Unitedhealth Group Inc (UNH) — Q2 2023 Earnings Call Transcript

Thank you, and good morning. And thank you all for joining us. As we discussed a number of weeks ago during the quarter, we saw a somewhat higher than usual range of movement in certain areas of care activity. As you'd expect, this inevitably impacted some elements of our business, but we overcame these dynamics with strength in other areas. Our second quarter performance reflects the capabilities, agility, and dedication of our people as they responded to the changes. As a team, we're confident in our ability to robustly grow in this fluid healthcare environment. Indeed, as I hope you saw in our release today, revenue growth in the quarter was strong and well balanced across our enterprise, increasing by more than $12 billion to nearly $93 billion. Let me provide a few highlights of our growth. First, the number of patients served by OptumHealth under fully accountable value-based care arrangements grew by more than 900,000 over this time last year. Among the new patients we welcomed, a significant number have complex needs. These people have serious health challenges, limited economic resources, and often live in communities where it can be difficult to access high-quality care. Our ability to support their needs is distinctive and a direct result of the investments we have made to provide coordinated and comprehensive medical, pharmacy, and behavioral care, foundational capabilities that will help the patients we serve live healthier lives and drive growth far into the future. OptumRx and OptumInsight revenue grew double-digits on expanded capabilities and products that are generating new sales and opportunities. UnitedHealthcare’s growth was strong and diversified as well. Today, we're serving nearly 1.6 million more people in our commercial and public sector program offerings than we did last year. This durable growth, driven by our colleagues' relentless focus on quality and execution, enabled us to achieve second-quarter adjusted earnings per share of $6.14 and to strengthen our full-year outlook to between $24.70 to $25 per share. We know there is great interest in understanding the recent care activity I just mentioned, so I'll give you an overview of how we're seeing care plans progress and how we're responding. I do want to underscore the most critical point first: making high-quality care more affordable and accessible is at the core of our mission. Having more people obtaining the care they need is a positive trend for individuals, our health system, and society. As we discussed several weeks ago, during the second quarter, we observed increased care patients, notably in outpatient surgeries for seniors, and especially with certain orthopedic procedures, which may have been postponed. John will provide some additional detail on this later. As we look to 2024, we have developed compelling Medicare Advantage offerings. Our teams were, of course, thoughtful, both in our response to the CMS rate notice and in incorporating these care activity trends into our June benefit filings. Even in this challenging funding environment, we continue to prioritize the stability and affordability our members have come to rely on from UnitedHealthcare. We're confident that next year we will once again grow at a pace exceeding that of the broader market. While of a much lesser impact than senior outpatient care, we also are seeing increased care activity in behavioral. Over the past few years, behavioral care patterns have been accelerating as people increasingly feel comfortable seeking services. Just since last year, the percentage of people who are accessing behavioral care has increased by double-digits. From our perspective, it’s an encouraging sign that more people are seeking help. Yet, the ongoing shortage of qualified care providers has caused significant access challenges. To address the issue, OptumHealth has expanded its network by tens of thousands of care professionals this year. And we are developing our benefit offerings, assuming demand for behavioral care services will continue to rise. OptumHealth’s value-based care models are continuing to deliver especially strong and measurable results for people, today serving more than 4 million patients and dozens of payers. OptumHealth and the patients and payers it serves share a common desire to seek improved health outcomes and experiences while ultimately lowering the cost of care. And we're pleased to see more evidence supporting the efficacy of value-based care. Last month, researchers at Yale Medicine working in collaboration with Optum published a peer-reviewed study about in-home visits, an important element in our value-based care approach. The study found patients who received our in-home preventative wellness assessments, compared with those who hadn't, made fewer emergency department visits and spent fewer nights in hospitals across four common conditions: depression, hypertension, coronary artery disease, and Type 2 diabetes. They also experienced reduced wait times for follow-up primary care. Yale Medicine’s research follows another peer-reviewed study published in JAMA in December, which found Medicare Advantage patients in Optum's fully accountable care model showed significantly better health outcomes compared to people in Medicare fee-for-service. OptumHealth patients fared better on each of eight key metrics, including hospital readmissions and emergency department visits. We see these results as compelling validation of the value-based care approach and signal more strongly its promise and potential as we expand these care models to many millions more patients in the years ahead. I'll now turn it over to UnitedHealth Group, President and Chief Operating Officer, Dirk McMahon, to elaborate on how we're focusing on affordability, transparency, and simplicity for the people we serve.

Thanks Andrew. Making high-quality care more affordable and more accessible is what we do. So it is great to see people getting the care they need, especially as our teams are working to build more capacity in our benefit networks and care delivery resources to accommodate consumers' evolving needs. Affordability is vital. For far too many people, cost remains the most significant barrier to high-quality care. We are leaning in hard on behalf of consumers, employers, and health plans to lower out-of-pocket costs and drive greater affordability throughout the system. As you heard from Andrew, we have recently seen an uptick in outpatient surgeries. Finding the most appropriate site of service is crucial because the cost of those procedures can differ dramatically depending upon where they are performed. Overall, evidence shows that comparable procedures performed in ambulatory surgery centers cost about half as much as traditional settings with comparable outcomes. For consumers, that translates into hundreds of dollars in out-of-pocket cost savings for just a single procedure. And the patient satisfaction levels at our centers are among the highest in healthcare with an NPS approaching 90. Also high on our affordability agenda is continuing to lower the cost of prescription drugs. Our customers, including employers, unions, health plans, and governments, count on us to help them access the most effective medicines at the lowest possible cost. In fact, pharmacy benefit managers like ours are the only link in the drug supply chain whose main purpose is to improve affordability for everyone. We go further by recommending benefit designs and providing tools to help consumers navigate their options and find the best value for their prescriptions. A recently launched feature called Price Edge, which provides the lowest cost option for a patient's medication, has already delivered millions of dollars in customer out-of-pocket savings. Specialty drug costs continue to be a focus for every customer OptumRx works with. Our differentiated approach to specialty is designed to serve the unique needs of patients, payers, providers, and pharma partners, and has allowed us to greatly expand our access to limited distribution drugs. We work to tailor our programs with individualized single point of contact care for rare diseases and clinical excellence programs for conditions such as MS, autoimmune diseases, and cancer. Clients working with OptumRx who implement all our specialty medication management programs can save up to 20% on specialty drug costs. Most related to specialty biosimilars are another area where we are helping to drive affordability and consumer choice. Earlier this year, we began offering Amjevita, a biosimilar to Humira at parity, ensuring patients and their doctors have more options to choose from when deciding on a course of care. Recently, OptumRx and UnitedHealthcare announced the addition of two new Humira biosimilars, Cyltezo and Hyrimoz, to our standard prescription drug list, also at parity. This increased competition for the innovator drug will result in double-digit savings for our customers. You might also recall that a year ago, we announced our initiative to offer lifesaving drugs at no cost to our customers. This benefit is available to everyone in UnitedHealthcare's Group fully insured commercial plans and has been adopted by more than 500 of our self-funded customers, increasing adherence, and saving people millions of dollars. Finally, another important customer innovation that is making the health system simpler is Optum Financial’s integrated card, which enables seamless access to benefits, programs, and rewards for more than 13 million consumers who have been issued the card since we broadly rolled it out at the start of the year. Adoption and satisfaction levels have been very strong, making it much simpler for seniors to navigate the system and understand their benefits, creating a more satisfying consumer experience. These and many other results are validating our strategic approach to healthcare. I know from my many meetings with customers that these affordability, transparency, and simplicity initiatives are resonating. They are a key reason for our continued growth in a highly competitive environment and for our confidence in maintaining our momentum as we look ahead. With that, let me hand it over to Chief Financial Officer, John Rex.

Thank you, Dirk. Adaptability and delivering greater value for the people we serve continue as foundational elements for our enterprise. These last few months are a good example, identifying evolving market trends; moving quickly to help people get the care they need; incorporating our broad and multifaceted insights into planning and, importantly, delivering on our commitments to you, our shareholders. These traits underpin our confidence not only in achieving our goals for ’23 but also as we look toward ’24 and beyond. Before reviewing our business results, let me elaborate on the care patterns Andrew described earlier. To illustrate, in the second quarter, outpatient care activity among seniors was a few hundred basis points above our expectations. As we've highlighted, specific orthopedic and cardiac procedures had increased far above that level of variation. And as we developed and filed our 2024 Medicare Advantage offerings, we assume that these levels of heightened care activity will persist throughout next year. Overall care activity among our Medicaid and commercial populations is consistent with our expectations. As always, we continue to intensely analyze trends that may indicate more severe disease progression, which could point to rising acuity. For example, in areas such as cancer or cardiovascular disease, we see no such evidence while continuing to monitor closely. With that, let’s turn to our second quarter results. Revenue of $92.9 billion grew by nearly $12.6 billion or 16% over the prior year with double-digit growth at both Optum and UnitedHealthcare. OptumHealth revenues grew by 36% to $23.9 billion, driven by an increase in the number of patients served, a growing mix of patients with more complex needs, and the expanding scope of care services we can offer. Operating margins reflect the higher care activity patterns we have discussed, with seniors comprising a significant majority of value-based patients served. OptumRx revenues grew by 15%, surpassing $28 billion, driven by continued new customer wins and strong double-digit growth across our specialty, infusion, and community pharmacies. Script growth of nearly 7% reflects continued demand for our affordable solutions that give customers choice and simplify the pharmacy experience, such as biosimilar access and digital pharmacy tools. Partway into the ’24 selling season, this momentum continues with strong client additions. OptumInsight revenues grew 42% to nearly $4.7 billion. The revenue backlog reached over $31 billion, an increase of $8 billion over last year, in part due to the addition of Change Healthcare. The integration and investment activities discussed on previous calls have gone well and are setting the stage for the next phase of growth for OptumInsight. Turning to UnitedHealthcare, our commercial business added nearly 500,000 people in the first half and continues its growth, with the ’24 selling season indications tracking favorably. Within our public sector programs, we continue to expect growth of over 900,000 Medicare Advantage members this year, and our Medicaid performance remains strong as we continue to support states as they initiate redeterminations. Comprehensive outreach efforts to help individuals retain coverage are underway, though it is still early as most states began this work only recently. Our capital capacities are strong. Adjusted cash flows from operations were at $10.4 billion or nearly two times net income in the second quarter and $15.6 billion or nearly 1.4 times net income in the first half. In the first six months of this year, we returned $8.3 billion to shareholders through dividends and share repurchases, and in June, our Board of Directors increased the dividend by 14%. As Andrew mentioned, based upon our growth outlook and the trends discussed, today we were able to strengthen and narrow our full-year ’23 adjusted earnings outlook to a range of $24.70 to $25 per share. Within this, we expect a relatively balanced pacing in the second half. Now I'll turn it back to Andrew.

John, thank you. Overall, for UnitedHealth Group, looking to the second half of the year and into 2024 and beyond. We're confident that we're capturing the current landscape in our planning decisions, which in turn gives us confidence in our ability to sustain the growth momentum shown in our first half and continue to demonstrate the adaptability, performance, and mission-driven purpose of this enterprise, especially in evolving environments. With that, operator, let's open it up for questions. One per caller, please.

Thanks. Hi, everybody. Maybe I appreciate the comments about what you're seeing in the care demand. Maybe on the OptumHealth side, if you guys, obviously top line continues to be very strong there. There's a little bit of margin degradation from first quarter to second quarter? How much of that relates to what you're describing around senior utilization? I know you've got a capitated component and you've got a free-for-service component. But I think last quarter you also said that the growth in membership would be something that would pressure margin short-term, but obviously be a long-term positive? And then there's a lot of other things in OptumHealth. Are they helping or hurting margin? Give us a little bit of flavor for what's happening underneath the aggregate number.

A.J., thanks so much for the question. So first off, let me start off, I'm super pleased with the performance of OptumHealth overall. When you look at the growth of that business and particularly the expansion of the number of patients who we're now looking after in value-based arrangements, now about 4 million folks, it's really strong validation of the model that we've been building and you can continue to see us extend that. In terms of the margin compression during the Q, really, I'd say there are a couple of dynamics to that. One is trend and you’d very much echo in the senior trend comments you've heard us make earlier in the quarter, and I think it's well understood. A second element of that which specifically affects OptumHealth is the behavioral growth. I mentioned that in my prepared comments, A.J., around continued strong growth in behavioral. That certainly has played its part within Q2 for OptumHealth. And then the third area is a good news story, but with short-term implications. So that's really the growth of the membership that's coming this year. As you know, we've grown very strongly this year, actually a little ahead of our expectations. We've also brought in a very significant number of complex patients as we invest in helping those folks manage their care better, which puts a little pressure on the margin in the short run. But that's really laying super strong foundation stones, not just for 2024, but into 2025 and 2026. So those three elements, the senior trend piece, the behavioral piece, and then the effect of the strong growth is really what explains what goes on. We're going to continue to lean into that growth very assertively. A.J, thanks so much.

Alright.

Hi. Thanks very much. Good morning. I just want to understand when I think about the guide to the upper end for the full-year MLR. How much of that is driven by this MA outpatient trend versus behavioral? And when I think about behavioral utilization, is that being driven by a particular population, or is it more broad-based? And, you know, how do I just think about behavioral as a percentage of your cost?

So Lisa, thanks so very much for that. Let me ask John to just provide context for you a little bit on the balance between the senior and behavioral. And then maybe ask Dr. Decker to give you a little bit of commentary around the type of consultation that we're dealing with in terms of the growth.

Lisa, good morning, it's John. So in terms of your question, the majority of the guide to the upper end of the full-year is driven by what we've described in terms of the activity, particularly the care activity we're seeing amongst seniors in outpatient, so that's the core there. In terms of behavioral, what we've noticed in behavioral is an increase in the number of people accessing care. Andrew had this in his comments, but a very significant increase even just since a year ago in terms of the number of people that are looking to access care. It's a great thing, and we are planning on that continuing. We don't see why that trend slows down, so we're designing our benefits for that to continue. As you recall, I know, Lisa, behavioral resides within OptumHealth, and so that's a kind of an impact that we'd see in that component. And Wyatt, maybe some other commentary?

Yes, absolutely. Thank you, Lisa. So you asked about the types of consultations and care being provided within behavioral. We're seeing across the board increasing utilization, but what's encouraging from a public health perspective is it isn't strictly young people. It's across the board. We're seeing 30, 40, 50-year-olds accessing behavioral healthcare for needed care for conditions like anxiety, depression, and substance use disorder. Our commitment is to make sure that they have access to that care. So as you heard from Andrew earlier, we've expanded our behavioral healthcare network, and we also, a couple of years ago, very thoughtfully launched behavioral care provider services, and we now have ambulatory services available in 37 states, and we have self-paced modules for things like anxiety and depression and we add a therapist as appropriate. So you'll see us continuing to make sure our members have access, as well as providing innovative scalable solutions for behavioral healthcare needs across the age spectrum. Thank you.

Yes, Wyatt, thank you so much. So, Lisa, I think you got it there. Overall, it’s very much around the senior trend phenomena. Within OptumHealth, the behavioral piece plays its part, and we see that very much as an area where we will continue to step up and make sure that we're delivering the care in the way that Wyatt just described to you. Next question please.

Hi, good morning. Thanks for the question. John, you mentioned the balance pacing of EPS in the back half of the year between 3Q and 4Q. Could you talk about your expectations for MCR, specifically between the two quarters? And how are you thinking about the trend of care activity as we head into the back half of the year given what you're seeing with respect to demand, as well as some of the supply bottlenecks that took care being delivered maybe being removed? And do those factors differ significantly between Medicare and the commercial or Medicaid lines of business? Thank you.

Good morning, Nate. Thank you for your question. Regarding the balance pacing, I would describe it this way: we expect the MCR to be slightly lower in the third quarter compared to the second quarter, which aligns with seasonal trends. In this context, we anticipate earnings to be marginally higher in the third quarter than in the fourth quarter due to this typical factor, and we expect the MCR to fall within a range that aligns with the first and second quarters, again influenced by seasonality. It is important to note that we expect the general pace of care activity to remain steady. We've observed that care activities across the company, particularly in senior outpatient care, are stabilizing at the levels we discussed. We anticipate this trend will continue, with care levels in the senior business exceeding our expectations by a few hundred basis points. The only factor to consider is a slight seasonality affecting those levels.

Right. Thanks so much John and thanks Nate. Next question.

Thanks, good morning. My question is about the commercial trend. You mentioned it's in line with expectations, but I would like to explore that further. I believe you indicated earlier that you anticipated the commercial trend to be above normal this year, indicating some conservatism. Does that mean it is currently running above normal but aligned with your pricing? If it is above normal, could you share how Q2 compares to Q4 and Q1? Specifically, is there an increase in Q2 compared to Q1 or Q4? Lastly, do you have any insights into the commercial components, particularly concerning outpatient pressures? Thanks.

Yes. Justin, thank you for your question. To be honest, there isn't much to report here. As you mentioned, we prepared for some expected unit cost inflation at the start of the year, and we have experienced some of that. However, everything is unfolding according to our expectations. We anticipated a slight increase in price and costs. Beyond that, there’s really nothing significant to report, and we are confident about our current position. Thank you. Next question?

Hi, thanks. Good morning. Do you believe that the increased utilization you're observing on the MA side was partially a result of your own decisions, considering that you've significantly enhanced benefits over the last couple of years? Could this have led to an overutilization trend compared to historical norms and expectations? Additionally, how are you planning to tackle the utilization trends in your benefit designs for 2024? I understand there might be some hesitance to share specifics on a public call, but could you provide any general changes you anticipate?

Josh, thank you for your question. I will have Tim Noel provide additional insight. However, I believe that the benefits are not the primary driving force behind this situation. Looking at the trends in outpatients, particularly in orthopedics, it appears to be more about deferring care. It’s interesting to observe some changes in patient behavior. We have noticed an increase in the number of people who, after receiving a recommendation for surgery, actually proceed with the procedure. This change may be influenced by two factors: first, an increase in availability, making it easier for patients to have the surgery done, and second, a reduced hesitation among individuals to enter healthcare facilities in a post-COVID environment compared to during the pandemic. This seems to be where the shift is occurring. Tim, would you like to add anything to that?

Yes. Thanks, Josh. Consistent with what Andrew said, when we look at potential drivers, everything from acuity to benefits added to mix of membership, everything is really tracking very normally and in line with what we would expect. So nothing to call out there, but certainly something that we look at closely and carefully each and every year, and this year being no different. With respect to your question regarding benefits, one thing to keep in mind is that the more important driver to our benefit decisions this year was the changes to the risk model. Certainly, we've been talking a lot about care patterns, but that has far less of an impact on the benefits filed and is really one of many assumptions that we make inside of our bids. But we feel very confident in our ability to provide stability to the benefits that seniors value most, things like zero co-pays for primary care visits, zero co-pays for Tier 1 drugs. Keeping zero monthly planned premiums where we had them in the past and maintaining level out-of-pocket maximums are very important things for benefits for stability. We are able to preserve those, so we're really happy about that. So on balance, combined with the great momentum we see in our value proposition, the great partnerships we have and confidence from the broker community, we feel really good about the benefits we filed. And also, as we talked about in our opening remarks, really confident in seeing that momentum pull through into some great growth results next year.

Tim, thanks so much. And Josh, thanks very much for the question. Next questions?

Yes, a question on the commercial side of the business. Can you talk a little bit about membership and in the fee-based business being down? And also maybe related to that and your outlook going forward, in Medicaid redetermination, are you seeing any trends with respect to recapture of those sorts of members? Or anything that's driving the opportunity for either growth in membership or maybe you're seeing in-account attrition due to weakness in the economy? Thanks.

Lance, thanks so much for the question. Before I hand it to Dan Kueter, who looks after our E&I business, I just want to make a couple of high-level comments. We're seeing overall a very strong performance from our commercial business this year and also setting up, it feels like very well for the ‘24 season. We've seen fantastic overall growth, as I mentioned, in terms of membership. And that's been led very much by a lot of the product innovation that the team have been putting together and into the marketplace. And we see that continuing pretty assertively as we roll into ‘24. Just with that kind of backdrop, maybe, Dan, if you could respond to Lance's specific questions, that would be great.

Yes, Lance, thanks for the question. Growth is on track for the full year. What you see in Q2 really is represented by the contraction of one large customer in our fee-based business. Your question about attrition and redeterminations, the outcome of those, which will be some puts and takes, will probably determine where within our range we will fall. But the punch line is we're on track to hit our range for this year. Thanks for the question, Lance.

Great. Thanks, Dan. Thanks so much, Lance, for the questions. And just to be super clear as well that client loss that Dan just referred to, we knew about that about a year ago very much within our expectations and forecast plan. It was something we were anticipating and makes no impact at all to our full-year expectation. But thanks so much for the question. And next questions, please?

Thank you. I would like to follow up on OptumHealth because the margin there was under pressure this quarter. I want to understand how we should view the normalization of the margin over the next couple of years. On the Medicare Advantage side, you can adjust pricing accordingly, and it seems you were able to align bids with costs. Could you confirm that? Additionally, since OptumHealth relies on other providers and their pricing for 2024, what is your outlook for the market? If you are under target this year, is it possible to recover next year, or is it more of a multi-year issue depending on how others set their prices? Are the factors under your control, or is this a longer-term normalization process? Thank you.

Hey, Kevin, thanks so much for the question. So first off, as I mentioned earlier, the pressure is really coming from those three sources, the senior trend phenomenon that we talked a lot about, the very specific Optum piece around behavioral, and then the growth in the book. Within that, very much to complex care patients, which, as I'm going to repeat again, is an extremely positive element of our growth going forward. We're going to continue to lean into that growth first and foremost. We do expect to see margins continue to strengthen, particularly as you roll through into ‘24. You're absolutely right. We believe we've caught this in our pricing for next year. But more importantly, the longer time we have to look after folks and wrap around care, we can deliver much better outcomes for them, as we talked about earlier, and we can also make the economic proposition better. It really builds much more sustainable capability. So all of that will kick in, as we roll through subsequent quarters and years. This is going to be a continuing building pressure. I feel very good about that range we've laid out for OptumHealth over the next several years. If I had the choice on a slightly suppressed margin in Q2 or the very significant growth that we've taken in, I'll take the growth all day long. I'll take that growth because it's going to underpin years of growth going forward. Appreciate the question, Kevin. Next question?

Hi, good morning. I want to discuss some of the factors affecting performance because it's somewhat surprising to hear about the higher medical loss ratio while seeing your largest profit segment, OptumHealth, report a lower margin. This quarter, investment income exceeded expectations compared to our model, and general and administrative expenses were better than anticipated. As we look towards the second half of the year, you seem to think there might be more opportunities to adjust some of those G&A factors. Could you elaborate on investment income, general and administrative expenses, and any other factors that could impact the latter half of the year? Also, how much of this is affecting your outlook for 2024 at this time?

Yes. I very much appreciate the question. Let me ask John to make some comments on that. John?

Good morning, Gary, it's John. Yes, you're correct. Investment income has been growing significantly over the past several quarters and continues to do so. This is partly due to the rising interest rate environment, which you are well aware of. Additionally, our treasury teams have been very proactive in managing our cash balances by moving more funds into interest-bearing accounts, enhancing the productivity of that cash after years of a zero-interest-rate environment. There are various factors contributing to this. In any quarter, we may see gains from our investment portfolio, which can come from our regular fixed income investments or our diverse venture holdings. These gains may occur at different times and can sometimes be less predictable, but they generally fall within a certain range. I don’t rely on these gains every quarter; they are not the primary focus for us. However, we have observed consistent elements in the current conditions. So yes, thank you, Gary.

Thanks, John. And maybe I'll ask Dirk to also comment a little bit. As you think about the G&A side of the equation going forward. Dirk maybe reflect a little bit on the work you're leading around technology and other interventions as we look to drive down our overall costs.

Yes. Gary, I'd like to highlight that we've been heavily investing in artificial intelligence, machine learning, and natural language processing. We believe there is significant potential in these areas for the long term. In the short term, we're working on projects like using generative AI to streamline the writing of medical appeal letters, enhancing our provider search and digital platforms with natural language processing and AI, and improving our payment integrity models to detect waste, fraud, and abuse. Additionally, in general and administrative tasks, we're utilizing AI to efficiently handle basic inquiries in our call centers, such as questions about disease coverage or deductible status, which helps reduce call volume and associated labor. Looking ahead, I'm very optimistic about our extensive data sets and our capacity to leverage new technologies to enhance healthcare, and I'm truly excited about it. Thank you for your question.

Yes, Dirk, thanks so much. I think, Gary, overall, I think I tried to allude at the very beginning. Obviously, when you see a movement in care activity like we saw in the quarter, it's been great to see the range of levers that we have within the organization to respond. You've seen what we've been able to do in the very short run. As you would expect, we have more and more of those levers as you roll through into the medium and longer-term outlooks as both John and Dirk have described both in the financial side of the company, but also critically in the core operating cost structure of the company, which we're going to continue to bear down on very, very assertively. The consequence of all of that is that even with the backdrop of some of the fluidity we've seen, we're able to continue to commit to the investment behind growth and the investment behind looking after patients as well as we possibly can and giving people a fantastic experience, which is what we think builds super sustainable shareholder value. So that's the priority that we're focused on. Next question?

Yes. Good morning, guys. And thanks for taking the question. I guess, John, I want to talk a little bit more about your expectations for the senior book in ‘24. You guys kind of talked about that you expect the current elevated trend to continue and price for it when you think about the MA bids. I guess, kind of talk about what drove, like what drives the visibility there from what you see now in ortho, like looking all the way out to ‘24. And should we think of the pricing as just kind of conservatism on UNH's part? Or like I'm kind of interested in the data that drives the visibility? Thank you.

Hey George, thanks for the question. I'm actually going to ask Tim Noel, who leads the Medicare business, to respond to that. Tim?

Thanks, George, for the question. So I'll start by reiterating one thing as an important point. The biggest item shaping this year has been thinking was around the risk model changes. The outpatient care patterns play a far smaller role there. But that said, having the ability to incorporate the latest data and anything we've learned recently into our Medicare Advantage bids is extremely important in each and every year, especially given how we see both key revenue and medical elements firm up inside of Q2, being able to accommodate late changes in our bid filings is really, really important. This year, out of respect for a developing trend, we made the assumption that some of these early indications that we are seeing in the outpatient care patterns we've talked about would remain durable. As we sit here today, as John has talked about, these assumptions have validated and they've also stabilized. We feel confident that we've made the appropriate accommodations inside of our 2024 bids for all of this. Thank you.

Tim, thanks so much. Jenifer, we have time for one last question. So, let’s take the last question. Thank you.

Hi, all. Thanks. I was hoping maybe you could drill a little bit just into the announcement of the Amedisys acquisition. And maybe in particular, just talk about, sort of, strategy for ramping up the exposure here given the tough near-term reimbursement environment for home health? And then maybe some early thoughts around some of the integrations or synergies that you could generate from integrating Amedisys in LHCG together? Thanks.

Thank you for the question, Scott. We are very pleased to have reached an agreement on the transaction with Amedisys, and we appreciate it. However, we are still in the early stages of that process, so it wouldn't be appropriate to discuss any specifics at this time. Generally, we strongly believe in the value of home health and see it as a crucial part of future value-based care, especially for complex patients who may struggle to leave home or have different relationships with clinics. This area is important to us. As for specifics, we will follow our regular process and provide updates as appropriate, but there's not much more to share today. Thank you again, Scott, for the question, and thank you, everyone, for joining us this morning. We appreciate your time and want you to know we have confidence in our ability to continue performing and growing strongly while we pursue our mission and lay the groundwork for continued growth in 2024 and beyond. We look forward to sharing more about our progress with you in October. Thank you for your time this morning.