Good morning, and welcome to the UnitedHealth Group’s Second Quarter 2022 Earnings Conference Call. A question-and-answer session will follow UnitedHealth Group's prepared remarks. As a reminder, this call is being recorded. Here are some important introductory information. This call contains forward-looking statements under the U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of these risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. This call will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the Financial and Earnings Reports section of the company's Investor Relations page at www.unitedhealthgroup.com. Information presented on this call is contained in the earnings release we issued this morning and in our Form 8-K dated July 15, 2022, which may be accessed from the Investor Relations page of the company's website. I will now turn the conference over to the Chief Executive Officer of UnitedHealth Group, Andrew Witty.

Katy, thank you, and good morning, everybody, and thank you for joining us today. UnitedHealth Group ended the second half of the year with sustained momentum as we execute on our objective to serve more people more effectively with connected high-quality care. For that, I want to thank our 360,000 colleagues. It's their unwavering commitment to our mission and their hard work and support of the people we serve that makes all of this possible. As a result of the strong performance at both Optum and UnitedHealthcare, we are increasing our adjusted earnings per share outlook for the year to a range of $21.40 to $21.90 per share. Comprehensive value-based care is a central theme of our growth strategy, helping more patients and care providers transition from traditional fee-for-service to a value-based orientation. We aim to drive better and more consistent care outcomes at lower overall cost, often for people who are among society's most vulnerable with multiple chronic conditions, limited income and unmet social needs. Optum Health and Optum Rx's clinical platforms span a continuum of care settings, from virtual to post-acute, in-clinic and at home, enabling our care teams to meet patients' unique needs by providing personalized connected care. Our approach helps patients stick with their prescribed care programs, allowing them to spend more time in the comfort of their own homes. The high consumer satisfaction with this comprehensive and consumer-focused approach is evidenced, for example, by a Net Promoter Score of 80 for the 1.5 million people served by our Dual Special Needs Plans. We again delivered growth across our health benefits offerings this quarter. As you might expect, right now, our Medicare teams are finalizing offerings for this fall's open enrollment, focused, as always, on delivering more value, stability and predictability for seniors. Throughout the year, we gather extensive consumer broker and market feedback to continually improve our products. Our approach is grounded in providing deep customer engagement, high-touch service and access to the best care. The benefits of this approach are striking. People served by Medicare Advantage spend about 40% less out of pocket than those participating in fee-for-service, which translates into savings of about $2,000 each year for seniors, most of whom are on limited income. And compared to traditional fee-for-service, Medicare Advantage plans devote up to 30% more in resources to primary care and perform up to 50% more preventative screening and testing services for their seniors. The response among seniors in our plans is positive. Plan satisfaction ratings have risen by 450 basis points over the past 5 years, nearly twice that of the industry. Consumer satisfaction is best demonstrated by the almost 3.4 million additional seniors who have chosen our plans over the same period. Meanwhile, in our domestic commercial health business, we have grown to serve over 250,000 more people as a result of innovation in and expansion of our products, including our digital-first offerings. To continue driving affordability in areas of greatest need, we are announcing today an important initiative from UnitedHealthcare, supported by Optum Rx. Starting in 2023, there will be no co-pay, $0 out of pocket for several critical medicines on our preferred drug list for UnitedHealthcare Group fully insured members. Included are medicines such as insulin, epinephrine for severe allergic reactions, and albuterol for acute asthma attacks. While this is an important step for vulnerable people's health, the larger and longer-term cost containment of drugs depends upon manufacturers restraining and lowering the list price of their products, which is a fundamental driver of costs. We will continue to use our capabilities to do everything we can to lower out-of-pocket costs for consumers, building on past actions, including point-of-sale discounts. Stepping back and looking across each of our 5 growth areas, you'll see a common theme: The deepening of our relationships with the consumers served by Optum and UnitedHealthcare. Throughout 2022, we've been rapidly expanding and accelerating investments in capabilities to reach and serve a broader base of consumers ever more effectively. This includes further enhancing our digital experiences to help consumers find trusted, health-related information and drive greater engagement with our direct-to-consumer platforms. Now, I'd like to turn it over to Dirk McMahon, our President and Chief Operating Officer, to share more about these efforts.

Thank you, Andrew. Picking up on Andrew's comments, I want to provide you with a little more color on the progress we have been making on our growth strategies. This progress is evidenced in our work to serve more people through value-based arrangements and to deliver better care. We are well along in our goals for the year. This expansion has significant implications for clinical quality and consistency. MA patients in value-based arrangements with Optum Care physicians are more engaged in their care, with adherence to wellness checks running 5 points higher than Medicare fee-for-service patients, helping to deliver a nearly 20% lower hospitalization rate. Further, Optum Care COPD patients served in our value-based arrangements have 80% higher medication adherence rates than Medicare fee-for-service patients, contributing to about 60% fewer respiratory complications, enabling people to avoid emergency room visits. Clinical results like these are a small part of the track record we have built in delivering value-based care at a substantial scale for years now, and what gives real urgency to our work to expand access to such care. We also remain committed as an organization to improving access by driving down the cost of healthcare through applied technology. For example, we are investing hundreds of millions of dollars to enhance the technology backbone of healthcare, areas such as platform rationalization to reduce unnecessary complexities, greater end-to-end eligibility management for a more seamless customer experience, and a common platform to facilitate a consistent clinical experience for our consumers and providers. These investments will ultimately lead to an enhanced end-to-end service experience, lower overall operating cost, and greater value for the people we serve. A simpler experience is at the center of our work on the integrated consumer card developed by our Optum financial services team. We have seen great consumer response within our initial pilot groups. The simplicity of combining all benefits, even healthy food purchases onto a single widely-accepted card has been a differentiator with consumers. Based on this initial work, we intend to introduce the card to all our individual Medicare Advantage members in 2023. Another key element of our work to improve the experience is the optimization of consumer transactions. We know members need and expect timely information at their fingertips, and I'm pleased to report they are responding well to our digital offerings for everything from understanding their coverage to completing a virtual visit. Digital engagement has jumped 170% among Medicare members during the last couple of years. Lastly, in pharmacy services, we are very focused on improving quality of care and access for consumers by driving pharmacist-led offerings. We are on track to have nearly 700 community pharmacies by the end of the year and continue to increase the integrated community pharmacy footprint in our clinical locations. With that, now I'll turn it over to Chief Financial Officer, John Rex.

Thank you, Dirk. As Andrew noted, we entered the second half of this year with strong growth momentum. First half revenues of over $160 billion grew 13% compared to last year. Performance was well balanced, with double-digit growth at both Optum and UnitedHealthcare. To begin, let me touch briefly on the care patterns we have observed so far this year. Principally, we have seen what had been a balanced relationship between COVID and non-COVID care activity over the past couple of years diverge modestly, with the latter not returning quite as rapidly with lower levels of COVID care. We also continue to see some variation in underlying care patterns, with certain areas remaining below historical levels. For example, pediatrics and emergency department. Others are coming back more fully, such as the levels at which seniors are obtaining important preventive care. In recent weeks, we are seeing rising COVID-related hospital admissions but with a lower average length of stay compared with earlier periods. As always, we watch closely for longer-term health impacts on people due to care, which might have been deferred during earlier periods. Thus far, we are still not seeing patterns that indicate shifting acuity. There are, of course, many reasonable theories about what is driving the current environment, and they are all no doubt interesting. But here is what we are actually doing. Consistent with the long-standing practice at UnitedHealth Group, our primary intent is to ensure people are getting the care they need and to help them in that process as much as we can. We remain, as always, highly respectful of medical cost trends and how they can evolve rapidly, and we will continue to position our offerings accordingly. Moving now to the businesses. Optum Health revenue grew by over $4 billion or 32% in the second quarter. Revenue per consumer increased 30%, led by growth in patients served under value-based arrangements. Earnings from operations rose 24% even as we accelerated investments in our care delivery practices to support value-based expansions. We also saw strong contributions from Optum's ambulatory surgery centers, which continue to advance the scope and complexity of procedures performed in these optimal settings, all while delivering a superior patient and surgeon experience and high-quality clinical outcomes. Our centers have nearly tripled the number of high-acuity joint, spine, and cardiovascular procedures performed compared to just 2 years ago. Care providers increasingly recognize the benefits these centers offer, and consumers place high value on the care quality and experience, with an NPS consistently in excess of 90. Optum Insight revenue grew 11% year-over-year. The revenue backlog was $23.6 billion, growth of $2.3 billion compared to last year. We continue to drive technological advancements, applying artificial intelligence and machine learning more deeply in high-value knowledge-based services, including an expanding suite of information technology and data analytics offerings. Optum Rx revenues grew 10% to nearly $25 billion, reflecting continued strong sales results and execution in the core PBM as well as our growth in our pharmacy care services. These vital and expanding care offerings serve and improve the health of people, including in such areas as our high-touch specialty services where we tightly monitor and track the effectiveness of complex treatments. Turning to UnitedHealthcare. Revenue grew by a strong $6.6 billion or 12%, with contributions from all our businesses. In our offerings for seniors, we continue to expect to serve up to 800,000 additional people within Medicare Advantage this year. About 3/4 will be in individual and group Medicare Advantage and the remainder in Dual Special Needs Plans. This puts us on track for our seventh consecutive year of share gaining growth in Medicare Advantage. People served by our Medicaid offerings grew by 180,000 in the second quarter. At this point, we anticipate the impact to Medicaid enrollment as a result of state redetermination activities will be experienced next year. We continue to prepare resources to help people find uninterrupted access to appropriate coverage as this transition occurs. We added 80,000 new people in domestic commercial plans during the quarter. Within that, fully-insured commercial offerings grew by 60,000 from the first quarter of this year, with balanced growth across group and individual fully-insured offerings. Of note, some 90% of the growth within our individual and family plans was among people who chose a plan featuring convenient and cost-effective access to virtual visits. Our capital capacities remain strong. Second quarter cash flows from operations were $6.9 billion or 1.3 times net income, and we continue to expect full-year cash flows of about $24 billion. In the first half of this year, we returned nearly $8 billion to shareholders through dividends and share repurchase. In June, our Board increased the dividend by 14%, and we deployed more than $7 billion in capital to enhance our care delivery capacity and consumer strategies to improve outcomes and experiences for the people we serve and for the benefit of the broader health system. As noted earlier, based on this growth outlook, today, we increased our adjusted earnings outlook to a range of $21.40 to $21.90 per share. Now, I'll turn it back to Andrew.

Thanks, John. Before the Q&A, let me underscore a few key points. First, the strong momentum throughout our business. The people we serve are continually seeking value, high-quality care at fair cost, and our colleagues across Optum and UnitedHealthcare are raising the bar every day. You see that manifested in our business performance and the strong growth in our core platforms, double-digit growth across the Benefits businesses, a growing revenue backlog in Optum Insight, robust growth in our pharmacy services and expansion across Optum Health. We see tremendous opportunity ahead, and we remain confident in our ability to deliver our long-term 13% to 16% earnings per share growth objective and further advance our mission to help people live healthier lives and to help make the health system work better for everyone. With that, operator, let's open it up for questions. One per caller, please.

We'll take our first question from A.J. Rice with Credit Suisse.

I wondered if maybe we could ask you to comment a little bit more on your discussions with the employer groups as we go through the selling season on the benefits business. I have 2 open questions. It seems to me there's this sort of back and forth about the need to retain employees, a tight labor market in many industries. But alternatively, concerns about the recession, and how is that coloring conversations? And then also this issue of pressure on some of the provider areas from their tight labor markets, how is that impacting discussions with employers about their benefit outlook for next year?

A.J., thanks so much for the question. So first off, before I hand this to Brian Thompson to give you a few thoughts, we've been super pleased with the progression, particularly across the benefits business, as you've seen in the report this morning. But certainly within our E&I business, the commercial business had a very strong year. And I think the team has worked extremely hard to understand the kind of pressures you're describing as employers are obviously concerned about managing their own cost environment and how we make sure that the benefits availability for their employees are appropriate. Really, I would say, take just this opportunity just to emphasize how important the role of a company like UnitedHealthcare is here. Because as we all know, we're in a more inflationary environment. The role of UnitedHealthcare to help deliver affordable healthcare coverage to the employees of all of those companies that rely on it is super important. And maybe with that, I'll hand it to Brian to give you a little bit more sense of how things are playing out.

Yes. Thanks for the question, A.J., and I appreciate that lead-in, Andrew. Most of these conversations have been around innovation and how do we continue to drive value-based solutions in the form of product design. That has really been the central theme throughout. We have showed up to the market with some new ideas around virtual care. You've heard about that with our partnership with Optum, both in terms of product design, as well as broader access beyond medical integrated with behavioral, et cetera, and how we really enable the consumer. High deductibles have often been a part of the equation for a long time, but Bind really puts that consumer in the driver's seat where they're able to choose what coverage they want with pre-service guaranteed costs. And that really resonates in the marketplace. And most importantly, for employers, it not only provides great quality, but lower price points. So I would say the conversations have been less around staffing and employment levels and more around value. And these examples of products have really resonated.

Brian, thanks so much. And A.J., thank you again. Next question, please.

We'll go next to Justin Lake with Wolfe Research.

Thanks. Good morning. A question on cost trend. One, it'd be great if you could just run us through what you were seeing by business segment? And then two, in terms of thinking into next year, one, are you starting to price for some level of COVID kind of being normal? So I know you've always guided above for normal plus COVID. Are you starting to price that COVID in pricing above normal for next year? And two, what are hospital unit costs looking like for next year versus the 4% to 5% that we typically take in terms of new contracts? Thanks.

Justin, thanks so much for the question. Before I ask John to maybe comment a little bit on the business cost evolution and then Brian, I think will give you a little bit of perspective of what they're seeing in terms of hospital conversation, just a couple of step back observations maybe I would offer here. First off, as we look across the overall business, we are seeing tremendous growth opportunities and tremendous potential for us to invest behind those. And you see that picked up in some of the increase in investment levels that you see in the quarter this time around. I think that's an incredibly positive sign of the forward potential of the overall organization. John will talk a little bit more to some of those in a second. I think in terms of 2023, we are not going to get into a ton of detail on how we are thinking about pricing. But as always, we are very, very respectful of the kind of underlying phenomena within the cost trends of the environment. Of course, that includes a sense of where COVID may or may not be. And I think we have all learned to be deeply respectful of something like a pandemic and the uncertainties it can present. And even in the last few months we have seen that play out a little bit. And of course, respectful of things like inflationary trends in the environment and all of that plays into how we think about these things. Maybe just to give you a little bit more depth on the first part of your question, I'll pass it to John, and then maybe John, you could pass it to Brian, just to finish off on the second part.

Good morning, Justin. I have a few thoughts regarding the observations from the recent quarter and the first half of the year, which influence our current thinking. As I mentioned in my prepared remarks, we usually see a balanced relationship between COVID care and non-COVID care over the last two years, but that balance has shifted in recent months. The level of COVID care has decreased significantly, with about one-third of the inpatient admissions in the second quarter compared to the first quarter, and this wasn't quickly offset by an increase in non-COVID utilization. This is an important underlying factor we've noticed. Additionally, we've experienced a longer interval between COVID hospitalizations than at any other time since the pandemic, which further clarifies the non-COVID care patterns we are observing. We're also encouraged to see some areas of care returning to normal levels, particularly annual wellness visits for our Medicare patients, which have now reached pre-pandemic rates. This is crucial for ensuring they receive necessary care. We're witnessing a slight increase in first fill prescriptions, indicating that people are accessing care. There's been a notable rise in preventative care, such as colonoscopies, which are returning to baseline levels. All of this influences our future outlook, as we aim to ensure people are receiving the care they need. We have noticed the greatest response from our senior populations, partly due to our efforts to provide care in their homes. Respectfully, we are aware of the potential impact of future COVID hospitalizations, as we are currently observing a rise in cases after a period of stability since January. We remain cautious in our outlook regarding how this situation might evolve throughout the year and into the next, acknowledging the variability and potential for acceleration in these trends. Brian?

Yes, John, I think you summarized that well. I might just add on inflation. Obviously, as you well know, Justin, we priced to our forward view of cost, that includes inflation. We're certainly respectful of what we're seeing in terms of labor costs with our provider partners. And as you might expect, obviously, with long-term agreements, there will be more impact in 2023 than 2022, just as a function of time and how we renew these contracts. So certainly respectful of that dynamic and environment. Thanks.

Justin. Appreciate it. Next question, please.

We'll go next to Ricky Goldwasser with Morgan Stanley.

Yes. I'll focus on Optum Rx. So when we look at Optum Rx, clearly, you've seen very strong top line growth and membership growth, but we haven't seen necessarily the flow-through on the margins. So what kind of trends are you seeing just in terms of mix that have impacted results? And how should we think about the progression for the rest of the year for Optum Rx?

Ricky, yes, great. Ricky, thanks so much for the question. Before I ask Heather to make a few comments on that, I think one of the overwhelming senses that we see around Optum Rx is the really strong growth and the bringing on board of significant new clients. And of course, that, as you know, brings with it a kind of front-loading investment phenomenon as you gear up for supporting that, and that's one of the reasons why you see this lag between the revenue growth and the earnings growth. And maybe to give you a little bit more of a sense of all of that and other aspects, Heather?

Yes. Thanks. So as Andrew said, really strong growth this year, and you see that as a result of new client growth and the membership that we've brought in and the direct Optum Rx, as well as the UnitedHealthcare book. And you're seeing that in the revenue, you're seeing that in the scripts volume, we see strong utilization, and you also we're seeing that in the earnings growth. With respect to investments, which do impact margins in the quarter, but we will see a return on those through the year and in our long-term plan, I point you to actually 4 things. Number one, those client investments that Andrew talked about. Number two, we talked to you about the new businesses. We've referenced Genoa that we continue to expand into new sites so we can serve more individuals in underserved communities. But I'd maybe point you to 2 additional ones that I think provide some great context where we're investing for the year. That's, number one, with our existing clients and even being responsive to those or prospective clients in our PBM, it's moving very urgently with innovation, like Brian's seeing on the UnitedHealthcare side. To develop products today that address specialty drug costs that are high and rising in addition to consumer affordability. Building on the tools that we've already, I think, delivered significant value. Our specialty tools have delivered over $1 billion of value over the last 2.5 years, and we're not done. We're working urgently to bring more services and products. So that's happening real-time in the quarter, and those investments will pay off. And then the last one I'd point you to are our pharmacies. So our pharmacies are fast-growing. We're seeing that impacting our top line growth and in our earnings. But you'll see us not just invest in our operations, and we've talked to you about that before, and in our digital experience. But I'm most excited about the fact that we're also integrating the service. So putting the pharmacist first. We have over 7,000 pharmacists that work hard every day not just to serve and sync meds, but to help our individuals navigate, educate and guide people through our best-in-class capabilities. And so really, integrating those pharmacies with the pharmacist-first and a service-first model is one of our biggest investments in the quarter, and you're going to see a return on that through the rest of the year, but I think it's also going to pay off in the growth of those pharmacies and better service to individuals that need us most.

Great. Thanks, Heather, and Ricky, thank you for the question. Next question, please.

We’ll go next to Matt Borsch with BMO Capital Markets.

Yes. I would like to ask a question about the recent decision by the U.S. Supreme Court not to review the case related to the CMS rule on risk coding. Could you provide any insights on the implications or the next steps in that situation?

Matt, thanks very much for the question. I mean, I think not to be too disappointing too, but I don't think you'd be too surprised that we don't generally comment on ongoing legal processes. And I think in this case, that certainly applies. So not really in a position to be able to give you too much information on that, but certainly appreciate the question. Next question, please.

We'll go next to Scott Fidel with Stephens.

Just had a question around the LHCG pending acquisition. And clearly, just recently, CMS put out their Home Health Proposal for 2023 and with a pretty disappointing rate cut that they're proposing for next year. Just interested in how that rate cut may influence your thinking on the financial impact of the LHCG acquisition in 2023? And then also whether that influences how you think about deploying that asset potentially in different ways if CMS does end up going through with the rate cut in the final rates when they release those?

Thank you for the question, Scott. I want to emphasize that we firmly believe enhancing and developing high-quality care at home will be essential for the future. Linking this care to other services, such as physician clinics and virtual care, is a central focus of our Optum Health strategy. Integrating LHC into the overall Optum organization is crucial for us, and we are fully committed to that transaction. We are convinced it will significantly improve the quality of care we can provide and contribute to better value-based care for patients. It's vital that the incentive systems encourage the right kind of care. We sincerely hope that CMS and others will recognize the importance of home care and continue to support the growth of high-quality services in home environments. We are dedicated to this agenda because we see it as a critical strategy for delivering better care to individuals at home. Many of these individuals are unable to leave their homes, and it is essential we find ways to assist them. Our long history of providing services like house calls has offered incredible health assessments and preventive care to millions, and this is another significant step for us. We remain optimistic and hope that CMS and others will show their support through their investment decisions in this area as we move forward this year. Thank you for your question. Please, next question.

We'll go next to Lisa Gill with JPMorgan.

Andrew, I appreciate your comments on Optum Rx and what you're doing for 2023 around the no co-pay, $0 co-pay. But I'm wondering if you or Heather could maybe comment on 2 things. One, the 2023 selling season? And then secondly, I know you and I have talked in the past about the shift towards value-based care within Rx. Are you seeing new programs for 2023 beyond what you talked about as we think about value-based care?

Thank you for the question, Lisa. I believe UHC and Optum Rx are taking the right approach by providing $0 co-pay and $0 out of pocket on essential medications. It's important to consider the impact on individuals affected by the conditions these medications treat. If they lack access to these medications when necessary, they risk ending up in the emergency room or facing worse outcomes, which leads to significant personal and financial repercussions. That's why we see this as a critical area for us to focus our efforts. Before I pass it over to Heather to discuss the specifics of the Optum Rx selling season, I want to emphasize that Optum is currently experiencing a record selling season overall. When looking at the first half of the year, including Optum Rx along with our other two businesses, it's clear that we are in a period of strong market demand for our products and services. This surge in service demand is one reason for the increase in our investment in the business. Heather, could you share what you're observing in Optum Rx as we approach the 2023 selling season, and also touch on the value-based care aspect that Lisa mentioned?

Absolutely. As Andrew mentioned, we are experiencing a strong selling season at Optum Rx, building on last year's success. Currently, there are two key points to consider. First, client retention is expected to remain in the high 90s this year, with most of our client base already established. In terms of new business, our sales activities show that we are ahead of last year's figures regarding finalists and win rates. This can be attributed to our real-time innovation; we are actively collaborating with our clients to provide services immediately without waiting for external market conditions. I believe we have the best and most responsive client management team in the industry, which is benefiting our operations. We anticipate being exceptionally busy in 2023, which will necessitate further investment as we continue to serve our clients. Regarding value-based care, we observe growing interest and pressure from our clients, along with increased engagement in value-based care elements, including the incorporation of pharmacy and specialty pharmacy. Our role involves ensuring that our pharmaceutical partners offer the most affordable and clinically suitable drugs to drive positive outcomes. Additionally, we provide real-time tools that integrate our products with treatment protocols. We collaborate closely with Optum Health and our Optum Care prescribers and providers to test tools and services that empower prescribers to make informed decisions. This will enhance predictability for our plans and sponsors, making us a crucial participant in the value-based care transition. We will continue to invest in this area and we expect pharmacy benefit managers to play a larger role in promoting value-based care and integrating pharmacy services.

Heather, thanks so much. And Lisa, I think you're really right to focus us on this value-based piece. And as Heather just said, rather than it being an Optum Rx kind of standalone agenda, it's very much an Optum agenda, right, in terms of how we build value-based care propositions. And of course, you've seen that very substantially within the primary care, kind of holistic approach that Optum Health is leading on. You'll continue to see us prospect experiment and invest in areas like behavioral health and in areas like oncology, and these are going to be important areas for us to solve. Right now, I'd say those are early day opportunities. But as you think about where the burden of cost and complexity sits in the healthcare environment, those are the kind of places where we need to make progress, and we are. And you should expect to hear much more from us on that over the next 2 or 3 years. Lisa, thanks so much. Next question.

We'll go next to Josh Raskin with Nephron Research.

As you look at the senior market over the next couple of years beyond the obvious primary care services that you're building out, are there other capabilities that you think you need to develop or acquire things that are now emerging in the market that you think are going to be even more important in the future?

Yes, Josh, great question. Really appreciate it. And we continue to see a very strong performance in our senior book of business. You see that continued progression toward 800,000 folks joining us this year for the first time. That's really important, continued market share growth. And all of that is built on the stability of the service offering that we're giving. And I think the experience that the seniors are taking. But you're totally right to ask the question about where next. And maybe Tim Noel, you could speak to that?

Hey, good morning, Josh. Throughout the selling season, we're seeing great engagement. I think about the senior market continuing to innovate is super important. Dirk talked about the UCARD, which is something that makes our benefits easier to use, more simple for members to understand on and experience. But beyond that, we'll continue to bring forth consistent innovations that make the member experience easier for people. Things like the digital experience, more personalized member experiences as well. I think another theme for the senior population will continue to be to expand at-home services. That's really important. I think we've historically thought of the center of care for seniors to be in the physician's office. More and more, though, that's becoming something that needs to occur out of the home given mobility challenges for folks, the vulnerability of this population, bringing care into the home is absolutely essential to the delivery of high-quality care. So those are the big themes. For me, looking forward is to continue to advance the at-home capabilities for seniors and continue to innovate, making using benefits easier, more understandable, simple and affordable.

Tim, thanks so much. And I think maybe there was a little glitch with Tim's mic at the beginning of his comments. So I hope very much you were able to hear him and certainly hear the latter part of his commentary. And I think the sense of urgency and depth of thinking around innovation for our senior members and where that service can go over the next several years is really substantive, and you should continue to see us be super active in that space. Josh, I really appreciate the question. Next question, please.

We'll go next to Kevin Fischbeck with Bank of America.

Great. I was wondering if you could talk a little bit about the capitated physician growth in the quarter. How you think about the ability to continue to add doctors at this rate, the competitive landscape? And how should we think about where the margin in the capitated physician business compared to Optum Health broadly and where that segment could go over time?

Great questions, Kevin. I'm going to ask John in a second to talk to the margin progression opportunity. But maybe first, Dr. Decker, Head of Optum Health, might speak to the whole dynamic around physician recruitment?

Yes. Kevin, thanks for the question. Absolutely, we are seeing continued growth of our physicians in Optum Health and Optum Care. What we’ve found is that physicians are increasingly attracted to the value proposition that we offer them, which is less clerical burden and more focused on doing the work that they love, which is providing clinical care. Moving physicians to value-based care paradigms is especially appealing. So you're seeing us appeal to large groups like Atrius and Kelsey that have recently joined Optum Health, as well as doctors coming straight out of residency. So we're tracking nicely towards our growth agenda of adding 10,000 physicians and advanced practitioners during the year, and look forward to following up with you at the investor conference to share those numbers.

Good morning, Kevin, it's John here. Considering the growth in Optum Health and the expected earnings progression, our primary focus remains on expanding our value-based care capabilities. These investments are made well before we see any revenue impact from bringing on new physicians. When I mention our pipeline, I’m referring to both potential future additions and our existing clinical care delivery capabilities, where we need to enhance our offerings for future value-based expansion. We are still in the early stages of this, which is why we maintain an 8% to 10% margin range for Optum Health, as we envision a decade of development ahead of us. Our existing pipeline has the potential to drive strong double-digit top line growth for many years as we execute this plan. It's important to continue investing in these value-based capabilities due to the value they bring to the patients we serve. As we progress, we aim to deliver within the 8% to 10% margin range, which I anticipate will continue given our significant investments and the early stage of development we are in for care delivery.

John, thank you very much. Kevin, I appreciate the question. Next question, please.

We'll go next to Whit Mayo with SVB Securities.

I would have thought that investment income would have been a little higher this quarter. Were there any write-downs on Optum Ventures, anything that would negatively impact that? Just wondering how you're marking some of those investments that you've made in recent years.

Yes. Well, thanks so much. Let me hand it straight to John.

Good morning, Whit. Yes, during the quarter, we did incur some losses as we adjusted the portfolio to align with the current environment. So, in terms of the quarterly progression that you're interested in, I would refer to it as some of the realized losses we decided to record this quarter.

Thanks, John, and thanks, Whit. Next question, please.

We'll go next to Gary Taylor with Cowen and Company.

I just wanted to follow up on the Kelsey-Seybold and Atrius commentary just a little bit. You spent just under $6 billion on acquisitions this quarter, which is about what you've spent annually each of the last 5 years. So just wondering, given the size of that, if you could give us any more color on kind of where those organizations are fee-for-service versus capitation? How they might impact Optum Health margins in the second half? And then just broadly on the environment, are the valuations that you're able to garner still far below public company value-based care valuations even after they've corrected? Or is there anything there that becomes more intriguing?

I'll ask John to share some thoughts on this shortly, but I'm pleased to see our ongoing commitment to deploying capital to grow the business. A vital component of our long-term growth strategy involves not just organic growth but also integrating new businesses and teams that can enhance what we already have. A crucial aspect of this strategy is the expansion of our value-based care initiatives. We have confidence in both the Atrius and Kelsey-Seybold organizations, which are made up of outstanding teams with unique character, history, and personalities that will bring diversity to the company along with valuable skills and perspectives. Many of these organizations have already developed significant insights around value-based care, making the integration a strong fit. Typically, when new organizations are brought on board, there’s a period of adjustment before they start contributing fully, and we expect this will also be true in these cases. Nonetheless, we remain very proactive in our approach to capital deployment and are optimistic about our prospects in this area. John, could you elaborate more on the valuation perspective?

Yes. As it relates to valuation perspective, I mean, our pipeline and our conversations as we expand in care delivery, these are multiyear conversations that we have. Often by the time we are able to partner with another care delivery organization, we've probably been in conversations with them for 5 years. Super long pipelines, development processes, relationships, understanding the organization. That is us understanding their organization, them understanding us. These go on for quite a long period of time. So with that perspective there, there's probably a little bit less volatility than you might expect in terms of as we pace out and we think about valuations in this business and where we would have stepped into it maybe a number of years ago where we are now. And even if you look towards a public market and such, this just don't manifest quite as quickly. But they also kind of on the other side, they weren't manifesting as quickly. So I would call it a little less impactful at this point and juncture, but the key point that I think we focused on is these have been multiyear conversations and relationship builds for us as we move into these, and typically not a 6-month process.

Absolutely. Gary, thank you so much for the question. We just have time for one last question. So final question, please, operator.

We'll go to Nathan Rich with Goldman Sachs.

I wanted to ask on utilization in the current inflationary environment that consumers are facing. If, given the greater consumerization of healthcare in today's market, how do you think consumers might change how they utilize the system given some of the pressures that they're facing? And have you seen any signs of changes in behavior so far?

Nate, thanks so much for the question. I'm maybe going to go to Brian in a couple of minutes just to give you a little bit of what he's seeing and what is kind of reflected in his membership. But listen, obviously, we all see the inflationary pressures around us, and we all know that that has really focused people's minds on how they prioritize their spend and investment. What it really means for us is we have to double down on getting a great deal for them. We have to use our capabilities to get the very best quality care available at the most affordable cost. And whether that's through the PBM or whether that's through the UnitedHealthcare negotiations with the rest of the medical environment. That's a really important role we're stepping into play, and we're going to continue to lean into that very much. Now then, it speaks to really being astute around understanding how within the consumer experience, some things are more problematic than others. And I'll call out one of the things we're announcing today to eliminate those co-pays for people who are in really vulnerable situations. This is the right time to do that, to help those folks who are struggling, and we know that we need those folks to make sure they fill their prescriptions properly. And if there's anything caused by the inflationary environment that might hold that back, there's going to be really bad downside there. And we don't want that to happen. So we will lean into that. I'd call out things like virtual, call out things as you think about much more digital engagement. Call out choice. I mean, giving consumers more choice. The more pressure there is in the environment, you've got to lean into it. And that's why, as an organization, we have over the last 2 years really doubled down on our commitment to consumer strategy across the board. A core capability of this company going forward will be consumer capability. And that's an area where you will see us continue to talk about, invest in, build, innovate and we hope really lead in terms of moving the consumer to the center of thinking in healthcare. And maybe just to finish off, Brian, would love to get your perspective on what you're seeing from your very significant membership.

Sure. Thanks for that, Andrew. Maybe to put it in 2 zones. Macro, I think Andrew hit it right in that macro environment. It's really around virtual care and around emergency department use. We've seen, obviously, virtual care increase and emergency department use go down. As I think in the particular, again, back to that concept of consumer and choice, it's around product design, Bind being our best example when we can put that consumer in the driver's seat where they can choose site of service and optimize both their cost and quality, they do. And when you couple that with a high-performing network, obviously, you get the benefit both of the unit cost as well as that consumer choice. So those are the greatest examples that I can see really emerging in this environment.

Thanks so much. And Nate, thank you very, very much for that question. We certainly appreciate your time and attention today. And I hope what you heard is the story of growth and focused execution. As our strategy continues to generate momentum across our businesses and advance our mission on behalf of every person and every community, we're privileged to serve. Really grateful for your attention this morning. Thank you so much for your questions. We look forward to following up as usual with any further questions you might have offline. Thanks so much, and have a great day.

That will conclude today's call. We appreciate your participation.