UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

Form 10-Q

__________________________________________________________



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2018~~2019



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission ~~file number:~~File Number: 1-10864

__________________________________________________________

UnitedHealth Group Incorporated

(Exact name of registrant as specified in its charter)

__________________________________________________________



Delaware		41-1321939
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

UnitedHealth Group Center 9900 Bren Road East Minnetonka, Minnesota		55343
(Address of principal executive offices)		(Zip Code)

(952) 936-1300

(Registrant’s telephone number, including area code)

~~__________________________________________________________~~_________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act ~~(check one)~~



Large accelerated filer	[X]	Accelerated filer	[ ]	Non-accelerated filer ~~(Do not check if a smaller reporting company)~~	[ ]
Smaller reporting company	[ ]			Emerging growth company	[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	UNH	New York Stock Exchange, Inc.

As of April 30, ~~2018,~~2019, there were ~~960,981,242~~950,343,113 shares of the registrant’s Common Stock, $.01 par value per share, issued and outstanding.

UNITEDHEALTH GROUP

Table of Contents


				Page				Page

Part I. Financial Information	Part I. Financial Information				Part I. Financial Information
Item 1.	Item 1.	Financial Statements (unaudited)		1	Item 1.	Financial Statements (unaudited)		1
		Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017		1		Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018		1
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017		2		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018		2
		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017		3		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2019 and 2018		3
		Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2018 and 2017		4		Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2019 and 2018		4
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017		5		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018		5
		Notes to the Condensed Consolidated Financial Statements		6		Notes to the Condensed Consolidated Financial Statements		6
		1.	Basis of Presentation	6		1.	Basis of Presentation	6
		2.	Investments	7		2.	Investments	7
		3.	Fair Value	8		3.	Fair Value	8
		4.	Medical Costs Payable	10		4.	Medical Costs Payable	10
		5.	Commercial Paper and Long-Term Debt	11		5.	Commercial Paper and Long-Term Debt	11
		6.	Commitments and Contingencies	12		6.	Commitments and Contingencies	12
		7.	Segment Financial Information	13		7.	Segment Financial Information	13
Item 2.	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21
Item 4.	Item 4.	Controls and Procedures		22	Item 4.	Controls and Procedures		22
Part II. Other Information	Part II. Other Information				Part II. Other Information
Item 1.	Item 1.	Legal Proceedings		23	Item 1.	Legal Proceedings		22
Item 1A.	Item 1A.	Risk Factors		23	Item 1A.	Risk Factors		22
Item 2.	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 6.	Item 6.	Exhibits		24	Item 6.	Exhibits		23
Signatures	Signatures			25	Signatures			24

PART I

ITEM 1. FINANCIAL STATEMENTS

UnitedHealth Group

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions, except per share data)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	18,243		$	11,981		$	12,407		$	10,866
Short-term investments	3,798			3,509			3,303			3,458
Accounts receivable, net	11,512			9,568			12,826			11,388
Other current receivables, net	6,778			6,262			7,631			6,862
Assets under management	2,922			3,101			2,951			3,032
Prepaid expenses and other current assets	5,100			2,663			3,697			3,086
Total current assets	48,353			37,084			42,815			38,692
Long-term investments	29,441			28,341			33,553			32,510
Property, equipment and capitalized software, net	8,144			7,013			8,230			8,458
Goodwill	56,850			54,556			59,379			58,910
Other intangible assets, net	9,033			8,489			9,245			9,325
Other assets	3,748			3,575			7,975			4,326
Total assets	$	155,569		$	139,058		$	161,197		$	152,221
Liabilities, redeemable noncontrolling interests and equity
Current liabilities:
Medical costs payable	$	19,589		$	17,871		$	21,139		$	19,891
Accounts payable and accrued liabilities	18,210			15,180			16,900			16,705
Commercial paper and current maturities of long-term debt	7,379			2,857			3,919			1,973
Unearned revenues	7,683			2,269			2,530			2,396
Other current liabilities	14,806			12,286			14,445			12,244
Total current liabilities	67,667			50,463			58,933			53,209
Long-term debt, less current maturities	28,206			28,835			34,419			34,581
Deferred income taxes	2,213			2,182			2,786			2,474
Other liabilities	5,557			5,556			8,554			5,730
Total liabilities	103,643			87,036			104,692			95,994
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	1,890			2,189			2,054			1,908
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; 962 and 969 issued and outstanding	10			10
Additional paid-in capital	—			1,703
Common stock, $0.01 par value - 3,000 shares authorized; 953 and 960 issued and outstanding							10			10
Retained earnings	50,494			48,730			55,472			55,846
Accumulated other comprehensive loss	(2,951		)	(2,667		)	(3,758		)	(4,160		)
Nonredeemable noncontrolling interests	2,483			2,057			2,727			2,623
Total equity	50,036			49,833			54,451			54,319
Total liabilities, redeemable noncontrolling interests and equity	$	155,569		$	139,058		$	161,197		$	152,221

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions, except per share data)	2018			2017			2019			2018
Revenues:
Premiums	$	44,084		$	38,938		$	47,513		$	44,084
Products	6,702			6,129			8,072			6,702
Services	4,104			3,434			4,318			4,104
Investment and other income	298			222			405			298
Total revenues	55,188			48,723			60,308			55,188
Operating costs:
Medical costs	35,863			32,079			38,939			35,863
Operating costs	8,506			7,022			8,517			8,506
Cost of products sold	6,184			5,676			7,381			6,184
Depreciation and amortization	582			533			639			582
Total operating costs	51,135			45,310			55,476			51,135
Earnings from operations	4,053			3,413			4,832			4,053
Interest expense	(329		)	(283		)	(400		)	(329		)
Earnings before income taxes	3,724			3,130			4,432			3,724
Provision for income taxes	(800		)	(939		)	(875		)	(800		)
Net earnings	2,924			2,191			3,557			2,924
Earnings attributable to noncontrolling interests	(88		)	(19		)	(90		)	(88		)
Net earnings attributable to UnitedHealth Group common shareholders	$	2,836		$	2,172		$	3,467		$	2,836
Earnings per share attributable to UnitedHealth Group common shareholders:
Basic	$	2.94		$	2.28		$	3.62		$	2.94
Diluted	$	2.87		$	2.23		$	3.56		$	2.87
Basic weighted-average number of common shares outstanding	966			954			958			966
Dilutive effect of common share equivalents	21			21			17			21
Diluted weighted-average number of common shares outstanding	987			975			975			987
Anti-dilutive shares excluded from the calculation of dilutive effect of common share equivalents	7			9			8			7
Cash dividends declared per common share	$	0.750		$	0.625

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions)	2018			2017			2019			2018
Net earnings	$	2,924		$	2,191		$	3,557		$	2,924
Other comprehensive (loss) income:
Gross unrealized (losses) gains on investment securities during the period	(378		)	99
Other comprehensive income (loss):
Gross unrealized gains (losses) on investment securities during the period							520			(378		)
Income tax effect	86			(32		)	(119		)	86
Total unrealized (losses) gains, net of tax	(292		)	67
Gross reclassification adjustment for net realized gains included in net earnings	(19		)	(21		)
Total unrealized gains (losses), net of tax							401			(292		)
Gross reclassification adjustment for net realized losses (gains) included in net earnings							4			(19		)
Income tax effect	4			8			(1		)	4
Total reclassification adjustment, net of tax	(15		)	(13		)	3			(15		)
Total foreign currency translation (loss) gain	(1		)	180
Other comprehensive (loss) income	(308		)	234
Total foreign currency translation losses							(2		)	(1		)
Other comprehensive income (loss)							402			(308		)
Comprehensive income	2,616			2,425			3,959			2,616
Comprehensive income attributable to noncontrolling interests	(88		)	(19		)	(90		)	(88		)
Comprehensive income attributable to UnitedHealth Group common shareholders	$	2,528		$	2,406		$	3,869		$	2,528

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Common Stock				Additional Paid-In Capital				Retained Earnings			Accumulated Other Comprehensive (Loss) Income						Nonredeemable Noncontrolling Interests			Total Equity				Common Stock					Additional Paid-In Capital			Retained Earnings				Accumulated Other Comprehensive (Loss) Income								Nonredeemable Noncontrolling Interests			Total Equity
(in millions)	Shares		Amount					Net Unrealized (Losses) Gains on Investments				Foreign Currency Translation (Losses) Gains					Shares							Amount					Net Unrealized (Losses) Gains on Investments							Foreign Currency Translation Losses
Balance at January 1, 2019																									960		$	10			$	—		$	55,846			$	(264	)		$	(3,896	)		$	2,623		$	54,319
Adjustment to adopt ASU 2016-02																																	(13		)										(5		)	(18		)
Net earnings																																	3,467												60			3,527
Other comprehensive income (loss)																																					404				(2		)					402
Issuances of common stock, and related tax effects																									5		—			56																		56
Share-based compensation																														239																		239
Common share repurchases																									(12	)	—			(34		)	(2,968		)													(3,002		)
Cash dividends paid on common shares ($0.90 per share)																																	(860		)													(860		)
Redeemable noncontrolling interests fair value and other adjustments																														(152		)																(152		)
Acquisition and other adjustments of nonredeemable noncontrolling interests																														(109		)													132			23
Distribution to nonredeemable noncontrolling interests																																													(83		)	(83		)
Balance at March 31, 2019																									953		$	10		$	—		$	55,472			$	140			$	(3,898	)		$	2,727		$	54,451

Balance at January 1, 2018	969		$	10			$	1,703				$	48,730		$	(13	)	$	(2,654	)	$	2,057			$	49,833		969		$	10		$	1,703			$	48,730			$	(13	)		$	(2,654	)	$	2,057		$	49,833
Adjustment to adopt ASU 2016-01									(24		)	24									—												(24		)		24											—
Net earnings									2,836									53			2,889												2,836												53			2,889
Other comprehensive loss												(307		)	(1		)				(308		)														(307		)		(1		)					(308		)
Issuances of common stock, and related tax effects	5		—		415																415				5		—			415																		415
Share-based compensation					206																206									206																		206
Common share repurchases	(12	)	—		(2,324		)		(326		)										(2,650		)		(12	)	—			(2,324		)	(326		)													(2,650		)
Cash dividends paid on common shares									(722		)										(722		)
Cash dividends paid on common shares ($0.75 per share)																																	(722		)													(722		)
Acquisition of nonredeemable noncontrolling interests																		423			423																								423			423
Distribution to nonredeemable noncontrolling interests																		(50		)	(50		)																						(50		)	(50		)
Balance at March 31, 2018	962		$	10	$	—			$	50,494		$	(296	)	$	(2,655	)	$	2,483		$	50,036			962		$	10		$	—		$	50,494			$	(296	)		$	(2,655	)		$	2,483		$	50,036

Balance at January 1, 2017	952		$	10	$	—			$	40,945		$	(97	)	$	(2,584	)	$	(97	)	$	38,177
Net earnings									2,172									9			2,181
Other comprehensive income												54			180						234
Issuances of common stock, and related tax effects	17		—		1,923																1,923
Share-based compensation					189																189
Common share repurchases	(4	)	—		(682		)		—												(682		)
Cash dividends paid on common shares									(596		)										(596		)
Redeemable noncontrolling interests fair value and other adjustments					389																389
Acquisition of nonredeemable noncontrolling interests																		2,191			2,191
Distribution to nonredeemable noncontrolling interests																		(11		)	(11		)
Balance at March 31, 2017	965		$	10	$	1,819			$	42,521		$	(43	)	$	(2,404	)	$	2,092		$	43,995

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions)	2018			2017			2019			2018
Operating activities
Net earnings	$	2,924		$	2,191		$	3,557		$	2,924
Noncash items:
Depreciation and amortization	582			533			639			582
Deferred income taxes	(74		)	(89		)	134			(74		)
Share-based compensation	208			196			243			208
Other, net	27			43			42			27
Net change in other operating items, net of effects from acquisitions and changes in AARP balances:
Accounts receivable	(1,579		)	(1,232		)	(1,421		)	(1,579		)
Other assets	(3,232		)	(998		)	(1,495		)	(3,232		)
Medical costs payable	1,313			1,024			1,125			1,313
Accounts payable and other liabilities	2,821			292			318			2,821
Unearned revenues	5,379			4,496			92			5,379
Cash flows from operating activities	8,369			6,456			3,234			8,369
Investing activities
Purchases of investments	(3,891		)	(3,683		)	(3,540		)	(3,891		)
Sales of investments	1,002			1,018			1,510			1,002
Maturities of investments	1,504			1,326			1,711			1,504
Cash paid for acquisitions, net of cash assumed	(2,583		)	(468		)	(689		)	(2,583		)
Purchases of property, equipment and capitalized software	(477		)	(507		)	(562		)	(477		)
Other, net	(72		)	25			154			(72		)
Cash flows used for investing activities	(4,517		)	(2,289		)	(1,416		)	(4,517		)
Financing activities
Common share repurchases	(2,650		)	(682		)	(3,002		)	(2,650		)
Cash dividends paid	(722		)	(596		)	(860		)	(722		)
Proceeds from common stock issuances	295			270			323			295
Repayments of long-term debt	(1,100		)	(1,392		)	(1,250		)	(1,100		)
Proceeds from (repayments of) commercial paper, net	4,259			(139		)
Proceeds from issuance of long-term debt	—			1,342
Proceeds from commercial paper, net							3,101			4,259
Customer funds administered	2,962			3,217			1,784			2,962
Other, net	(622		)	(495		)	(368		)	(622		)
Cash flows from financing activities	2,422			1,525
Cash flows (used for) from financing activities							(272		)	2,422
Effect of exchange rate changes on cash and cash equivalents	(12		)	20			(5		)	(12		)
Increase in cash and cash equivalents	6,262			5,712			1,541			6,262
Cash and cash equivalents, beginning of period	11,981			10,430			10,866			11,981
Cash and cash equivalents, end of period	$	18,243		$	16,142		$	12,407		$	18,243

Supplemental schedule of noncash investing activities
Common stock issued for acquisition	$	—		$	1,860

See Notes to the Condensed Consolidated Financial Statements

UnitedHealth Group

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

UnitedHealth Group Incorporated (individually and together with its subsidiaries, “UnitedHealth Group” and the “Company”) is a diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone.

Through its diversified family of businesses, the Company leverages core competencies in data and health information; advanced technology; and clinical ~~expertise to help meet the demands of the health system.~~expertise. These core competencies are deployed within two distinct, but strategically aligned, business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum.

The Company has prepared the Condensed Consolidated Financial Statements according to U.S. Generally Accepted Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has omitted certain footnote disclosures that would substantially duplicate the disclosures contained in its annual audited Consolidated Financial Statements. Therefore, these Condensed Consolidated Financial Statements should be read together with the Consolidated Financial Statements and the Notes included in Part II, Item 8, “Financial ~~Statements”~~Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 as filed with the SEC ~~(2017~~(2018 10-K). The accompanying Condensed Consolidated Financial Statements include all normal recurring adjustments necessary to present the interim financial statements fairly.

Use of Estimates

These Condensed Consolidated Financial Statements include certain amounts based on the Company’s best estimates and judgments. The Company’s most significant estimates ~~relate to~~include medical costs payable ~~revenues,~~ and ~~goodwill and other intangible assets.~~goodwill. Certain of these estimates require the application of complex assumptions and judgments, often because they involve matters that are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is included in earnings in the period in which the estimate is adjusted.

Recently ~~Issued~~Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02, “Leases (Topic 842)” ~~(ASU~~as modified by ASUs 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01 (collectively, ASU 2016-02). Under ASU 2016-02, an entity ~~will be~~is required to recognize assets and liabilities for the rights and obligations created by leases on the entity’s balance sheet for both finance and operating leases. ~~For~~The Company adopted ASU 2016-02 using a cumulative-effect upon adoption approach as of January 1, 2019. Upon adoption, the Company recognized $3.3 billion of lease right-of-use (ROU) assets and liabilities for operating leases ~~with a term~~on its Condensed Consolidated Balance Sheet, of ~~12 months or less, an entity can elect~~which, $668 million were classified as current liabilities. The adoption of ASU 2016-02 was immaterial to ~~not recognize~~the Company’s consolidated results of operations, equity and cash flows. The Company has included the disclosures required by ASU 2016-02 below and in Note 6, “Commitments and Contingencies”.

The Company leases facilities and equipment under long-term operating leases that are non-cancelable and expire on various dates. At the lease commencement date, lease ROU assets and lease liabilities ~~and expense~~are recognized based on the present value of the future minimum lease payments over the lease ~~over~~term, which includes all fixed obligations arising from the lease contract. If an interest rate is not implicit in a ~~straight-line basis~~lease, the Company utilizes its incremental borrowing rate for a period that closely matches the ~~term of the lease. ASU 2016-02 will require new disclosures that depict the amount, timing~~lease term.

The Company’s ROU assets are included in other assets, and ~~uncertainty of cash flows pertaining to an entity’s leases. Companies~~lease liabilities are ~~required to adopt the new standard using a modified retrospective approach for annual~~included in other current liabilities and ~~interim periods beginning after December 15, 2018. Early adoption of ASU 2016-02 is permitted. When adopted, ASU 2016-02 will not have a material impact on~~other liabilities in the Company’s ~~balance sheet, results of operations, equity or cash flows.~~

~~Recently Adopted Accounting Standards~~

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). Most notably, the new guidance requires that equity investments, with certain exemptions, be measured at fair value with changes in fair value recognized in net income as opposed to other comprehensive income. The Company adopted ASU 2016-01 on a prospective basis effective January 1, 2018, as required, and reclassified $24 million from accumulated other comprehensive income to retained earnings.Condensed Consolidated Balance Sheet.

The Company has determined that there have been no other recently adopted or issued accounting standards that had, or will have, a material impact on its Condensed Consolidated Financial Statements.

2. Investments

A summary of debt securities by major security type is as follows:


(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2018
March 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,939	$	1	$	(54	)	$	2,886	$	3,610	$	30	$	(19	)	$	3,621
State and municipal obligations	7,190		43		(94		)	7,139		6,566		150		(9		)	6,707
Corporate obligations	14,411		15		(167		)	14,259		15,589		95		(58		)	15,626
U.S. agency mortgage-backed securities	4,423		3		(110		)	4,316		5,212		37		(51		)	5,198
Non-U.S. agency mortgage-backed securities	1,162		—		(20		)	1,142		1,471		13		(6		)	1,478
Total debt securities - available-for-sale	30,125		62		(445		)	29,742		32,448		325		(143		)	32,630
Debt securities - held-to-maturity:
U.S. government and agency obligations	249		1		(2		)	248		265		—		(1		)	264
State and municipal obligations	2		—		—			2		31		1		—			32
Corporate obligations	340		—		—			340		428		1		—			429
Total debt securities - held-to-maturity	591		1		(2		)	590		724		2		(1		)	725
Total debt securities	$	30,716	$	63	$	(447	)	$	30,332	$	33,172	$	327	$	(144	)	$	33,355
December 31, 2017
December 31, 2018
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,673	$	1	$	(30	)	$	2,644	$	3,434	$	13	$	(42	)	$	3,405
State and municipal obligations	7,596		99		(35		)	7,660		7,117		61		(57		)	7,121
Corporate obligations	13,181		57		(44		)	13,194		15,366		14		(218		)	15,162
U.S. agency mortgage-backed securities	3,942		7		(38		)	3,911		4,947		11		(106		)	4,852
Non-U.S. agency mortgage-backed securities	1,018		3		(6		)	1,015		1,376		2		(20		)	1,358
Total debt securities - available-for-sale	28,410		167		(153		)	28,424		32,240		101		(443		)	31,898
Debt securities - held-to-maturity:
U.S. government and agency obligations	254		1		(1		)	254		255		1		(2		)	254
State and municipal obligations	2		—		—			2		11		—		—			11
Corporate obligations	280		—		—			280		355		—		—			355
Total debt securities - held-to-maturity	536		1		(1		)	536		621		1		(2		)	620
Total debt securities	$	28,946	$	168	$	(154	)	$	28,960	$	32,861	$	102	$	(445	)	$	32,518

The Company held ~~$1.9 billion and~~ $2.0 billion of equity securities as of March 31, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018. The Company’s investments in equity securities primarily consist of employee savings plan related investments, inshares of Brazilian real denominated fixed-income funds ~~employee savings plan related investments~~ and dividend paying stocks with readily determinable fair values.

Additionally, the Company’s investments included ~~$959 million and $898 million~~$1.5 billion of equity method investments in operating businesses in the health care sector as of March 31, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018.

The amortized cost and fair value of debt securities as of March 31, ~~2018~~,2019, by contractual maturity, were as follows:


	Available-for-Sale				Held-to-Maturity				Available-for-Sale				Held-to-Maturity
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,923	$	3,915	$	135	$	135	$	3,457	$	3,455	$	132	$	132
Due after one year through five years	11,400		11,273		202		200		12,283		12,304		318		318
Due after five years through ten years	6,874		6,766		103		103		7,314		7,430		131		131
Due after ten years	2,343		2,330		151		152		2,711		2,765		143		144
U.S. agency mortgage-backed securities	4,423		4,316		—		—		5,212		5,198		—		—
Non-U.S. agency mortgage-backed securities	1,162		1,142		—		—		1,471		1,478		—		—
Total debt securities	$	30,125	$	29,742	$	591	$	590	$	32,448	$	32,630	$	724	$	725

The fair value of available-for-sale debt securities with gross unrealized losses by security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:


	Less Than 12 Months					12 Months or Greater					Total					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			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2018
March 31, 2019
Debt securities - available-for-sale:
U.S. government and agency obligations	$	1,787	$	(25	)	$	945	$	(29	)	$	2,732	$	(54	)	$	—	$	—		$	1,329	$	(19	)	$	1,329	$	(19	)
State and municipal obligations	3,958		(66		)	781		(28		)	4,739		(94		)	—		—			1,274		(9		)	1,274		(9		)
Corporate obligations	9,998		(129		)	1,193		(38		)	11,191		(167		)	1,461		(7		)	5,479		(51		)	6,940		(58		)
U.S. agency mortgage-backed securities	2,775		(61		)	1,127		(49		)	3,902		(110		)	—		—			2,979		(51		)	2,979		(51		)
Non-U.S. agency mortgage-backed securities	863		(15		)	136		(5		)	999		(20		)	—		—			546		(6		)	546		(6		)
Total debt securities - available-for-sale	$	19,381	$	(296	)	$	4,182	$	(149	)	$	23,563	$	(445	)	$	1,461	$	(7	)	$	11,607	$	(136	)	$	13,068	$	(143	)
December 31, 2017
December 31, 2018
Debt securities - available-for-sale:
U.S. government and agency obligations	$	1,249	$	(8	)	$	1,027	$	(22	)	$	2,276	$	(30	)	$	998	$	(7	)	$	1,425	$	(35	)	$	2,423	$	(42	)
State and municipal obligations	2,599		(21		)	866		(14		)	3,465		(35		)	1,334		(11		)	2,491		(46		)	3,825		(57		)
Corporate obligations	5,901		(23		)	1,242		(21		)	7,143		(44		)	8,105		(109		)	4,239		(109		)	12,344		(218		)
U.S. agency mortgage-backed securities	1,657		(12		)	1,162		(26		)	2,819		(38		)	1,296		(22		)	2,388		(84		)	3,684		(106		)
Non-U.S. agency mortgage-backed securities	411		(3		)	144		(3		)	555		(6		)	622		(7		)	459		(13		)	1,081		(20		)
Total debt securities - available-for-sale	$	11,817	$	(67	)	$	4,441	$	(86	)	$	16,258	$	(153	)	$	12,355	$	(156	)	$	11,002	$	(287	)	$	23,357	$	(443	)

The Company’s unrealized losses from debt securities as of March 31, ~~2018~~2019 were generated from ~~18,000~~11,000 positions out of a total of ~~28,000~~30,000 positions. The Company believes that it will collect the principal and interest due on its debt securities that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities. At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting no significant deterioration since purchase. As of March 31, ~~2018~~,2019, the Company did not have the intent to sell any of the securities in an unrealized loss position. Therefore, the Company believes these losses to be temporary.

3. Fair Value

Certain assets and liabilities are measured at fair value in the Condensed Consolidated Financial Statements or have fair values disclosed in the Notes to the Condensed Consolidated Financial Statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial ~~Statements”~~Statements and Supplementary Data” in the ~~2017~~2018 10-K.

The following table presents a summary of fair value measurements by level and carrying values for items measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:


(in millions)	Quoted Prices in Active Markets (Level 1)			Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)			Total Fair and Carrying Value			Quoted Prices in Active Markets (Level 1)			Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)			Total Fair and Carrying Value
March 31, 2018
March 31, 2019
Cash and cash equivalents	$	16,249		$	1,994		$	—		$	18,243		$	12,283		$	124		$	—		$	12,407
Debt securities - available-for-sale:
U.S. government and agency obligations	2,631			255			—			2,886			3,319			302			—			3,621
State and municipal obligations	—			7,139			—			7,139			—			6,707			—			6,707
Corporate obligations	50			14,068			141			14,259			17			15,424			185			15,626
U.S. agency mortgage-backed securities	—			4,316			—			4,316			—			5,198			—			5,198
Non-U.S. agency mortgage-backed securities	—			1,142			—			1,142			—			1,478			—			1,478
Total debt securities - available-for-sale	2,681			26,920			141			29,742			3,336			29,109			185			32,630
Equity securities	1,791			13			143			1,947			1,827			12			—			1,839
Assets under management	950			1,972			—			2,922			896			2,043			12			2,951
Total assets at fair value	$	21,671		$	30,899		$	284		$	52,854		$	18,342		$	31,288		$	197		$	49,827
Percentage of total assets at fair value	41		%	58		%	1		%	100		%	37		%	63		%	—		%	100		%
December 31, 2017
December 31, 2018
Cash and cash equivalents	$	11,718		$	263		$	—		$	11,981		$	10,757		$	109		$	—		$	10,866
Debt securities - available-for-sale:
U.S. government and agency obligations	2,428			216			—			2,644			3,060			345			—			3,405
State and municipal obligations	—			7,660			—			7,660			—			7,121			—			7,121
Corporate obligations	65			12,989			140			13,194			39			14,950			173			15,162
U.S. agency mortgage-backed securities	—			3,911			—			3,911			—			4,852			—			4,852
Non-U.S. agency mortgage-backed securities	—			1,015			—			1,015			—			1,358			—			1,358
Total debt securities - available-for-sale	2,493			25,791			140			28,424			3,099			28,626			173			31,898
Equity securities	1,784			14			194			1,992			1,832			13			—			1,845
Assets under management	1,117			1,984			—			3,101			1,086			1,938			8			3,032
Total assets at fair value	$	17,112		$	28,052		$	334		$	45,498		$	16,774		$	30,686		$	181		$	47,641
Percentage of total assets at fair value	38		%	61		%	1		%	100		%	35		%	65		%	—		%	100		%

~~Transfers between levels, if any, are recorded as~~There were no transfers in or out of ~~the beginning of the reporting period in which the transfer occurs; there were~~ no ~~transfers between Levels 1, 2 or~~Level 3 ~~of any~~ financial assets or liabilities during the three months ended March 31, ~~2018~~2019 or ~~2017.~~2018.

The following table presents a summary of fair value measurements by level and carrying values for certain financial instruments not measured at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:


(in millions)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Fair Value		Total Carrying Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Fair Value		Total Carrying Value
March 31, 2018
March 31, 2019
Debt securities - held-to-maturity	$	260	$	66	$	264	$	590	$	591	$	273	$	172	$	280	$	725	$	724
Long-term debt and other financing obligations	$	—	$	32,892	$	—	$	32,892	$	31,162	—		37,790		—		37,790		35,221
December 31, 2017
December 31, 2018
Debt securities - held-to-maturity	$	267	$	4	$	265	$	536	$	536	$	260	$	65	$	295	$	620	$	621
Long-term debt and other financing obligations	$	—	$	34,504	$	—	$	34,504	$	31,542	$	—	$	37,944	$	—	$	37,944	$	36,554

Nonfinancial assets and liabilities or financial assets and liabilities that are measured at fair value on a nonrecurring basis are subject to fair value adjustments only in certain circumstances, such as when the Company records an impairment. There were no significant fair value adjustments for these assets and liabilities recorded during the three months ended March 31, ~~2018~~2019 or ~~2017~~2018.

4. Medical Costs Payable

The following table shows the components of the change in medical costs payable for the three months ended March 31:


(in millions)	2018			2017			2019			2018
Medical costs payable, beginning of period	$	17,871		$	16,391		$	19,891		$	17,871
Acquisitions	211			76			35			211
Reported medical costs:
Current year	36,153			32,529			39,239			36,153
Prior years	(290		)	(450		)	(300		)	(290		)
Total reported medical costs	35,863			32,079			38,939			35,863
Medical payments:
Payments for current year	(21,237		)	(18,742		)	(22,973		)	(21,237		)
Payments for prior years	(13,119		)	(12,154		)	(14,753		)	(13,119		)
Total medical payments	(34,356		)	(30,896		)	(37,726		)	(34,356		)
Medical costs payable, end of period	$	19,589		$	17,650		$	21,139		$	19,589

For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, the medical cost reserve development included no individual factors that were significant. Medical costs payable included reserves for claims incurred by insured customers but not yet reported to the Company of ~~$13.3~~$14.3 billion and ~~$12.3~~$13.2 billion at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

5. Commercial Paper and Long-Term Debt

Commercial paper and senior unsecured long-term debt consisted of the following:


	March 31, 2018						December 31, 2017						March 31, 2019						December 31, 2018
(in millions, except percentages)	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value
Commercial paper	$	4,427	$	4,423	$	4,423	$	150	$	150	$	150	$	3,134	$	3,117	$	3,117	$	—	$	—	$	—
6.000% notes due February 2018	—		—		—		1,100		1,101		1,106
1.900% notes due July 2018	1,500		1,499		1,498		1,500		1,499		1,501
1.700% notes due February 2019	750		749		744		750		749		747		—		—		—		750		750		749
1.625% notes due March 2019	500		501		495		500		501		497		—		—		—		500		500		499
2.300% notes due December 2019	500		491		495		500		495		501		500		496		499		500		494		497
2.700% notes due July 2020	1,500		1,497		1,493		1,500		1,496		1,517		1,500		1,498		1,503		1,500		1,498		1,494
Floating rate notes due October 2020	300		299		299		300		299		300		300		299		300		300		299		298
3.875% notes due October 2020	450		441		459		450		446		467		450		445		457		450		443		456
1.950% notes due October 2020	900		896		879		900		895		892		900		897		890		900		897		884
4.700% notes due February 2021	400		398		418		400		403		425		400		400		413		400		398		412
2.125% notes due March 2021	750		747		731		750		746		744		750		748		744		750		747		734
Floating rate notes due June 2021													350		349		350		350		349		347
3.150% notes due June 2021													400		399		404		400		399		400
3.375% notes due November 2021	500		485		504		500		493		516		500		493		508		500		489		503
2.875% notes due December 2021	750		729		743		750		741		760		750		742		754		750		735		748
2.875% notes due March 2022	1,100		1,037		1,088		1,100		1,054		1,114		1,100		1,063		1,107		1,100		1,051		1,091
3.350% notes due July 2022	1,000		996		1,005		1,000		996		1,033		1,000		997		1,022		1,000		997		1,005
2.375% notes due October 2022	900		893		866		900		893		891		900		895		891		900		894		872
0.000% notes due November 2022	15		12		12		15		12		12		15		12		13		15		12		13
2.750% notes due February 2023	625		594		611		625		606		626		625		610		625		625		602		611
2.875% notes due March 2023	750		745		738		750		762		759		750		758		754		750		750		739
3.500% notes due June 2023													750		747		773		750		746		756
3.500% notes due February 2024													750		745		772		750		745		755
3.750% notes due July 2025	2,000		1,988		2,026		2,000		1,987		2,108		2,000		1,989		2,088		2,000		1,989		2,025
3.700% notes due December 2025													300		298		312		300		298		303
3.100% notes due March 2026	1,000		995		969		1,000		995		1,007		1,000		996		999		1,000		995		965
3.450% notes due January 2027	750		745		743		750		745		776		750		746		763		750		746		742
3.375% notes due April 2027	625		619		615		625		618		642		625		619		633		625		619		611
2.950% notes due October 2027	950		937		903		950		937		947		950		938		933		950		938		898
3.850% notes due June 2028													1,150		1,142		1,204		1,150		1,142		1,163
3.875% notes due December 2028													850		842		890		850		842		861
4.625% notes due July 2035	1,000		991		1,094		1,000		991		1,165		1,000		992		1,121		1,000		992		1,060
5.800% notes due March 2036	850		838		1,042		850		837		1,105		850		838		1,045		850		838		1,003
6.500% notes due June 2037	500		492		660		500		491		698		500		492		661		500		492		638
6.625% notes due November 2037	650		641		869		650		641		923		650		641		874		650		641		841
6.875% notes due February 2038	1,100		1,075		1,511		1,100		1,075		1,596		1,100		1,076		1,514		1,100		1,076		1,437
5.700% notes due October 2040	300		296		371		300		296		389		300		296		370		300		296		355
5.950% notes due February 2041	350		345		443		350		345		466		350		345		446		350		345		426
4.625% notes due November 2041	600		588		644		600		588		685		600		588		657		600		588		627
4.375% notes due March 2042	502		483		524		502		483		555		502		484		534		502		484		503
3.950% notes due October 2042	625		607		614		625		607		650		625		607		631		625		607		596
4.250% notes due March 2043	750		734		771		750		734		822		750		735		787		750		734		744
4.750% notes due July 2045	2,000		1,972		2,201		2,000		1,972		2,362		2,000		1,973		2,260		2,000		1,973		2,116
4.200% notes due January 2047	750		738		759		750		738		808		750		738		777		750		738		745
4.250% notes due April 2047	725		717		741		725		717		798		725		717		759		725		717		719
3.750% notes due October 2047	950		933		895		950		933		969		950		933		923		950		933		869
4.250% notes due June 2048													1,350		1,329		1,420		1,350		1,329		1,349
4.450% notes due December 2048													1,100		1,087		1,191		1,100		1,087		1,132
Total commercial paper and long-term debt	$	34,594	$	34,166	$	35,896	$	31,417	$	31,067	$	34,029	$	37,551	$	37,151	$	39,688	$	35,667	$	35,234	$	36,591

The Company’s long-term debt obligations included ~~$1.4~~$1.2 billion and ~~$625 million~~$1.3 billion of other financing obligations, of which ~~$207~~$306 million and ~~$107~~$229 million were classified as current as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Commercial Paper and Bank Credit Facilities

Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers. As of March 31, ~~2018~~,2019, the Company’s outstanding commercial paper had a ~~weighted-average~~weighted average annual interest rate of ~~2.0%~~2.7%.

The Company has ~~$3.0~~$3.5 billion five-year, ~~$3.0~~$3.5 billion three-year and ~~$4.0~~$3.0 billion 364-day revolving bank credit facilities with 26 banks, which mature in December ~~2022,~~2023, December ~~2020~~2021 and December ~~2018,~~2019, respectively. These facilities provide liquidity support for the Company’s commercial paper program and are available for general corporate purposes. As of March 31, ~~2018,~~2019, no amounts had been drawn on any of the bank credit facilities. The annual interest rates, which are variable based on term, are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. If amounts had been drawn on the bank credit facilities as of March 31, ~~2018,~~2019, annual interest rates would have ranged from ~~2.7%~~3.2% to ~~3.3%~~3.4%.

Debt Covenants

The Company’s bank credit facilities contain various covenants, including covenants requiring the Company to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than ~~55%~~60%. The Company was in compliance with its debt covenants as of March 31, ~~2018.~~2019.

6. Commitments and Contingencies

Leases

Operating lease costs were $238 million for the three months ended March 31, 2019 and included immaterial variable and short-term lease costs. Cash payments made on the Company’s operating lease liabilities were $181 million for the three months ended March 31, 2019, which were classified within operating activities in the Condensed Consolidated Statements of Cash Flows. As of March 31, 2019, the Company’s weighted-average remaining lease term and weighted-average discount rate for its operating leases were 8.5 years and 4.2%, respectively.

As of March 31, 2019, future minimum annual lease payments under all non-cancelable operating leases were as follows:



(in millions)	Future Operating Lease Payments
2019	480
2020	667
2021	578
2022	481
2023	393
Thereafter	1,553
Total future minimum lease payments	4,152
Less imputed interest	(731	)
Total	3,421

Legal Matters

Because of the nature of its businesses, the Company is frequently made party to a variety of legal actions and regulatory inquiries, including class actions and suits brought by members, care providers, consumer advocacy organizations, customers and regulators, relating to the Company’s businesses, including management and administration of health benefit plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust, privacy and contract claims and claims related to health care benefits coverage and other business practices.

The Company records liabilities for its estimates of probable costs resulting from these matters where appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy; involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could result in a change in business practices. Accordingly, the Company is often unable to

estimate the losses or ranges of losses for those matters where there is a reasonable possibility or it is probable that a loss may be incurred.

Government Investigations, Audits and Reviews

The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services (CMS), state insurance and health and welfare departments, the Brazilian national regulatory agency for private health insurance and plans (the Agência Nacional de Saúde Suplementar), state attorneys general, the Office of the Inspector General, the Office of Personnel Management, the Office of Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the U.S. Department of Justice, the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the Brazilian federal revenue service (the Secretaria da Receita Federal), the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Defense Contract Audit Agency and other governmental authorities. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS has selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans.

On February 14, 2017, the Department of Justice (DOJ) announced its decision to pursue certain claims within a lawsuit initially asserted against the Company and filed under seal by a whistleblower in 2011. The whistleblower’s complaint, which was unsealed on February 15, 2017, alleges that the Company made improper risk adjustment submissions and violated the False Claims Act. On February 12, 2018, the court granted in part and denied in part the Company’s motion to dismiss. In May 2018, DOJ moved to dismiss the Company’s counterclaims, which were filed in March 2018, and moved for partial summary judgment. In March 2019, the court denied the government’s motion for partial summary judgment and dismissed the Company’s counterclaims without prejudice. The Company cannot reasonably estimate the outcome that may result from this matter given its procedural status.

7. Segment Financial Information

The Company’s four reportable segments are UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. For more information on the Company’s segments see Part I, Item I, “Business” and Note 13 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial ~~Statements”~~Statements and Supplementary Data” in the ~~2017~~2018 10-K.

The following tables present reportable segment financial information:


			Optum																			Optum
(in millions)	UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations			Optum		Corporate and Eliminations			Consolidated			UnitedHealthcare		OptumHealth		OptumInsight		OptumRx		Optum Eliminations			Optum		Corporate and Eliminations			Consolidated
Three Months Ended March 31, 2019
Revenues - unaffiliated customers:
Premiums																				$	46,501	$	1,012	$	—	$	—	$	—		$	1,012	$	—		$	47,513
Products																				—		8		23		8,041		—			8,072		—			8,072
Services																				2,141		1,274		754		149		—			2,177		—			4,318
Total revenues - unaffiliated customers																				48,642		2,294		777		8,190		—			11,261		—			59,903
Total revenues - affiliated customers																				—		4,287		1,407		9,613		(359		)	14,948		(14,948		)	—
Investment and other income																				254		132		5		14		—			151		—			405
Total revenues																				$	48,896	$	6,713	$	2,189	$	17,817	$	(359	)	$	26,360	$	(14,948	)	$	60,308
Earnings from operations																				$	2,954	$	626	$	432	$	820	$	—		$	1,878	$	—		$	4,832
Interest expense																				—		—		—		—		—			—		(400		)	(400		)
Earnings before income taxes																				$	2,954	$	626	$	432	$	820	$	—		$	1,878	$	(400	)	$	4,432
Three Months Ended March 31, 2018
Revenues - unaffiliated customers:
Premiums	$	43,237	$	847	$	—	$	—	$	—		$	847	$	—		$	44,084		$	43,237	$	847	$	—	$	—	$	—		$	847	$	—		$	44,084
Products	—		12		23		6,667		—			6,702		—			6,702			—		12		23		6,667		—			6,702		—			6,702
Services	2,039		1,188		740		137		—			2,065		—			4,104			2,039		1,188		740		137		—			2,065		—			4,104
Total revenues - unaffiliated customers	45,276		2,047		763		6,804		—			9,614		—			54,890			45,276		2,047		763		6,804		—			9,614		—			54,890
Total revenues - affiliated customers	—		3,606		1,304		9,295		(333		)	13,872		(13,872		)	—			—		3,606		1,304		9,295		(333		)	13,872		(13,872		)	—
Investment and other income	183		106		2		7		—			115		—			298			183		106		2		7		—			115		—			298
Total revenues	$	45,459	$	5,759	$	2,069	$	16,106	$	(333	)	$	23,601	$	(13,872	)	$	55,188		$	45,459	$	5,759	$	2,069	$	16,106	$	(333	)	$	23,601	$	(13,872	)	$	55,188
Earnings from operations	$	2,400	$	488	$	395	$	770	$	—		$	1,653	$	—		$	4,053		$	2,400	$	488	$	395	$	770	$	—		$	1,653	$	—		$	4,053
Interest expense	—		—		—		—		—			—		(329		)	(329		)	—		—		—		—		—			—		(329		)	(329		)
Earnings before income taxes	$	2,400	$	488	$	395	$	770	$	—		$	1,653	$	(329	)	$	3,724		$	2,400	$	488	$	395	$	770	$	—		$	1,653	$	(329	)	$	3,724
Three Months Ended March 31, 2017
Revenues - unaffiliated customers:
Premiums	$	38,053	$	885	$	—	$	—	$	—		$	885	$	—		$	38,938
Products	—		12		21		6,096		—			6,129		—			6,129
Services	1,922		721		642		149		—			1,512		—			3,434
Total revenues - unaffiliated customers	39,975		1,618		663		6,245		—			8,526		—			48,501
Total revenues - affiliated customers	—		3,059		1,179		8,698		(286		)	12,650		(12,650		)	—
Investment and other income	161		56		1		4		—			61		—			222
Total revenues	$	40,136	$	4,733	$	1,843	$	14,947	$	(286	)	$	21,237	$	(12,650	)	$	48,723
Earnings from operations	$	2,134	$	332	$	294	$	653	$	—		$	1,279	$	—		$	3,413
Interest expense	—		—		—		—		—			—		(283		)	(283		)
Earnings before income taxes	$	2,134	$	332	$	294	$	653	$	—		$	1,279	$	(283	)	$	3,130


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with the accompanying Condensed Consolidated Financial Statements and Notes and with our ~~2017~~2018 10-K, including the Consolidated Financial Statements and Notes in Part II, Item 8, “Financial ~~Statements”~~Statements and Supplementary Data” in that report. Unless the context indicates otherwise, references to the terms “UnitedHealth Group,” “we,” “our” or “us” used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to UnitedHealth Group Incorporated and its consolidated subsidiaries.

Readers are cautioned that the statements, estimates, projections or outlook contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, including discussions regarding financial prospects, economic conditions, trends and uncertainties contained in this Item 2, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed or implied in the forward-looking statements. A description of some of the risks and uncertainties is set forth in Part I, Item 1A, “Risk Factors” in our ~~2017~~2018 10-K and in the discussion below.

EXECUTIVE OVERVIEW

General

UnitedHealth Group is a diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone. Through our diversified family of businesses, we leverage core competencies in data and health information; advanced technology; and clinical ~~expertise to help meet the demands of the health system.~~expertise. These core competencies are deployed within our two

distinct, but strategically aligned, business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum.

Further information on our business is presented in Part I, Item 1, “Business” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2017~~2018 10-K and additional information on our segments can be found in this Item 2 and in Note 7 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Business Trends

Our businesses participate in the United States, South American and certain other international health markets. In the United States, health care spending has grown consistently for many years and comprises approximately ~~19%~~18% of gross domestic product. We expect overall spending on health care to continue to grow in the future due to inflation, medical technology and pharmaceutical advancement, regulatory requirements, demographic trends in the population and national interest in health and well-being. The rate of market growth may be affected by a variety of factors, including macro-economic conditions and regulatory changes, which have impacted and could further impact our results of operations.

Pricing Trends. To price our health care benefit products, we start with our view of expected future costs, including ~~the~~any impact offrom the Health Insurance Industry Tax. We frequently evaluate and adjust our approach in each of the local markets we serve, considering all relevant factors, such as product positioning, price competitiveness and environmental, competitive, legislative and regulatory considerations, including minimum medical loss ratio (MLR) thresholds. We will continue seeking to balance growth and profitability across all of these dimensions.

The commercial risk market remains highly competitive in both the small group and large group segments. We expect broad-based competition to continue as the industry adapts to individual and employer needs amid reform changes. ~~In 2019 there will be a one year moratorium on the collection of the Health Insurance Industry Tax.~~ Pricing for contracts that cover some portion of calendar year ~~2019~~2020 will reflect the ~~impact~~return of the ~~moratorium.~~Health Insurance Industry Tax after a moratorium in 2019.

~~Medicare Advantage funding continues~~Government programs in the public and senior sector tend to ~~be pressured, as discussed below in “Regulatory Trends~~receive lower rates of increase than the commercial market due to governmental budget pressures and ~~Uncertainties~~.”lower cost trends.

Medical Cost Trends. Our medical cost trends primarily relate to changes in unit costs, health system utilization and prescription drug costs. We endeavor to mitigate those increases by engaging physicians and consumers with information and helping them make clinically sound choices, with the objective of helping them achieve high quality, affordable care.

Regulatory Trends and Uncertainties

Following is a summary of management’s view of ~~the~~regulatory trends and ~~uncertainties related to Medicare Advantage rates.~~uncertainties. For additional information regarding regulatory trends and uncertainties, see Part I, Item 1 “Business - Government Regulation,” Part 1, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2017~~2018 10-K.

Medicare Advantage Rates. Final ~~2019~~2020 Medicare Advantage rates resulted in an increase in industry base rates of approximately ~~3.4%~~2.5%, short of the industry forward medical cost trend, ~~which creates~~including the return of the Health Insurance Industry Tax, creating continued pressure in the Medicare Advantage program. The impact of this funding shortfall in Medicare Advantage is partially mitigated by reductions in provider payments for those care providers with rates indexed to Medicare Advantage revenues or Medicare fee-for-service payment rates. These factors can affect our plan benefit designs, pricing, growth prospects and earnings expectations for our Medicare Advantage plans.

~~The Tax Cut and Jobs Act (Tax Reform).~~ Tax Reform was enacted by the U.S federal government in December 2017, changing existing federal tax law, including reducing the U.S. corporate income tax rate. With the impact of Tax Reform, partially offset by the return of the nondeductible Health Insurance Industry Tax, we expect that our effective tax rate in 2018 will be approximately 24%.

Health Insurance Industry Tax. ~~After~~There is a one year moratorium ~~in 2017, the industry-wide amount of~~on the Health Insurance Industry Tax in ~~2018 will be $14.3 billion and we expect our portion to be approximately $2.8 billion. The return of the tax~~2019. This moratorium impacts ~~year over year~~year-over-year comparability of our financial statements, including ~~revenue,~~revenues, operating costs, medical care ratio (MCR), operating cost ratio, ~~and~~ effective tax ~~rate. A one year moratorium on the collection of the Health Insurance Industry Tax will occur in 2019.~~rate and cash flows from operations.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select first quarter ~~2018~~2019 year-over-year operating comparisons to first quarter ~~2017 and other 2018 significant items.~~2018.

Consolidated revenues grew ~~13%~~9%, UnitedHealthcare revenues grew ~~13%~~8% and Optum revenues grew ~~11%~~12%.

UnitedHealthcare served ~~465,000 fewer~~880,000 additional people primarily as a result of ~~completion of its commitment~~business combinations and growth in services to ~~the 2.9 million people under the TRICARE military health care program, partially offset by the addition of 2 million people through acquisition~~self-funded employers and ~~the remainder from organic growth.~~seniors.

Earnings from operations increased 19%, including increases of ~~12%~~23% at UnitedHealthcare and ~~29%~~14% at Optum.

~~Due primarily to the impact of Tax Reform, our effective income tax rate decreased 850 basis points to 21.5%.~~

Diluted earnings per common share increased ~~29%~~24%.

Cash flows from operations were ~~$8.4 billion, aided by the March receipt of our April CMS premium payment of $5.1~~$3.2 billion.

Return on Equity was 26.8%.

RESULTS SUMMARY

The following table summarizes our consolidated results of operations and other financial information:


(in millions, except percentages and per share data)	Three Months Ended March 31,						Increase/(Decrease)					Three Months Ended March 31,						Increase/(Decrease)
(in millions, except percentages and per share data)	2018			2017			2018 vs. 2017					2019			2018			2019 vs. 2018
Revenues:
Premiums	$	44,084		$	38,938		$	5,146		13	%	$	47,513		$	44,084		$	3,429		8	%
Products	6,702			6,129			573			9		8,072			6,702			1,370			20
Services	4,104			3,434			670			20		4,318			4,104			214			5
Investment and other income	298			222			76			34		405			298			107			36
Total revenues	55,188			48,723			6,465			13		60,308			55,188			5,120			9
Operating costs:
Medical costs	35,863			32,079			3,784			12		38,939			35,863			3,076			9
Operating costs	8,506			7,022			1,484			21		8,517			8,506			11			—
Cost of products sold	6,184			5,676			508			9		7,381			6,184			1,197			19
Depreciation and amortization	582			533			49			9		639			582			57			10
Total operating costs	51,135			45,310			5,825			13		55,476			51,135			4,341			8
Earnings from operations	4,053			3,413			640			19		4,832			4,053			779			19
Interest expense	(329		)	(283		)	(46		)	16		(400		)	(329		)	(71		)	22
Earnings before income taxes	3,724			3,130			594			19		4,432			3,724			708			19
Provision for income taxes	(800		)	(939		)	139			(15	)	(875		)	(800		)	(75		)	9
Net earnings	2,924			2,191			733			33		3,557			2,924			633			22
Earnings attributable to noncontrolling interests	(88		)	(19		)	(69		)	363		(90		)	(88		)	(2		)	2
Net earnings attributable to UnitedHealth Group common shareholders	$	2,836		$	2,172		$	664		31	%	$	3,467		$	2,836		$	631		22	%
Diluted earnings per share attributable to UnitedHealth Group common shareholders	$	2.87		$	2.23		$	0.64		29	%	$	3.56		$	2.87		$	0.69		24	%
Medical care ratio (a)	81.4		%	82.4		%	(1.0		)%			82.0		%	81.4		%	0.6		%
Operating cost ratio	15.4			14.4			1.0					14.1			15.4			(1.3		)
Operating margin	7.3			7.0			0.3					8.0			7.3			0.7
Tax rate	21.5			30.0			(8.5		)			19.7			21.5			(1.8		)
Net earnings margin (b)	5.1			4.5			0.6					5.7			5.1			0.6
Return on equity (c)	23.8		%	21.7		%	2.1		%			26.8		%	23.8		%	3.0		%


(a)	Medical care ratio is calculated as medical costs divided by premium revenue.


(b)	Net earnings margin attributable to UnitedHealth Group shareholders.


(c)	Return on equity is calculated as annualized net earnings attributable to UnitedHealth Group common shareholders divided by average shareholders’ equity. Average shareholders’ equity is calculated using the shareholders’ equity balance at the end of the preceding year and the shareholders’ equity balances at the end of each of the quarters in the year presented.

~~2018~~2019 RESULTS OF OPERATIONS COMPARED TO ~~2017~~2018 RESULTS OF OPERATIONS

Consolidated Financial Results

Revenue

The increase in revenue was primarily driven by the increase in the number of individuals served through ~~risk-based products~~various Medicare products; pricing trends; and growth across ~~our UnitedHealthcare benefits businesses, pricing trends, including for~~ the ~~return~~Optum business, primarily due to expansion in pharmacy care services and care delivery; partially offset by the moratorium of the Health Insurance Industry Tax in ~~2018, and growth across the Optum business.~~2019.

Medical Costs and MCR

Medical costs increased due to growth in people served through ~~risk-based~~Medicare products and medical cost trends. The MCR ~~decreased~~increased due to the revenue effects of the Health Insurance Industry Tax ~~partially offset by elevated flu-related illness costs.~~moratorium.

Operating Cost Ratio

The operating cost ratio decreased due to the impact of the Health Insurance Industry Tax moratorium and effective operating cost management.

Income Tax Rate

Our effective tax rate decreased due to the impact of ~~Tax Reform, which was partially offset by~~ the ~~return~~moratorium of the nondeductible Health Insurance Industry Tax.

Reportable Segments

See Note 7 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information on our segments. The following table presents a summary of the reportable segment financial information:


	Three Months Ended March 31,						Increase/(Decrease)					Three Months Ended March 31,						Increase/(Decrease)
(in millions, except percentages)	2018			2017			2018 vs. 2017					2019			2018			2019 vs. 2018
Revenues
UnitedHealthcare	$	45,459		$	40,136		$	5,323		13	%	$	48,896		$	45,459		$	3,437		8	%
OptumHealth	5,759			4,733			1,026			22		6,713			5,759			954			17
OptumInsight	2,069			1,843			226			12		2,189			2,069			120			6
OptumRx	16,106			14,947			1,159			8		17,817			16,106			1,711			11
Optum eliminations	(333		)	(286		)	(47		)	16		(359		)	(333		)	(26		)	8
Optum	23,601			21,237			2,364			11		26,360			23,601			2,759			12
Eliminations	(13,872		)	(12,650		)	(1,222		)	10		(14,948		)	(13,872		)	(1,076		)	8
Consolidated revenues	$	55,188		$	48,723		$	6,465		13	%	$	60,308		$	55,188		$	5,120		9	%
Earnings from operations
UnitedHealthcare	$	2,400		$	2,134		$	266		12	%	$	2,954		$	2,400		$	554		23	%
OptumHealth	488			332			156			47		626			488			138			28
OptumInsight	395			294			101			34		432			395			37			9
OptumRx	770			653			117			18		820			770			50			6
Optum	1,653			1,279			374			29		1,878			1,653			225			14
Consolidated earnings from operations	$	4,053		$	3,413		$	640		19	%	$	4,832		$	4,053		$	779		19	%
Operating margin
UnitedHealthcare	5.3		%	5.3		%	—		%			6.0		%	5.3		%	0.7		%
OptumHealth	8.5			7.0			1.5					9.3			8.5			0.8
OptumInsight	19.1			16.0			3.1					19.7			19.1			0.6
OptumRx	4.8			4.4			0.4					4.6			4.8			(0.2		)
Optum	7.0			6.0			1.0					7.1			7.0			0.1
Consolidated operating margin	7.3		%	7.0		%	0.3		%			8.0		%	7.3		%	0.7		%

UnitedHealthcare

The following table summarizes UnitedHealthcare revenues by business:


	Three Months Ended March 31,				Increase/(Decrease)				Three Months Ended March 31,				Increase/(Decrease)
(in millions, except percentages)	2018		2017		2018 vs. 2017				2019		2018		2019 vs. 2018
UnitedHealthcare Employer & Individual	$	13,414	$	12,739	$	675	5	%	$	14,084	$	13,414	$	670	5	%
UnitedHealthcare Medicare & Retirement	18,925		16,552		2,373		14		21,096		18,925		2,171		11
UnitedHealthcare Community & State	10,671		8,949		1,722		19		11,182		10,671		511		5
UnitedHealthcare Global	2,449		1,896		553		29		2,534		2,449		85		3
Total UnitedHealthcare revenues	$	45,459	$	40,136	$	5,323	13	%	$	48,896	$	45,459	$	3,437	8	%

The following table summarizes the number of individuals served by our UnitedHealthcare businesses, by major market segment and funding arrangement:


	March 31,		Increase/(Decrease)				March 31,		Increase/(Decrease)
(in thousands, except percentages)	2018	2017	2018 vs. 2017				2019	2018	2019 vs. 2018
Commercial group:
Commercial:
Risk-based	7,860	7,695	165		2	%	8,340	8,335	5		—	%
Fee-based	18,475	19,155	(680	)	(4	)	19,175	18,475	700		4
Total commercial group	26,335	26,850	(515	)	(2	)
Individual	475	585	(110	)	(19	)
Fee-based TRICARE	—	2,860	(2,860	)	(100	)
Total commercial	26,810	30,295	(3,485	)	(12	)	27,515	26,810	705		3
Medicare Advantage	4,760	4,305	455		11		5,165	4,760	405		9
Medicaid	6,695	6,200	495		8		6,425	6,695	(270	)	(4	)
Medicare Supplement (Standardized)	4,490	4,350	140		3		4,500	4,490	10		—
Total public and senior	15,945	14,855	1,090		7		16,090	15,945	145		1
Total UnitedHealthcare - domestic medical	42,755	45,150	(2,395	)	(5	)	43,605	42,755	850		2
International	6,095	4,165	1,930		46		6,125	6,095	30		—
Total UnitedHealthcare - medical	48,850	49,315	(465	)	(1	)%	49,730	48,850	880		2	%
Supplemental Data:
Medicare Part D stand-alone	4,770	4,955	(185	)	(4	)%	4,480	4,770	(290	)	(6	)%

~~Broad-based growth, primarily in services to small groups, resulted in the overall increase in people served through risk-based benefit plans in the commercial group market.~~ Fee-based commercial group business ~~declined~~increased primarily due to ~~the non-renewal of one public sector customer in the third quarter of 2017.~~a business combination. Medicare Advantage increased ~~year-over-year~~ due to growth in people served through individual and employer-sponsored group Medicare Advantage plans. The decrease in people served through Medicaid ~~growth~~ was primarily driven by states adding new carriers to existing programs, reduced enrollment from state efforts to manage eligibility status and the ~~combination~~sale of ~~new state-based awards and growth~~our New Mexico Medicaid plan in ~~established programs. Medicare Supplement growth reflected strong customer retention and new sales. International growth was driven by an acquisition in the first quarter.~~2018.

UnitedHealthcare’s revenue and earnings from operations increased due to growth in the number of individuals served ~~across its risk-based businesses,~~through several Medicare products, a higher revenue membership mix and rate increases for underlying medical cost ~~trends and~~trends. Revenue increases were partially offset by the ~~impact of the return of~~moratorium on the Health Insurance Industry ~~Tax. Earnings from operations increased, as the operating margin remained consistent.~~Tax in 2019.

Optum

Total revenues and earnings from operations increased as each segment reported increased revenues and earnings from operations as a result of productivity and overall cost management initiatives in addition to the factors discussed below.

The results by segment were as follows:

OptumHealth

Revenue and earnings from operations increased at OptumHealth primarily due to organic growth and ~~acquisition-related growth~~business combinations in care delivery and organic growth in behavioral ~~digital customer engagement and health financial services.~~health.

OptumInsight

Revenue and earnings from operations at OptumInsight increased primarily due to organic ~~and acquisition-related~~ growth in ~~payer technology and services and care provider advisory~~managed services.

OptumRx

Revenue and earnings from operations at OptumRx increased primarily due to ~~customer~~business combinations and organic growth in specialty pharmacy, home delivery services and overall prescription growth. OptumRx fulfilled ~~332~~339 million and ~~322~~332 million adjusted scripts in the first quarters of ~~2018~~2019 and ~~2017,~~2018, respectively.

LIQUIDITY, FINANCIAL CONDITION AND CAPITAL RESOURCES

Liquidity

Summary of our Major Sources and Uses of Cash and Cash Equivalents


	Three Months Ended March 31,						Increase/(Decrease)			Three Months Ended March 31,						Increase/(Decrease)
(in millions)	2018			2017			2018 vs. 2017			2019			2018			2019 vs. 2018
Sources of cash:
Cash provided by operating activities	$	8,369		$	6,456		$	1,913		$	3,234		$	8,369		$	(5,135	)
Issuances of commercial paper and long-term debt, net of repayments	3,159			—			3,159			1,851			3,159			(1,308		)
Proceeds from common stock issuances	295			270			25			323			295			28
Customer funds administered	2,962			3,217			(255		)	1,784			2,962			(1,178		)
Other	—			25			(25		)
Total sources of cash	14,785			9,968						7,192			14,785
Uses of cash:
Common stock repurchases	(2,650		)	(682		)	(1,968		)	(3,002		)	(2,650		)	(352		)
Cash paid for acquisitions, net of cash assumed	(2,583		)	(468		)	(2,115		)	(689		)	(2,583		)	1,894
Purchases of investments, net of sales and maturities	(1,385		)	(1,339		)	(46		)	(319		)	(1,385		)	1,066
Repayments of commercial paper and long-term debt, net of issuances	—			(189		)	189
Purchases of property, equipment and capitalized software	(477		)	(507		)	30			(562		)	(477		)	(85		)
Cash dividends paid	(722		)	(596		)	(126		)	(860		)	(722		)	(138		)
Other	(694		)	(495		)	(199		)	(214		)	(694		)	480
Total uses of cash	(8,511		)	(4,276		)				(5,646		)	(8,511		)
Effect of exchange rate changes on cash and cash equivalents	(12		)	20			(32		)	(5		)	(12		)	7
Net increase in cash and cash equivalents	$	6,262		$	5,712		$	550		$	1,541		$	6,262		$	(4,721	)

~~2018~~2019 Cash Flows Compared to ~~2017~~2018 Cash Flows

~~Increased~~Decreased cash flows provided by operating activities were primarily driven by the increase in unearned revenues in 2018 due to the ~~increase in the~~ March 2018 early receipt of our April CMS premium payment of $5.1 billion ~~compared to $4.4 billion, for 2018 and 2017, respectively, higher net earnings,~~ and the year-over-year impact of the ~~return of the~~ Health Insurance Industry ~~Tax.~~Tax moratorium, partially offset by higher net earnings.

Other significant changes in sources or uses of cash year-over-year included ~~an increase~~a decrease in cash paid for acquisitions, increased sales and ~~share repurchases, partially offset by net~~maturities of investments, decreased issuances of commercial paper and a decrease in ~~2018.~~customer funds administered due to the early receipt of our CMS payment in 2018 described above.

Financial Condition

As of March 31, ~~2018,~~2019, our cash, cash equivalent, available-for-sale debt securities and equity securities balances of ~~$50~~$47.0 billion included ~~$18~~approximately $12.4 billion of cash and cash equivalents (of which ~~$1 billion~~$800 million was available for general corporate use), ~~$30~~$32.6 billion of debt securities and $2$2.0 billion of investments in equity securities. Given the significant portion of our portfolio held in cash and cash equivalents, we do not anticipate fluctuations in the aggregate fair value of our financial assets to have a material impact on our liquidity or capital position. Our available-for-sale debt portfolio had a weighted-average duration of ~~3.2~~3.5 years and a weighted-average credit rating of “Double A” as of March 31, ~~2018.~~2019. When multiple credit ratings are available for an individual security, the average of the available ratings is used to determine the weighted-average credit rating.

Capital Resources and Uses of Liquidity

In addition to cash flows from operations and cash and cash equivalent balances available for general corporate use, our capital resources and uses of liquidity are as follows:

Commercial Paper and Bank Credit Facilities. Our revolving bank credit facilities provide liquidity support for our commercial paper borrowing program, which facilitates the private placement of unsecured debt through third-party broker-dealers, and are available for general corporate purposes. For more information on our commercial paper and bank credit facilities, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Our revolving bank credit facilities contain various covenants, including covenants requiring us to maintain a defined debt to debt-plus-shareholders’ equity ratio of not more than ~~55%~~60%. As of March 31, ~~2018,~~2019, our debt to debt-plus-shareholders’ equity ratio, as defined and calculated under the credit facilities, was approximately 40%.

Long-Term Debt. Periodically, we access capital markets and issue long-term debt for general corporate purposes, such as to meet our working capital requirements, to refinance debt, to finance acquisitions or for share repurchases. For more information on our long-term debt, see Note 5 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.

Credit Ratings. Our credit ratings as of March 31, ~~2018~~2019 were as follows:

Moody’s

S&P Global

Fitch

A.M. Best

Ratings

Outlook

Ratings

Outlook

Ratings

Outlook

Ratings

Outlook

Senior unsecured debt

Stable

A+

Stable

A-

Stable

~~bbb+~~A-

Stable

Commercial paper

P-2

n/a

A-1

n/a

~~AMB-2~~AMB-1

n/a

The availability of financing in the form of debt or equity is influenced by many factors, including our profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions, regulatory requirements and economic and market conditions. For example, a significant downgrade in our credit ratings or adverse conditions in the capital markets may increase the cost of borrowing for us or limit our access to capital.

Share Repurchase Program. During the three months ended March 31, ~~2018,~~2019, we repurchased 12 million shares at an average price of ~~$228.16~~$252.76 per share. As of March 31, ~~2018,~~2019, we had Board authorization to purchase up to ~~an additional 31~~83 million shares of our common stock.

Dividends. Our quarterly cash dividend to shareholders reflects an annual dividend rate of ~~$3.00~~$3.60 per share.

For additional liquidity discussion, see Note 10 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial ~~Statements”~~Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our ~~2017~~2018 10-K.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

A summary of future obligations under our various contractual obligations and commitments as of December 31, ~~2017~~2018 was disclosed in our ~~2017~~2018 10-K. During the three months ended March 31, ~~2018,~~2019, there were no material changes to this previously disclosed information outside the ordinary course of business. However, we continually evaluate opportunities to expand our operations, including through internal development of new products, programs and technology applications and acquisitions.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 1 of Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a discussion of new accounting pronouncements that affect us.

CRITICAL ACCOUNTING ESTIMATES

In preparing our Condensed Consolidated Financial Statements, we are required to make judgments, assumptions and estimates, which we believe are reasonable and prudent based on the available facts and circumstances. These judgments, assumptions and estimates affect certain of our revenues and expenses and their related balance sheet accounts and disclosure of our contingent liabilities. We base our assumptions and estimates primarily on historical experience and consider known and projected trends. On an ongoing basis, we re-evaluate our selection of assumptions and the method of calculating our estimates. Actual results, however, may materially differ from our calculated estimates, and this difference would be reported in our current operations.

Our critical accounting estimates include medical costs payable ~~revenues,~~ and ~~goodwill and other intangible assets.~~goodwill. For a detailed description of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our ~~2017~~2018 10-K. For a detailed discussion of our significant accounting policies, see Note 2 of Notes to the Consolidated Financial Statements in Part II, Item 8, “Financial ~~Statements”~~Statements and Supplementary Data” in our ~~2017~~2018 10-K.

FORWARD-LOOKING STATEMENTS

The statements, estimates, projections, guidance or outlook contained in this document include “forward-looking” statements within the meaning of the PSLRA. These statements are intended to take advantage of the “safe harbor” provisions of the

PSLRA. Generally the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “forecast,” “outlook,” “plan,” “project,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. We caution that actual results could differ materially from those that management expects, depending on the outcome of certain factors.

Some factors that could cause actual results to differ materially from results discussed or implied in the forward-looking statements include: our ability to effectively estimate, price for and manage our medical costs, including the impact of any new coverage requirements; new laws or regulations, or changes in existing laws or regulations, or their enforcement or application, including increases in medical, administrative, technology or other costs or decreases in enrollment resulting from U.S., South American and other jurisdictions’ regulations affecting the health care industry; the outcome of the DOJ’s legal action relating to the risk adjustment submission matter; our ability to maintain and achieve improvement in CMS star ratings and other quality scores that impact revenue; reductions in revenue or delays to cash flows received under Medicare, Medicaid and other government programs, including the effects of a prolonged U.S. government shutdown or debt ceiling constraints; changes in Medicare, including changes in payment methodology, the CMS star ratings program or the application of risk adjustment data validation audits; cyber-attacks or other privacy or data security incidents; failure to comply with privacy and data security regulations; regulatory and other risks and uncertainties of the pharmacy benefits management industry; competitive pressures, which could affect our ability to maintain or increase our market share; changes in or challenges to our public sector contract awards; our ability to execute contracts on competitive terms with physicians, hospitals and other service providers; failure to achieve targeted operating cost productivity improvements, including savings resulting from technology enhancement and administrative modernization; increases in costs and other liabilities associated with increased litigation, government investigations, audits or reviews; failure to manage successfully our strategic alliances or complete or receive anticipated benefits of acquisitions and other strategic transactions, fluctuations in foreign currency exchange rates on our reported shareholders’ equity and results of operations; downgrades in our credit ratings; the performance of our investment portfolio; impairment of the value of our goodwill and intangible assets if estimated future results do not adequately support goodwill and intangible assets recorded for our existing businesses or the businesses that we acquire; failure to maintain effective and efficient information systems or if our technology products do not operate as intended; and our ability to obtain sufficient funds from our regulated subsidiaries or the debt or capital markets to fund our obligations, to maintain our debt to total capital ratio at targeted levels, to maintain our quarterly dividend payment cycle or to continue repurchasing shares of our common stock.

This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our other periodic and current filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any or all forward-looking statements we make may turn out to be wrong, and can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. By their nature, forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual future results may vary materially from expectations expressed or implied in this document or any of our prior communications. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements, except as required by applicable securities laws.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We manage exposure to market interest rates by diversifying investments across different fixed-income market sectors and debt across maturities, as well as by endeavoring to match our floating-rate assets and liabilities over time, either directly or through the use of interest rate swap contracts. Unrealized gains and losses on investments in available-for-sale debt securities are reported in comprehensive income.

The following table summarizes the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of March 31, ~~2018~~2019 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):


	March 31, 2018												March 31, 2019
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			Investment Income Per Annum			Interest Expense Per Annum			Fair Value of Financial Assets			Fair Value of Financial Liabilities
2 %	$	426		$	262		$	(2,037	)	$	(4,148	)	$	306		$	260		$	(2,294	)	$	(5,249	)
1	213			131			(1,035		)	(2,241		)	153			130			(1,159		)	(2,849		)
(1)	(213		)	(131		)	1,021			2,654			(153		)	(130		)	1,115			3,327
(2)	(340		)	(205		)	1,980			5,817			(306		)	(260		)	2,088			7,327


~~(a)~~	Given the low absolute level of short-term market rates on our floating-rate assets and liabilities as of March 31, 2018, the assumed hypothetical change in interest rates does not reflect the full 200 basis point reduction in interest expense as the rate cannot fall below zero.


~~(b)~~	~~As of~~ ~~March 31, 2018, 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

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this quarterly report on Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, ~~2018.~~2019. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, ~~2018.~~2019.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting during the quarter ended March 31, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

A description of our legal proceedings is included in and incorporated by reference to Note 6 of Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report.


~~ITEM 1A.~~	~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our ~~2017~~2018 10-K, which could materially affect our business, financial condition or future results. The risks described in our ~~2017~~2018 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

There have been no material changes to the risk factors disclosed in our ~~2017~~2018 10-K.


ITEM 2.	UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

In November 1997, our Board of Directors adopted a share repurchase program, which the Board evaluates periodically. There is no established expiration date for the program. During the first quarter ~~2018,~~2019, we repurchased approximately 12 million shares at an average price of ~~$228.16~~$252.76 per share. As of March 31, ~~2018,~~2019, we had Board authorization to purchase up to 3183 million shares of our common stock.


ITEM 6.	EXHIBITS*

The following exhibits are filed or incorporated by reference herein in response to Item 601 of Regulation S-K. The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-10864.



3.1			Certificate of Incorporation of UnitedHealth Group Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A/A filed on July 1, 2015)
3.2			Bylaws of UnitedHealth Group Incorporated, effective August 15, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 16, 2017)
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~~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)
~~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, ~~2018~~2019 filed on May 7, ~~2018,~~2019, 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 Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

________________



*		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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITEDHEALTH GROUP INCORPORATED



/s/ DAVID S. WICHMANN	Chief Executive Officer (principal executive officer)	Dated:	May 7, ~~2018~~2019
David S. Wichmann	Chief Executive Officer (principal executive officer)

/s/ JOHN F. REX	Executive Vice President and Chief Financial Officer (principal financial officer)	Dated:	May 7, ~~2018~~2019
John F. Rex

/s/S/ THOMAS E. ROOS	Senior Vice President and Chief Accounting Officer (principal accounting officer)	Dated:	May 7, ~~2018~~2019
Thomas E. Roos

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