Medical Cost Trends and MLR
Q: Did higher reserves indicate a 50 basis point MLR miss?
A: Management stated that medical cost trends came in as expected, with no significant deviations. The $800 million reserve was a prudent measure to account for potential claims disruptions, not an indication of a miss in MLR. The MLR increase was due to conservative reserving, and Q2 MLR is expected to be similar to Q1, including similar impacts from the cyber event. - , -

Visibility into Cost Trends
Q: How is visibility into medical cost trends versus last year?
A: Management feels confident about visibility into cost trends, noting that claims receipts are now at normalized levels. Unlike last year, there are improved sensing mechanisms and fewer unknowns like COVID impacts. They are not expecting the same step-up in trend as seen in early Q2 last year. - , - , -

Impact of Change Healthcare Cyberattack
Q: How will the cyberattack affect recovery and 2025 performance?
A: The company is recovering quickly, with 80% functionality restored in key areas like pharmacy claims and payments. They expect to return to baseline performance in 2025, and are confident in bringing customers back due to their support during the outage and ongoing innovation. - , -

CMS 2025 Rate Notice
Q: Does the 2025 rate notice change growth expectations?
A: Management expressed disappointment with the final rate but does not see it altering their 3-year strategy. They are well-positioned to handle the extra pressure in 2025, and the changes might lead to growth opportunities, especially in distribution and risk arrangements. - , -

IBNR Increase of $3 Billion
Q: Can you elaborate on the $3 billion IBNR increase?
A: The $3 billion increase is in incurred but not reported (IBNR) reserves due to potential claims disruptions from the cyberattack. This is separate from processed claims inventories and reflects a prudent stance to account for unreceived claims. - , -

Commercial Membership Growth
Q: What drove strong commercial membership growth?
A: Growth was broad-based across individual, local, and national segments, with 2 million members added in Q1. Key drivers include innovative products, expansion into 37 states, and latency from redeterminations contributing to risk-based growth. -

OptumHealth Capacity and Risk Deals
Q: How is OptumHealth's capacity growth and risk deal outlook?
A: OptumHealth continues to grow capacity with more providers and is not seeing constraints. They are expanding risk partnerships across multiple payers, renegotiating contracts to ensure appropriate funding levels, and are proud of their growth. -

Capital Deployment and M&A Priorities
Q: What are the capital deployment priorities and M&A outlook?
A: The company maintains a balanced view on capital deployment, with ongoing share repurchases, dividends, and a robust pipeline of M&A opportunities. They see interesting prospects in areas aligning with their strategic growth initiatives and are prepared to be opportunistic. -

Care Patterns and Trend Assumptions
Q: What are the trend assumptions for major categories in guidance?
A: Trends are consistent with expectations. Outpatient care for seniors, especially in orthopedic and cardiac areas, continues to be higher but at expected levels. Unit costs are up due to multiyear provider contracts renewing, and specialty Rx costs are increasing as planned. -

EPS Long-Term Growth Guidance
Q: Is the 13–16% long-term EPS growth guidance reaffirmed?
A: Yes, management reaffirmed their commitment to the 13–16% long-term growth objective, expressing confidence in achieving this target in the years ahead. - , -