant date fair value of shares granted, per share
|
|
109
|
|
|
70
|
|
||
Total fair value of restricted shares vested
|
|
395
|
|
|
414
|
|
||
Share-Based Compensation Items
|
|
|
|
|
||||
Share-based compensation expense, before tax
|
|
125
|
|
|
105
|
|
||
Share-based compensation expense, net of tax effects
|
|
101
|
|
|
86
|
|
||
Income tax benefit realized from share-based award exercises
|
|
138
|
|
|
119
|
|
(in millions, except years)
|
|
March 31, 2015
|
||
Unrecognized compensation expense related to share awards
|
|
$
|
618
|
|
Weighted-average years to recognize compensation expense
|
|
1.1
|
|
|
|
Three Months Ended March 31,
|
||
|
|
2015
|
|
2014
|
Risk-free interest rate
|
|
1.6%
|
|
1.7%
|
Expected volatility
|
|
24.1%
|
|
39.6%
|
Expected dividend yield
|
|
1.4%
|
|
1.6%
|
Forfeiture rate
|
|
5.0%
|
|
5.0%
|
Expected life in years
|
|
6.1
|
|
5.4
|
9.
|
Commitments and Contingencies
|
10.
|
Segment Financial Information
|
|
|
|
|
Optum
|
|
|
|
|
||||||||||||||||||||||||
(in millions)
|
|
UnitedHealthcare
|
|
OptumHealth
|
|
OptumInsight
|
|
OptumRx
|
|
Optum Eliminations
|
|
Optum
|
|
Corporate and
Eliminations
|
|
Consolidated
|
||||||||||||||||
Three Months Ended
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues - external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums
|
|
$
|
30,905
|
|
|
$
|
769
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
769
|
|
|
$
|
—
|
|
|
$
|
31,674
|
|
Services
|
|
1,603
|
|
|
521
|
|
|
559
|
|
|
23
|
|
|
—
|
|
|
1,103
|
|
|
—
|
|
|
2,706
|
|
||||||||
Products
|
|
—
|
|
|
5
|
|
|
20
|
|
|
1,205
|
|
|
—
|
|
|
1,230
|
|
|
—
|
|
|
1,230
|
|
||||||||
Total revenues - external customers
|
|
32,508
|
|
|
1,295
|
|
|
579
|
|
|
1,228
|
|
|
—
|
|
|
3,102
|
|
|
—
|
|
|
35,610
|
|
||||||||
Total revenues - intersegment
|
|
—
|
|
|
1,963
|
|
|
811
|
|
|
7,067
|
|
|
(159
|
)
|
|
9,682
|
|
|
(9,682
|
)
|
|
—
|
|
||||||||
Investment and other income
|
|
115
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
146
|
|
||||||||
Total revenues
|
|
$
|
32,623
|
|
|
$
|
3,289
|
|
|
$
|
1,390
|
|
|
$
|
8,295
|
|
|
$
|
(159
|
)
|
|
$
|
12,815
|
|
|
$
|
(9,682
|
)
|
|
$
|
35,756
|
|
Earnings from operations
|
|
$
|
1,898
|
|
|
$
|
234
|
|
|
$
|
222
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
742
|
|
|
$
|
—
|
|
|
$
|
2,640
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(150
|
)
|
|
(150
|
)
|
||||||||
Earnings before income taxes
|
|
$
|
1,898
|
|
|
$
|
234
|
|
|
$
|
222
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
742
|
|
|
$
|
(150
|
)
|
|
$
|
2,490
|
|
Three Months Ended
March 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues - external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums
|
|
$
|
27,511
|
|
|
$
|
604
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
604
|
|
|
$
|
—
|
|
|
$
|
28,115
|
|
Services
|
|
1,586
|
|
|
263
|
|
|
525
|
|
|
30
|
|
|
—
|
|
|
818
|
|
|
—
|
|
|
2,404
|
|
||||||||
Products
|
|
1
|
|
|
7
|
|
|
26
|
|
|
964
|
|
|
—
|
|
|
997
|
|
|
—
|
|
|
998
|
|
||||||||
Total revenues - external customers
|
|
29,098
|
|
|
874
|
|
|
551
|
|
|
994
|
|
|
—
|
|
|
2,419
|
|
|
—
|
|
|
31,517
|
|
||||||||
Total revenues - intersegment
|
|
—
|
|
|
1,671
|
|
|
696
|
|
|
6,464
|
|
|
(115
|
)
|
|
8,716
|
|
|
(8,716
|
)
|
|
—
|
|
||||||||
Investment and other income
|
|
156
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
191
|
|
||||||||
Total revenues
|
|
$
|
29,254
|
|
|
$
|
2,580
|
|
|
$
|
1,247
|
|
|
$
|
7,458
|
|
|
$
|
(115
|
)
|
|
$
|
11,170
|
|
|
$
|
(8,716
|
)
|
|
$
|
31,708
|
|
Earnings from operations
|
|
$
|
1,404
|
|
|
$
|
211
|
|
|
$
|
197
|
|
|
$
|
242
|
|
|
$
|
—
|
|
|
$
|
650
|
|
|
$
|
—
|
|
|
$
|
2,054
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|
(160
|
)
|
||||||||
Earnings before income taxes
|
|
$
|
1,404
|
|
|
$
|
211
|
|
|
$
|
197
|
|
|
$
|
242
|
|
|
$
|
—
|
|
|
$
|
650
|
|
|
$
|
(160
|
)
|
|
$
|
1,894
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(in millions, except percentages and per share data)
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
2015 vs. 2014
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Premiums
|
|
$
|
31,674
|
|
|
$
|
28,115
|
|
|
$
|
3,559
|
|
|
13
|
%
|
Services
|
|
2,706
|
|
|
2,404
|
|
|
302
|
|
|
13
|
|
|||
Products
|
|
1,230
|
|
|
998
|
|
|
232
|
|
|
23
|
|
|||
Investment and other income
|
|
146
|
|
|
191
|
|
|
(45
|
)
|
|
(24
|
)
|
|||
Total revenues
|
|
35,756
|
|
|
31,708
|
|
|
4,048
|
|
|
13
|
|
|||
Operating costs:
|
|
|
|
|
|
|
|
|
|||||||
Medical costs
|
|
25,689
|
|
|
23,208
|
|
|
2,481
|
|
|
11
|
|
|||
Operating costs
|
|
5,949
|
|
|
5,194
|
|
|
755
|
|
|
15
|
|
|||
Cost of products sold
|
|
1,100
|
|
|
892
|
|
|
208
|
|
|
23
|
|
|||
Depreciation and amortization
|
|
378
|
|
|
360
|
|
|
18
|
|
|
5
|
|
|||
Total operating costs
|
|
33,116
|
|
|
29,654
|
|
|
3,462
|
|
|
12
|
|
|||
Earnings from operations
|
|
2,640
|
|
|
2,054
|
|
|
586
|
|
|
29
|
|
|||
Interest expense
|
|
(150
|
)
|
|
(160
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|||
Earnings before income taxes
|
|
2,490
|
|
|
1,894
|
|
|
596
|
|
|
31
|
|
|||
Provision for income taxes
|
|
(1,077
|
)
|
|
(795
|
)
|
|
282
|
|
|
35
|
|
|||
Net earnings
|
|
$
|
1,413
|
|
|
$
|
1,099
|
|
|
$
|
314
|
|
|
29
|
|
Diluted earnings per share attributable to UnitedHealth Group common shareholders
|
|
$
|
1.46
|
|
|
$
|
1.10
|
|
|
$
|
0.36
|
|
|
33
|
%
|
Medical care ratio (a)
|
|
81.1
|
%
|
|
82.5
|
%
|
|
(1.4
|
)%
|
|
|
||||
Operating cost ratio
|
|
16.6
|
|
|
16.4
|
|
|
0.2
|
|
|
|
||||
Operating margin
|
|
7.4
|
|
|
6.5
|
|
|
0.9
|
|
|
|
||||
Tax rate
|
|
43.3
|
|
|
42.0
|
|
|
1.3
|
|
|
|
||||
Net earnings margin
|
|
4.0
|
|
|
3.5
|
|
|
0.5
|
|
|
|
||||
Return on equity (b)
|
|
17.6
|
%
|
|
13.6
|
%
|
|
4.0
|
%
|
|
|
(a)
|
Medical care ratio is calculated as medical costs divided by premium revenue.
|
(b)
|
Return on equity is calculated as annualized net earnings divided by average equity. Average equity is calculated using the equity balance at the end of the preceding year and the equity balances at the end of each of the quarters in the periods presented.
|
•
|
Consolidated revenues increased
13%
, UnitedHealthcare revenues increased
12%
and Optum revenues grew
15%
.
|
•
|
UnitedHealthcare grew to serve an additional
1.6 million
people domestically.
|
•
|
Earnings from operations increased
29%
, including an increase of
35%
at UnitedHealthcare and
14%
at Optum.
|
•
|
Diluted earnings per share to UnitedHealth Group shareholders increased
33%
to
$1.46
.
|
•
|
First quarter 2015 cash flows from operations were $2.3 billion an increase of 61%.
|
•
|
In March 2015, we announced our agreement to acquire Catamaran through the purchase of all of its outstanding common stock for cash. See Note 9 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information about this transaction.
|
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
(in millions, except percentages)
|
|
2015
|
|
2014
|
|
2015 vs. 2014
|
|||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||||||
UnitedHealthcare
|
|
$
|
32,623
|
|
|
$
|
29,254
|
|
|
$
|
3,369
|
|
|
12
|
%
|
OptumHealth
|
|
3,289
|
|
|
2,580
|
|
|
709
|
|
|
27
|
|
|||
OptumInsight
|
|
1,390
|
|
|
1,247
|
|
|
143
|
|
|
11
|
|
|||
OptumRx
|
|
8,295
|
|
|
7,458
|
|
|
837
|
|
|
11
|
|
|||
Optum eliminations
|
|
(159
|
)
|
|
(115
|
)
|
|
44
|
|
|
38
|
|
|||
Optum
|
|
12,815
|
|
|
11,170
|
|
|
1,645
|
|
|
15
|
|
|||
Eliminations
|
|
(9,682
|
)
|
|
(8,716
|
)
|
|
966
|
|
|
11
|
|
|||
Consolidated revenues
|
|
$
|
35,756
|
|
|
$
|
31,708
|
|
|
$
|
4,048
|
|
|
13
|
%
|
Earnings from operations
|
|
|
|
|
|
|
|
|
|||||||
UnitedHealthcare
|
|
$
|
1,898
|
|
|
$
|
1,404
|
|
|
$
|
494
|
|
|
35
|
%
|
OptumHealth
|
|
234
|
|
|
211
|
|
|
23
|
|
|
11
|
|
|||
OptumInsight
|
|
222
|
|
|
197
|
|
|
25
|
|
|
13
|
|
|||
OptumRx
|
|
286
|
|
|
242
|
|
|
44
|
|
|
18
|
|
|||
Optum
|
|
742
|
|
|
650
|
|
|
92
|
|
|
14
|
|
|||
Consolidated earnings from operations
|
|
$
|
2,640
|
|
|
$
|
2,054
|
|
|
$
|
586
|
|
|
29
|
%
|
Operating margin
|
|
|
|
|
|
|
|
|
|||||||
UnitedHealthcare
|
|
5.8
|
%
|
|
4.8
|
%
|
|
1.0
|
%
|
|
|
||||
OptumHealth
|
|
7.1
|
|
|
8.2
|
|
|
(1.1
|
)
|
|
|
||||
OptumInsight
|
|
16.0
|
|
|
15.8
|
|
|
0.2
|
|
|
|
||||
OptumRx
|
|
3.4
|
|
|
3.2
|
|
|
0.2
|
|
|
|
||||
Optum
|
|
5.8
|
|
|
5.8
|
|
|
—
|
|
|
|
||||
Consolidated operating margin
|
|
7.4
|
%
|
|
6.5
|
%
|
|
0.9
|
%
|
|
|
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
(in millions, except percentages)
|
|
2015
|
|
2014
|
|
2015 vs. 2014
|
|||||||||
UnitedHealthcare Employer & Individual
|
|
$
|
11,423
|
|
|
$
|
10,957
|
|
|
$
|
466
|
|
|
4
|
%
|
UnitedHealthcare Medicare & Retirement
|
|
12,781
|
|
|
11,502
|
|
|
1,279
|
|
|
11
|
|
|||
UnitedHealthcare Community & State
|
|
6,905
|
|
|
5,174
|
|
|
1,731
|
|
|
33
|
|
|||
UnitedHealthcare Global
|
|
1,514
|
|
|
1,621
|
|
|
(107
|
)
|
|
(7
|
)
|
|||
Total UnitedHealthcare revenues
|
|
$
|
32,623
|
|
|
$
|
29,254
|
|
|
$
|
3,369
|
|
|
12
|
%
|
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2015 vs. 2014
|
||||||
Sources of cash:
|
|
|
|
|
|
|
||||||
Cash provided by operating activities
|
|
$
|
2,269
|
|
|
$
|
1,408
|
|
|
$
|
861
|
|
Customer funds administered
|
|
1,049
|
|
|
818
|
|
|
231
|
|
|||
Issuances of commercial paper and long-term debt, net of repayments
|
|
778
|
|
|
—
|
|
|
778
|
|
|||
Proceeds from common stock issuances
|
|
192
|
|
|
216
|
|
|
(24
|
)
|
|||
Sales and maturities of investments, net of purchases
|
|
—
|
|
|
146
|
|
|
(146
|
)
|
|||
Total sources of cash
|
|
4,288
|
|
|
2,588
|
|
|
|
||||
Uses of cash:
|
|
|
|
|
|
|
||||||
Common stock repurchases
|
|
(896
|
)
|
|
(911
|
)
|
|
15
|
|
|||
Cash paid for acquisitions, net of cash assumed
|
|
(575
|
)
|
|
(345
|
)
|
|
(230
|
)
|
|||
Purchases of investments, net of sales and maturities
|
|
(545
|
)
|
|
—
|
|
|
(545
|
)
|
|||
Purchases of property, equipment and capitalized software, net
|
|
(373
|
)
|
|
(353
|
)
|
|
(20
|
)
|
|||
Cash dividends paid
|
|
(357
|
)
|
|
(276
|
)
|
|
(81
|
)
|
|||
Repayment of long-term debt and commercial paper, net of issuances
|
|
—
|
|
|
(163
|
)
|
|
163
|
|
|||
Other
|
|
(302
|
)
|
|
(308
|
)
|
|
6
|
|
|||
Total uses of cash
|
|
(3,048
|
)
|
|
(2,356
|
)
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
(85
|
)
|
|
6
|
|
|
(91
|
)
|
|||
Net increase in cash and cash equivalents
|
|
$
|
1,155
|
|
|
$
|
238
|
|
|
$
|
917
|
|
|
Moody’s
|
|
Standard & Poor’s
|
|
Fitch
|
|
A.M. Best
|
||||||||
|
Ratings
|
|
Outlook
|
|
Ratings
|
|
Outlook
|
|
Ratings
|
|
Outlook
|
|
Ratings
|
|
Outlook
|
Senior unsecured debt
|
A3
|
|
Negative
|
|
A+
|
|
Negative
|
|
A-
|
|
Negative
Watch
|
|
bbb+
|
|
Stable
|
Commercial paper
|
P-2
|
|
n/a
|
|
A-1
|
|
n/a
|
|
F1
|
|
n/a
|
|
AMB-2
|
|
n/a
|
|
|
March 31, 2015
|
||||||||||||||
Increase (Decrease) in Market Interest Rate
|
|
Investment
Income Per
Annum (a)
|
|
Interest
Expense Per
Annum (a)
|
|
Fair Value of
Financial Assets (b)
|
|
Fair Value of
Financial Liabilities
|
||||||||
2 %
|
|
$
|
212
|
|
|
$
|
268
|
|
|
$
|
(1,376
|
)
|
|
$
|
(1,927
|
)
|
1
|
|
106
|
|
|
134
|
|
|
(692
|
)
|
|
(1,059
|
)
|
||||
(1)
|
|
(60
|
)
|
|
(24
|
)
|
|
642
|
|
|
1,296
|
|
||||
(2)
|
|
nm
|
|
|
nm
|
|
|
1,006
|
|
|
2,891
|
|
(a)
|
Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of
March 31, 2015
, the assumed hypothetical change in interest rates does not reflect the full 100 basis point reduction in interest income or interest expense as the rate cannot fall below zero and thus the 200 basis point reduction is not meaningful.
|
(b)
|
As of
March 31, 2015
, some of our investments had interest rates below 2% so the assumed hypothetical change in the fair value of investments does not reflect the full 200 basis point reduction.
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
For the Month Ended
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
of Shares That May
Yet Be Purchased
Under The Plans or
Programs
|
|||||
|
|
(in millions)
|
|
|
|
(in millions)
|
|
(in millions)
|
|||||
January 31, 2015
|
|
2
|
|
|
$
|
102
|
|
|
2
|
|
|
69
|
|
February 28, 2015
|
|
2
|
|
|
111
|
|
|
2
|
|
|
68
|
|
|
March 31, 2015
|
|
4
|
|
|
115
|
|
|
4
|
|
|
63
|
|
|
Total
|
|
8
|
|
|
$
|
111
|
|
|
8
|
|
|
|
(a)
|
In November 1997, our Board of Directors adopted a share repurchase program, which the Board evaluates periodically. In June 2014, the Board renewed our share repurchase program with an authorization to repurchase up to 100 million shares of our common stock in open market purchases or other types of transactions (including prepaid or structured repurchase programs). There is no established expiration date for the program.
|
ITEM 6.
|
EXHIBITS**
|
2.1
|
|
|
Arrangement Agreement, dated as of March 29, 2015, among UnitedHealth Group Incorporated, 1031387 B.C. Unlimited Liability Company and Catamaran Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated March 30, 2015)
|
3.1
|
|
|
Third Restated Articles of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated May 29, 2007)
|
3.2
|
|
|
Fourth Amended and Restated Bylaws of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 23, 2009)
|
4.1
|
|
|
Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
|
4.2
|
|
|
Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
|
4.3
|
|
|
Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
|
4.4
|
|
|
Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
|
*10.1
|
|
|
Amended and Restated Employment Agreement, effective as of December 1, 2014, between United HealthCare Services, Inc. and David Wichmann
|
*10.2
|
|
|
Amended and Restated Employment Agreement, effective as of December 1, 2014, between United HealthCare Services, Inc. and Larry Renfro
|
12.1
|
|
|
Computation of Ratio of Earnings to Fixed Charges
|
31.1
|
|
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following materials from UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 filed on May 6, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
|
*
|
|
Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
|
**
|
|
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
|
/s/ S
TEPHEN
J. H
EMSLEY
|
|
Chief Executive Officer
(principal executive officer) |
Dated:
|
May 6, 2015
|
Stephen J. Hemsley
|
|
|
|
|
|
|
|
||
/s/ D
AVID
S. W
ICHMANN
|
|
President and Chief Financial Officer
(principal financial officer) |
Dated:
|
May 6, 2015
|
David S. Wichmann
|
|
|
|
|
|
|
|
||
/
S
/ E
RIC
S. R
ANGEN
|
|
Senior Vice President and
Chief Accounting Officer
(principal accounting officer) |
Dated:
|
May 6, 2015
|
Eric S. Rangen
|
|
|
|
2.1
|
|
|
Arrangement Agreement, dated as of March 29, 2015, among UnitedHealth Group Incorporated, 1031387 B.C. Unlimited Liability Company and Catamaran Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated March 30, 2015)
|
3.1
|
|
|
Third Restated Articles of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated May 29, 2007)
|
3.2
|
|
|
Fourth Amended and Restated Bylaws of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated October 23, 2009)
|
4.1
|
|
|
Senior Indenture, dated as of November 15, 1998, between United HealthCare Corporation and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3/A, SEC File Number 333-66013, filed on January 11, 1999)
|
4.2
|
|
|
Amendment, dated as of November 6, 2000, to Senior Indenture, dated as of November 15, 1998, between UnitedHealth Group Incorporated and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
|
4.3
|
|
|
Instrument of Resignation, Appointment and Acceptance of Trustee, dated January 8, 2007, pursuant to the Senior Indenture, dated as of November 15, 1998, amended November 6, 2000, among UnitedHealth Group Incorporated, The Bank of New York and Wilmington Trust Company (incorporated by reference to Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)
|
4.4
|
|
|
Indenture, dated as of February 4, 2008, between UnitedHealth Group Incorporated and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3, SEC File Number 333-149031, filed on February 4, 2008)
|
*10.1
|
|
|
Amended and Restated Employment Agreement, effective as of December 1, 2014, between United HealthCare Services, Inc. and David Wichmann
|
*10.2
|
|
|
Amended and Restated Employment Agreement, effective as of December 1, 2014, between United HealthCare Services, Inc. and Larry Renfro
|
12.1
|
|
|
Computation of Ratio of Earnings to Fixed Charges
|
31.1
|
|
|
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
The following materials from UnitedHealth Group Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 filed on May 6, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
|
*
|
|
Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
|
**
|
|
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company will furnish copies thereof to the SEC upon request.
|
A.
|
Employment
. UnitedHealth Group hereby employs Executive, and Executive accepts employment, under this Agreement’s terms.
|
B.
|
Title and Duties
. Executive will be employed as the President and Chief Financial Officer of UnitedHealth Group. Executive will perform such duties, have such authority, and exercise such supervision and control as are commonly associated with Executive’s position, as well as perform such other duties as are reasonably assigned to Executive. Executive will devote substantially all of Executive’s business time and energy to Executive’s duties. Executive will maintain operations in Executive’s area of responsibility, and make every reasonable effort to ensure that the employees within that area of responsibility act, in compliance with applicable law and UnitedHealth Group’s Code of Conduct, as amended from time to time. Executive is subject to all of UnitedHealth Group’s employment policies and procedures (except as specifically superseded by this Agreement).
|
A.
|
Base Salary
. Executive’s annual base salary will be $1,100,000, payable according to UnitedHealth Group’s regular payroll schedule. Periodic adjustments to Executive’s base salary may be made.
|
B.
|
Incentive Compensation
. Executive will be eligible to participate in UnitedHealth Group’s incentive compensation plans in UnitedHealth Group’s discretion and in accordance with the plans’ terms and conditions. Executive’s initial target bonus potential under UnitedHealth Group’s Executive Incentive Plan for the annual cash incentive will be 185% of annual base salary and for the long-term cash incentive will be 50% of annual base pay, subject to periodic adjustments in UnitedHealth Group’s discretion.
|
C.
|
Equity Awards
. Executive will be eligible for stock-based awards in UnitedHealth Group’s discretion.
|
D.
|
Employee Benefits
. Executive will be eligible to participate in UnitedHealth Group’s employee welfare, retirement, and other benefit plans on the same basis as other similarly situated executives, in accordance with the terms of the plans. Executive will be eligible for Paid Time Off in accordance with UnitedHealth Group’s policies. UnitedHealth Group reserves the right to amend or discontinue any plan or policy at any time in its sole discretion. In addition to the Company’s generally available benefits, the Company shall provide Executive, at the Company’s expense during the term of Executive’s employment, a $2 million face value term life insurance policy, as well as additional long-term disability coverage to the extent that Executive’s annual base earnings exceed $700,000. The Company shall bear the expense of the supplemental life and disability coverage and shall annually report the imputed income associated with the coverages on Executive’s Form W-2, with no gross-up for taxes.
|
A.
|
Term
. This Agreement’s term is from the Effective Date until this Agreement is terminated under Section 3.B.
|
B.
|
Termination
.
|
i.
|
By Mutual Agreement
. The parties may terminate Executive’s employment and this Agreement at any time by mutual agreement.
|
ii.
|
By UnitedHealth Group without Cause
. UnitedHealth Group may terminate this Agreement and Executive’s employment without Cause upon 90 days’ prior written notice.
|
iii.
|
By UnitedHealth Group with Cause
. UnitedHealth Group may terminate this Agreement and Executive’s employment at any time for Cause. “Cause” means Executive’s (a) material failure to follow UnitedHealth Group’s reasonable direction, or to perform any duties reasonably required on material matters, (b) material violation of, or failure to act upon or report known or suspected violations of, UnitedHealth Group’s Principles of Integrity and Compliance, (c)
|
iv.
|
By Executive without Good Reason
. Executive may terminate this Agreement and Executive’s employment at any time for any reason, including due to Executive’s retirement.
|
v.
|
By Executive for Good Reason
. Executive may terminate this Agreement and Executive’s employment for Good Reason, as defined below. Executive must give UnitedHealth Group written notice specifying in reasonable detail the circumstances constituting Good Reason, within 120 days of becoming aware of such circumstances, or such circumstances will not constitute Good Reason. If the circumstances constituting Good Reason are reasonably capable of being remedied, UnitedHealth Group will have 60 days to remedy such circumstances. “Good Reason” will exist if, without Executive’s consent, UnitedHealth Group: (a) reduces Executive’s base salary or long or short term target bonus percentage other than in connection with a general reduction affecting a group of similarly situated employees; (b) moves Executive’s primary work location more than 50 miles; (c) makes changes that substantially diminish Executive’s duties or responsibilities; or (d) changes the Executive’s reporting relationship.
|
vi.
|
Due to Executive’s Death or Disability
. This Agreement and Executive’s employment will terminate automatically if Executive dies. The termination date will be the date of Executive’s death. UnitedHealth Group may terminate this Agreement and Executive’s employment due to Executive’s disability that renders Executive incapable of performing the essential functions of Executive’s job, with or without reasonable accommodation. Executive will not be entitled to Severance Benefits under Section 4 in the event of termination due to Executive’s death or disability.
|
4.
|
Severance Benefits
.
|
A.
|
Circumstances under Which Severance Benefits Payable
. Executive will be entitled to Severance Benefits only if Executive’s employment is terminated by UnitedHealth Group without Cause or if Executive terminates employment for Good Reason. Executive will be considered to have experienced a termination of employment as of the date that the facts and circumstances indicate that it is reasonably anticipated that Executive will
|
B.
|
Severance Benefits
. Executive will be entitled to the following Severance Benefits in the event Executive’s employment terminates under the circumstances described at Section 4A above:
|
C.
|
Timing of Payments
. The Severance Benefits in Sections 4.B.(1)-(2) will be paid out, minus applicable deductions, including deductions for tax withholding, in equal bi-weekly payments on the regular payroll cycle over the 24-month period following Executive’s Termination. Commencement of payments shall begin on the first payroll date that occurs in the month that begins 60 days after the date of Executive’s Termination (the “Starting Date”), provided that Executive has satisfied the requirement in Section 4.D. The first payment on the Starting Date shall include those payments that would have been previously paid if the payments of the severance compensation had begun on the first payroll date following the date of Executive’s Termination. Executive’s entitlement to the payments of the severance compensation described in Section 4.B shall be treated as the entitlement to a series of separate payments for purposes of Section 409A. If Executive is a “specified employee” (within the meaning of Section 409A and determined pursuant to procedures adopted by UnitedHealth Group) at the time of Executive’s Termination and any amount that would be paid to Executive during the six-month period following Termination constitutes deferred compensation (within the meaning of Section 409A), such amount shall not be paid to Executive until the later of (i) six months after the date of Executive’s Separation from Service, and (ii) the payment date or commencement date specified in this Agreement for such payment(s). On the first regular payroll date following the expiration of such six-month period (or if Executive dies during the 6-month period, the first payroll date following the
|
D.
|
Separation Agreement and Release Required
. In order to receive any Severance Benefits under this Agreement, Executive must timely sign a separation agreement and release of claims in a form determined by UnitedHealth Group in its discretion. UnitedHealth Group shall provide to Executive a form of separation agreement and release of claims no later than three (3) days following Executive’s date of Termination. Executive must execute and deliver the separation agreement and release of claims within fifty (50) days after Executive’s date of Termination. If Executive does not timely execute and deliver to UnitedHealth Group such severance agreement and release, or if Executive does so, but then revokes it if permitted by and within the time required by applicable law, UnitedHealth Group will have no obligation to pay severance compensation to Executive.
|
A.
|
UnitedHealth Group’s Property
.
|
i.
|
Assignment of Property Rights
. Executive must promptly disclose in writing to UnitedHealth Group all inventions, discoveries, processes, procedures, methods and works of authorship, whether or not patentable or copyrightable, that Executive alone or jointly conceives, makes, discovers, writes or creates, during working hours or on Executive’s own time, during this Agreement’s term (the “Works”). Executive hereby assigns to UnitedHealth Group all Executive’s rights, including copyrights and patent rights, to all Works. Executive must assist UnitedHealth Group as it reasonably requires to perfect, protect, and use its rights to the Works. This provision does not apply to any Work for which no UnitedHealth Group equipment, supplies, facility or trade secret information was used and: (1) which does not relate directly to UnitedHealth Group’s business or actual or demonstrably anticipated research or development, or (2) which does not result from any work performed for UnitedHealth Group.
|
ii.
|
No Removal of Property
. Executive may not remove from UnitedHealth Group’s premises any UnitedHealth Group records, documents, data or other property, in either original or duplicate form, except as necessary in the ordinary course of UnitedHealth Group’s business.
|
iii.
|
Return of Property
. Executive must immediately deliver to UnitedHealth Group, upon termination of employment, or at any other time at UnitedHealth Group’s request, all UnitedHealth Group property, including records, documents, data, and equipment, and all copies of any such property, including any records or data Executive prepared during employment.
|
B.
|
Confidential Information
. Executive will be given access to and provided with sensitive, confidential, proprietary and trade secret information (“Confidential Information”) in the
|
C.
|
Non-Disparagement
. Executive agrees not to criticize, make any negative comments or otherwise disparage UnitedHealth Group or those associated with it, whether orally, in writing or otherwise, directly or by implication, to any person or entity, including UnitedHealth Group customers and agents.
|
D.
|
Restrictive Covenants
. Executive agrees to the restrictive covenants in this Section in consideration of Executive’s employment and UnitedHealth Group’s promises in this Agreement, including providing Executive access to Confidential Information. The restrictive covenants in this Section apply during Executive’s employment and for 24 months following termination of employment for any reason. Executive agrees that he will not, without UnitedHealth Group's prior written consent, directly or indirectly, for Executive or for any other person or entity, as agent, employee, officer, director, consultant, owner, principal, partner or shareholder, or in any other individual or representative capacity:
|
i.
|
Customer Solicitation
: Executive will not engage in, or attempt to engage in, any business competitive with any UnitedHealth Group business with any person or entity who: (a) was a UnitedHealth Group provider or customer within the 12 months before Executive’s employment termination and (b) with whom Executive had contact to further UnitedHealth Group’s business or for whom Executive performed services, or supervised the provision of services for, during Executive’s employment.
|
ii.
|
Employee Solicitation
: Executive will not hire, employ, recruit or solicit any UnitedHealth Group employee or consultant.
|
iii.
|
Interference
: Executive will not induce or influence any UnitedHealth Group employee, consultant, customer or provider to terminate his, her or its employment or other relationship with UnitedHealth Group.
|
iv.
|
Competitive Activities
: Executive will not engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any UnitedHealth Group product or service that Executive participated in, engaged in, or had Confidential Information regarding, during Executive’s employment; provided, however, that this Section 5.D.iv. will not
|
v.
|
Assisting Others
. Executive will not assist anyone in any of the activities listed above.
|
E.
|
Cooperation and Indemnification
. Executive agrees that Executive will cooperate (i) with UnitedHealth Group in the defense of any legal claim involving any matter that arose during Executive’s employment with UnitedHealth Group, and (ii) with all government authorities on matters pertaining to any investigation, litigation or administrative proceeding concerning UnitedHealth Group. UnitedHealth Group will reimburse Executive for any reasonable travel and out-of-pocket expenses incurred by Executive in providing such cooperation. UnitedHealth Group will indemnify Executive, in accordance with the Minnesota Business Corporation Act, for all claims and other covered matters arising in connection with Executive’s employment.
|
F.
|
Injunctive Relief
. Executive agrees that (a) legal remedies (money damages) for any breach of Section 5 will be inadequate, (b) UnitedHealth Group will suffer immediate and irreparable harm from any such breach, and (c) UnitedHealth Group will be entitled to injunctive relief from a court in addition to any legal remedies UnitedHealth Group may seek in arbitration. If an arbitrator or court determines that Executive has breached any provision of Section 5, Executive agrees to pay to UnitedHealth Group its reasonable costs and attorney’s fees incurred in enforcing that provision.
|
G.
|
Survival
. This Section 5 will survive this Agreement’s termination.
|
6.
|
Miscellaneous
.
|
A.
|
Tax Withholding
. All compensation payable under this Agreement will be subject to applicable tax withholding and other required or authorized deductions.
|
B.
|
Assignment
. Executive may not assign this Agreement. UnitedHealth Group may assign this Agreement. Any successor to UnitedHealth Group will be deemed to be UnitedHealth Group under this Agreement.
|
C.
|
Notices
. All notices under this Agreement must be hand delivered or sent by facsimile, e-mail, or registered or certified mail to the party’s address below or to the party’s current address at the time of notice.
|
D.
|
Entire Agreement; Amendment
. This Agreement contains the parties’ entire agreement regarding its subject matter and may only be amended in a writing signed by the parties. This Agreement supersedes any and all prior oral or written employment agreements (including letters and memoranda) between Executive and UnitedHealth Group or its predecessors. This Agreement does not supersede any stock option, restricted stock, or stock appreciation rights plan or award certificate.
|
E.
|
Choice of Law
. Minnesota law governs this Agreement.
|
F.
|
Waivers
. No party’s failure to exercise, or delay in exercising, any right or remedy under this Agreement will be a waiver of such right or remedy, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of such right or remedy.
|
G.
|
Narrowed Enforcement and Severability
. If a court or arbitrator decides that any provision of this Agreement is invalid or overbroad, the parties agree that the court or arbitrator should narrow such provision so that it is enforceable or, if narrowing is not possible or permissible, such provision should be considered severed and the other provisions of this Agreement should be unaffected.
|
H.
|
Dispute Resolution and Remedies
. Except for injunctive relief under Section 5.F, any dispute between the parties relating to this Agreement or to Executive’s employment will be resolved by binding arbitration under UnitedHealth Group’s Employment Arbitration Policy, as it may be amended from time to time. The arbitrator(s) may not vary this Agreement’s terms and must apply applicable law.
|
United HealthCare Services, Inc.
|
|
|
David Wichmann
|
||
|
|
|
|
|
|
By
|
/s/ Marianne D. Short
|
|
|
/s/ David Wichmann
|
|
Its
|
Executive Vice President and Chief Legal Officer
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 6, 2015
|
|
|
Date
|
May 6, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
|
Employment
. UnitedHealth Group hereby employs Executive, and Executive accepts employment, under this Agreement’s terms.
|
B.
|
Title and Duties
. Executive will be employed as the Vice Chairman of UnitedHealth Group and Chief Executive Officer of Optum and will report to Stephen Hemsley, Chief Executive Officer of UnitedHealth Group or the UnitedHealth Group Board of Directors. Executive will perform such duties, and exercise such supervision and control as are commonly associated with Executive’s position, as well as perform such other duties as are reasonably assigned to Executive. Executive will devote substantially all of Executive’s business time and energy to Executive’s duties. Executive will maintain operations in Executive’s area of responsibility, and promote and encourage compliance with applicable law and UnitedHealth Group’s Code of Conduct. Executive is subject to all of UnitedHealth Group’s employment policies and procedures (except as specifically superseded by this Agreement).
|
A.
|
Base Salary
. Executive’s annual base salary will be $1,100,000, payable according to UnitedHealth Group’s regular payroll schedule. Periodic adjustments to Executive’s base salary may be made in UnitedHealth Group’s sole discretion.
|
B.
|
Incentive Compensation
. Executive will be eligible to participate in UnitedHealth Group’s incentive compensation plans in UnitedHealth Group’s discretion and in accordance with the plans’ terms and conditions. Executive’s target bonus potential under UnitedHealth Group’s Executive Incentive Plan for the annual cash incentive will be 185% of annual base salary and for the long-term cash incentive will be
|
C.
|
Employee Benefits
. Executive will be eligible to participate in UnitedHealth Group’s employee welfare, retirement, and other benefit plans on the same basis as other similarly situated executives, in accordance with the terms of the plans. Executive will be eligible for Paid Time Off in accordance with UnitedHealth Group’s policies. UnitedHealth Group reserves the right to amend or discontinue any plan or policy at any time in its sole discretion. To supplement standard UnitedHealth Group-paid life and disability coverages, UnitedHealth Group also will provide Executive with additional group term life insurance coverage of $2 million, as well as additional long-term disability coverage to the extent that Executive's annual base earnings exceed $700,000. UnitedHealth Group shall bear the expense of the supplemental life and disability coverage and shall annually report the imputed income associated with the coverages on Executive's Form W-2, with no gross-up for taxes.
|
A.
|
Term
. This Agreement’s term
begins on December 1, 2014 and ends on November 30, 2017 (“Employment Period”), unless sooner terminated under Section 3.B. If both parties consent in writing no later than 60 days prior to the end of the Employment Period, this Agreement shall be extended for an additional two-year period commencing on December 1, 2017 (“Additional Employment Period”).
|
i.
|
By Mutual Agreement
. The parties may terminate Executive’s employment and this Agreement at any time by mutual agreement.
|
ii.
|
By UnitedHealth Group without Cause
. UnitedHealth Group may terminate this Agreement and Executive’s employment without Cause upon 90 days’ prior written notice.
|
iii.
|
By UnitedHealth Group with Cause
. UnitedHealth Group may terminate this Agreement and Executive’s employment at any time for Cause. “Cause” means Executive’s (a) material failure to follow UnitedHealth Group’s reasonable direction by the Chief Executive Officer of UnitedHealth Group or the UnitedHealth Group Board of Directors or to perform any duties reasonably required on material matters, (b) material violation of, or failure to act upon or report known or suspected violations of, UnitedHealth Group’s Code of Conduct, (c) conviction of any felony, (d) commission of any criminal, fraudulent, or dishonest act in connection with Executive’s employment, (e) material breach of this Agreement, or (f) conduct that is materially detrimental to UnitedHealth Group’s interests. UnitedHealth Group will, within 120 days of discovery of the conduct, give Executive written notice specifying the conduct constituting Cause in reasonable detail and Executive will have 60 days to remedy such conduct, if such conduct is reasonably capable of being remedied. In any instance where the Company may have grounds for Cause, failure by the Company to provide written notice of the grounds for Cause within 120 days of discovery shall be a waiver of its right to assert the subject conduct as a basis for termination for Cause.
|
iv.
|
By Executive without Good Reason
. Executive may terminate this Agreement and Executive’s employment at any time for any reason, including due to Executive’s retirement. Termination without Good Reason will not be a basis for Severance Benefits.
|
v.
|
By Executive for Good Reason
. Executive may terminate this Agreement and Executive’s employment for Good Reason, as defined below. Executive must give UnitedHealth Group written notice specifying in reasonable detail the circumstances constituting Good Reason, within 120 days of becoming aware of such circumstances, or such circumstances will not constitute Good Reason. If the circumstances constituting Good Reason are reasonably capable of being remedied, UnitedHealth Group will have 60 days to remedy such circumstances. “Good Reason” will exist if, without Executive’s consent, UnitedHealth Group: (a) reduces Executive’s base salary or target bonus percentage other than in connection with a general reduction affecting a group of similarly situated senior executives; (b) moves Executive’s primary work location more than 50 miles from Boston, Massachusetts or another location agreed upon by Executive and UnitedHealth Group, which is a substantative location of operations for Optum; (c) makes changes so that Executive no longer holds the position of Vice Chair of UnitedHealth Group and Chief Executive Officer of Optum or another position with equivalent or greater responsibilities, duties and standing; or (d) changes to Executive’s reporting relationship that results in Executive not reporting to Stephen
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vi.
|
Due to Executive’s Death or Disability.
This Agreement and Executive’s employment will terminate automatically if Executive dies. The termination date will be the date of Executive’s death. UnitedHealth Group may terminate this Agreement and Executive’s employment due to Executive’s disability that renders Executive incapable of performing the essential functions of Executive’s job, with or without reasonable accommodation. Executive will not be entitled to Severance Benefits under Section 4 in the event of termination due to Executive’s death or disability.
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vii.
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Payment on Termination
. The Company shall pay Executive all salary and any incentive or other bonus earned but not yet paid as of Executive’s termination date. The Company shall reimburse Executive for all reasonable and approved business expenses incurred by Executive prior to Executive’s termination date, subject to limitations set out in Section 409A of the Internal Revenue Code of 1986 and its accompanying regulations (“Section 409A”).
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4.
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Severance Benefits
.
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A.
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Circumstances under Which Severance Benefits Payable
. Executive will be entitled to Severance Benefits only if Executive’s employment is terminated by UnitedHealth Group without Cause or if Executive terminates employment for Good Reason during the Employment Period or Additional Employment Period, as applicable. For purposes of clarity, Executive will not be entitled to Severance Benefits if Executive does not agree to renew this Agreement at the end of the Employment Period as provided under Section 3.A., or if Executive is employed at the end of the Additional Employment Period. Executive will be considered to have experienced a termination of employment as of the date that the facts and circumstances indicate that it is reasonably anticipated that Executive will provide no further services after such date or that the level of bona fide services that Executive is expected to perform permanently decreases to no more than 20% of the average level of bona fide services that Executive performed over the immediately preceding 36-month period. Whether Executive has had a termination of employment will be determined in a manner consistent with the definition of “separation from service” under Section 409A. A termination of employment will mean a “separation from service” and will be referred to herein as a “Termination”.
The Severance Benefits in this Agreement are in lieu of any payments or benefits to which Executive otherwise might be entitled under any UnitedHealth Group severance plan or program.
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B.
|
Severance Benefits
. Subject to Section 4.D, Executive shall be entitled to the following Severance Benefits if Executive’s employment terminates under the circumstances described in Section 4.A above:
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C.
|
Timing of Payments
. The Severance Benefits in Sections 4.B.(1)-(2) will be paid out, minus applicable deductions, including deductions for tax withholding, in equal bi-weekly payments on the regular payroll cycle over the 12-month period following Executive’s Termination. Commencement of payments shall begin on the first payroll date that occurs in the month that begins 60 days after the date of Executive’s Termination (the “Starting Date”), provided that Executive has satisfied the requirement in Section 4.D. The first payment on the Starting Date shall include those payments that would have been previously paid if the payments of the severance compensation had begun on the first payroll date following the date of Executive’s Termination. Executive’s entitlement to the payments of the severance compensation described in Section 4.B shall be treated as the entitlement to a series of separate payments for purposes of Section 409A. If Executive is a “specified employee” (within the meaning of Section 409A and determined pursuant to procedures adopted by UnitedHealth Group) at the time of Executive’s Termination and any amount that would be paid to Executive during the six-month period following Termination constitutes deferred compensation (within the meaning of Section 409A), such amount shall not be paid to Executive until the later of (i) six months after the date of Executive’s Separation from Service, and (ii) the payment date or commencement date specified in this Agreement for such payment(s). On the first regular payroll date following the expiration of such six-month period (or if Executive dies during the 6-month period, the first payroll date following the death), all payments that were delayed pursuant to the preceding sentence shall be paid to Executive in a single lump sum and thereafter all payments shall be made as if there had been no such delay. All Severance Benefits described in Section 4.B shall be paid by, and no further severance compensation shall be paid or payable after December 31 of the second calendar year in which Executive’s Termination occurs.
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D.
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Separation Agreement and Release Required
. In order to receive any Severance Benefits under this Agreement, Executive must timely sign a separation agreement and release of claims in a form substantially similar to the one provided to Executive at the time this agreement is executed. UnitedHealth Group shall provide to Executive a form of separation agreement and release of claims no later than three (3) days following Executive’s date of Termination. Executive must execute and deliver the separation agreement and release of claims within fifty (50) days after Executive’s date of Termination. If Executive does not timely execute and deliver to UnitedHealth Group such severance agreement and release, or if Executive does so, but then revokes it if permitted by and within the time required by applicable law, UnitedHealth Group will have no obligation to pay severance compensation to Executive.
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A.
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UnitedHealth Group’s Property
.
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i.
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Assignment of Property Rights
. Executive must promptly disclose in writing to UnitedHealth Group all inventions, discoveries, processes, procedures, methods and works of authorship, whether or not patentable or copyrightable, that Executive alone or jointly conceives, makes, discovers, writes or creates, during working hours or on Executive’s own time, during this Agreement’s term (the “Works”). Executive hereby assigns to UnitedHealth Group all Executive’s rights, including copyrights and patent rights, to all Works. Executive must assist UnitedHealth Group as it reasonably requires to perfect, protect, and use its rights to the Works. This provision does not apply to any Work for which no UnitedHealth Group equipment, supplies, facility or trade secret information was used and: (1) which does not relate directly to UnitedHealth Group’s business or actual or demonstrably anticipated research or development, or (2) which does not result from any work performed for UnitedHealth Group.
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ii.
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No Removal of Property
. Executive may not remove from UnitedHealth Group’s premises any UnitedHealth Group records, documents, data or other property, in either original or duplicate form, except as necessary in the ordinary course of UnitedHealth Group’s business.
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iii.
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Return of Property
. Executive must immediately deliver to UnitedHealth Group, upon termination of employment, or at any other time at UnitedHealth Group’s request, all UnitedHealth Group property, including records, documents, data, and equipment, and all copies of any such property, including any records or data Executive prepared during employment.
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B.
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Confidential Information
. Executive will be given access to and provided with sensitive, confidential, proprietary and trade secret information (“Confidential
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C.
|
Non-Disparagement
. Executive agrees not to criticize, make any negative comments or otherwise disparage UnitedHealth Group or those associated with it, whether orally, in writing or otherwise, directly or by implication, to any person or entity, including UnitedHealth Group customers and agents.
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D.
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Restrictive Covenants
. Executive agrees to the restrictive covenants in this Section in consideration of Executive’s employment and UnitedHealth Group’s promises in this Agreement, including providing Executive access to Confidential Information. The restrictive covenants in this Section apply during Executive’s employment and for 24 months following termination of employment for any reason. Executive agrees that he will not, without UnitedHealth Group's prior written consent, directly or indirectly, for Executive or for any other person or entity, as agent, employee, officer, director, consultant, owner, principal, partner or shareholder, or in any other individual or representative capacity:
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i.
|
Customer Solicitation
: Executive will not solicit any business competitive with UnitedHealth Group from any person or entity who (a) was a UnitedHealth Group provider or customer within the 12 months before Executive’s employment termination and with whom Executive had contact to further UnitedHealth Group’s business, or for whom Executive provided services or supervised employees who provided those services, or (b) was a prospective provider or customer UnitedHealth Group solicited within the 12 months before Executive’s employment termination and with whom UnitedHealth Group had contact for the purposes of soliciting the person or entity to become a provider or customer of UnitedHealth Group, or supervised employees who had those contacts.
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ii.
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Employee Solicitation
: Executive will not hire, employ, recruit or solicit any UnitedHealth Group employee or consultant.
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iii.
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Interference
: Executive will not induce or influence any UnitedHealth Group employee, consultant, or provider to terminate his, her or its employment or other relationship with UnitedHealth Group.
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iv.
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Competitive Activities
: Executive will not engage in or participate in any activity that competes, directly or indirectly, with any UnitedHealth Group product or service that Executive engaged in, participated in, or had Confidential Information about during Executive’s employment; provided, however, that this Section 5.D.iv. will not prevent Executive from being employed by, or working as a consultant to, or serving on the board of, or being an owner or an investor in, a private equity firm.
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v.
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Assisting Others
. Executive will not assist anyone in any of the activities listed above.
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E.
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Cooperation and Indemnification
. Executive agrees that Executive will cooperate (i) with UnitedHealth Group in the defense of any legal claim involving any matter that arose during Executive’s employment with UnitedHealth Group, and (ii) with all government authorities on matters pertaining to any investigation, litigation or administrative proceeding concerning UnitedHealth Group. UnitedHealth Group will reimburse Executive for any reasonable travel and out-of-pocket expenses incurred by Executive in providing such cooperation. UnitedHealth Group will indemnify Executive, in accordance with the Minnesota Business Corporation Act, for all claims and other covered matters arising in connection with Executive’s employment.
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F.
|
Injunctive Relief
. Executive agrees that (a) legal remedies (money damages) for any breach of Section 5 will be inadequate, (b) UnitedHealth Group will suffer immediate and irreparable harm from any such breach, and (c) UnitedHealth Group will be entitled to injunctive relief from a court in addition to any legal remedies UnitedHealth Group may seek in arbitration. If an arbitrator or court determines that Executive has breached any provision of Section 5, Executive agrees to pay to UnitedHealth Group its reasonable costs and attorney’s fees incurred in enforcing that provision.
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G.
|
Survival
. This Section 5 will survive this Agreement’s termination.
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6.
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Miscellaneous
.
|
A.
|
Tax Withholding
. All compensation payable under this Agreement will be subject to applicable tax withholding and other required or authorized deductions.
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B.
|
Assignment
. Executive may not assign this Agreement. UnitedHealth Group may assign this Agreement. Any successor to UnitedHealth Group will be deemed to be UnitedHealth Group under this Agreement.
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C.
|
Entire Agreement, Amendment
. This Agreement contains the parties’ entire agreement regarding its subject matter and may only be amended in a writing signed by the parties. This Agreement supersedes any and all prior oral or written employment agreements (including letters and memoranda) between Executive and UnitedHealth Group or its predecessors. Except as provided in the following paragraph, this Agreement does not supersede any equity award plan or certificate, employee benefit plan, or compensation plan.
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D.
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Choice of Law
. Minnesota law governs this Agreement.
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E.
|
Waivers
. No party’s failure to exercise, or delay in exercising, any right or remedy under this Agreement will be a waiver of such right or remedy, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of such right or remedy.
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F.
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Narrowed Enforcement and Severability
. If a court or arbitrator decides that any provision of this Agreement is invalid or overbroad, the parties agree that the court or arbitrator should narrow such provision so that it is enforceable or, if narrowing is not possible or permissible, such provision should be considered severed and the other provisions of this Agreement should be unaffected.
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G.
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Dispute Resolution and Remedies
. Except for injunctive relief under Section 5.F, any dispute between the parties relating to this Agreement or to Executive’s employment will be resolved by binding arbitration under UnitedHealth Group’s Employment Arbitration Policy, as it may be amended from time to time. The arbitrator(s) may not vary this Agreement’s terms and must apply applicable law.
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H.
|
Section 409A.
To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Section 409A. This Agreement shall be construed in a manner to give effect to such intention. In no event whatsoever shall UnitedHealth Group or any of its affiliates be liable for any tax, interest or penalties that may be imposed on Executive under Section 409A. Neither UnitedHealth Group nor any of its affiliates have any obligation to indemnify or otherwise hold Executive harmless from any or all such taxes, interest or penalties, or liability for any damages related thereto.
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United HealthCare Services, Inc.
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|
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Executive
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||
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By
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/s/ Marianne D. Short
|
|
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/s/ Larry Renfro
|
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Its
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Executive Vice President and Chief Legal Officer
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|
|
|
|
|
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|
|
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Date
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May 6, 2015
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|
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Date
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May 6, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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March 31,
|
|
March 31,
|
||||
(dollars in millions)
|
|
2015
|
|
2014
|
||||
Earnings before income taxes
|
|
$
|
2,490
|
|
|
$
|
1,894
|
|
Fixed charges
|
|
191
|
|
|
192
|
|
||
Total earnings available for fixed charges
|
|
$
|
2,681
|
|
|
$
|
2,086
|
|
|
|
|
|
|
||||
Fixed Charges:
|
|
|
|
|
||||
Interest expense
|
|
$
|
150
|
|
|
$
|
160
|
|
Interest component of rental payments
|
|
41
|
|
|
32
|
|
||
Total fixed charges
|
|
$
|
191
|
|
|
$
|
192
|
|
Ratio of earnings to fixed charges
|
|
14.0
|
|
|
10.9
|
|
1.
|
I have reviewed this report on Form 10-Q of UnitedHealth Group Incorporated (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
May 6, 2015
|
/s/ STEPHEN J. HEMSLEY
|
|
Stephen J. Hemsley
Chief Executive Officer
|
|
|
1.
|
I have reviewed this report on Form 10-Q of UnitedHealth Group Incorporated (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
May 6, 2015
|
/s/ DAVID S. WICHMANN
|
|
David S. Wichmann
President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
May 6, 2015
|
/s/ STEPHEN J. HEMSLEY
|
|
Stephen J. Hemsley
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
May 6, 2015
|
/s/ DAVID S. WICHMANN
|
|
David S. Wichmann
President and Chief Financial Officer
|