UnitedHealth Group Incorporated (UNH)

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UnitedHealth Group Inc. (UNH)

F1Q10 Earnings Call

April 20, 2010; 8:45 AM ET


Steve Hemsley - President, CEO

Gail Boudreaux - EVP, President

Mike Mikan - EVP, CFO


Scott Fidel - Deutsche Bank

Christine Arnold - Cowen & Co.

Tom Carroll - Stifel Nicolaus

John Rex - JPMorgan

Kevin Fischbeck - Bank of America Merrill Lynch

Justin Lake - UBS

Doug Simpson - Morgan Stanley

Carl McDonald - Oppenheimer

Ana Gupte - Sanford C. Bernstein



Good morning. I will be your conference facilitator today. At this time, I would like to welcome everyone to the UnitedHealth Group first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator instructions)

As a reminder, this conference is being recorded. This call and its contents are the property of UnitedHealth Group. Any use, copying, or distribution without written permission from UnitedHealth Group is strictly prohibited.

Here is some important introductory information. This call will reference a non-GAAP amount. A reconciliation of non-GAAP to GAAP amount is available on the financial reports and SEC filings section of the company’s investor’s page at www.unitedhealthgroup.com. This call contains forward-looking statements under U.S. Federal Securities Laws. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.

A description of some of the risks and uncertainties can be found in the reports that we filed with the Securities and Exchange Commission from time-to-time, including the cautionary statements included in our current and periodic filings. Information presented on this call is contained in the earnings release we issued this morning, and in our Form 8-K, dated April 20, 2010, which maybe accessed from the Investors page of the company’s website at www.unitedhealthgroup.com.

I would now like to turn the conference over to the President and Chief Executive Officer of UnitedHealth Group, Stephen Hemsley.

Steve Hemsley

Good morning and thank you for joining us this morning. Today, we will provide a brief review of our 2010 first quarter and update on our view of full-year 2010 performance, and an initial high level view on our preparations for growth perform environment. We perform strongly in the first quarter and virtually all our businesses expanding the momentum we built steadily throughout 2009 in a wide range of key performance areas.

First quarter revenues grew beyond our expectations as more people purchased our products and services in the first quarter and anticipated. Again this quarter, we effectively managed medical care and operating expenses on behalf of our customers. We also further strengthened our administrative infrastructure and system and as a result improved performance quality, consistency, responsiveness and operational efficiency.

First quarter earnings per share were $1.03 and operating cash flow as $1.2 billion. We are updating our full-year 2010 earnings outlook to a range of $3.15 to $3.35 per share. This is based on stronger revenue growth, the cumulative impact of ongoing operating the medical cost management efforts, and improving operational integration in our distinct health benefits and health service business platforms.

For the past two years, as you know we have steadily pursued an agenda of consistent execution on the fundamentals of our businesses. Customers are responding well for that execution. We continued to deliver distinctively in key areas such as responsive service and integrated consumer engagements in clinical managements, which we provided significant scale well customize the individual needs.

We have built on our leadership and innovation by focusing on practical developments that help modernize the health system. Last week, there was trade we introduced the Diabetes Prevention and Control Alliance and now have a partnership with YMCA-USA and retail pharmacy beginning with Walgreens. This pioneering program will use adjunct networks of lifestyle coaches and pharmacists to help people prevent diabetes for better control their conditions.

We will use advanced analytics from the Ingenix to identify people who are at risk of diabetes years before the conditions that they’re in. The program is distinct from, but aligns with our Diabetes Health Plan, a use of biometrics screening to drive wellness in our new partnership around healthy eating, nutrition possess in the work shops. These are part of a broader and more sophisticated effort to slow the U.S. diabetes epidemic than as ever been pursued addressing the condition that potentially could affect more than 25% of the U.S. population.

We’re delivering our practical innovations through our health services businesses as well. Ingenix formed a joint venture with technology leaders into it to code develop the quick and help expense cracker, which is now subscribed by several large insurance companies including the UnitedHealthcare, where we already have 50,000 users in just four months. It automatically assembles for consumers a complete picture of their medical-related savings and expenses by drawing on claims and benefits data. This helps people better understand and manage their health expenditures and bring with them the industry’s first automatic online bill payment applications.

Last week the UnitedHealth Center for Health Reform & Modernization issued its first post reform research report providing analysis and ideas that help with the execution implementation of the new laws. We identified nearly $370 billion in potential savings over 10 years for the Medicaid system to the application of proven techniques in programs and suggested a substantial portion of those savings we invested in strengthening primary care resources.

This follows too earlier research reports where we identified more than $500 billion of saving available in the Medicare program and more than $330 billion through the better use of modern technology in the health system broadly. These reports are available on unitedhealthgroup.com. We have more activity in the pipeline as we remain committed to be in a progressive and innovative voice helping advanced healthcare monetization.

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