Stock Analysis on Net

UnitedHealth Group Inc. (NYSE:UNH)

Analysis of Income Taxes

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Income Tax Expense (Benefit)

UnitedHealth Group Inc., income tax expense (benefit), continuing operations

US$ in millions

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12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Federal 4,098  2,629  2,897  3,597  4,302 
State and local 392  319  219  314  312 
Foreign 491  564  404  254  95 
Current provision 4,981  3,512  3,520  4,165  4,709 
Deferred provision (benefit) (8) 230  42  (965) 81 
Provision for income taxes 4,973  3,742  3,562  3,200  4,790 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Item Description The company
Current provision Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. UnitedHealth Group Inc. current provision decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Deferred provision (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. UnitedHealth Group Inc. deferred provision (benefit) increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. UnitedHealth Group Inc. provision for income taxes increased from 2018 to 2019 and from 2019 to 2020.

Effective Income Tax Rate (EITR)

UnitedHealth Group Inc., effective income tax rate (EITR) reconciliation

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
U.S. federal statutory tax rate 21.00% 21.00% 21.00% 35.00% 35.00%
State income taxes, net of federal benefit 1.50% 1.50% 1.00% 1.40% 1.70%
Share-based awards, excess tax benefit -0.60% -0.70% -1.00% -2.30% -1.30%
Non-deductible compensation 0.70% 0.70% 0.70% 1.30% 1.10%
Health insurance tax 3.00% 0.00% 3.50% 0.00% 5.40%
Foreign rate differential -0.80% -1.20% -1.30% -2.00% -0.90%
Other, net -0.80% -0.50% -1.60% -2.00% -0.60%
Effective income tax rate, before change in tax law 24.00% 20.80% 22.30% 31.40% 40.40%
Change in tax law 0.00% 0.00% 0.00% -8.60% 0.00%
Effective income tax rate 24.00% 20.80% 22.30% 22.80% 40.40%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Item Description The company
Effective income tax rate, before change in tax law Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. UnitedHealth Group Inc. effective income tax rate, before change in tax law decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Components of Deferred Tax Assets and Liabilities

UnitedHealth Group Inc., components of deferred tax assets and liabilities

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Accrued expenses and allowances 815  654  551  544  820 
U.S. federal and state net operating loss carryforwards 276  260  190  216  147 
Share-based compensation 98  97  91  97  126 
Nondeductible liabilities 252  184  184  169  236 
Non-U.S. tax loss carryforwards 340  420  426  445  434 
Lease liability 1,200  892  —  —  — 
Other, domestic 126  179  306  167  344 
Other, non-U.S. 454  329  337  198  175 
Deferred income tax assets, before valuation allowances 3,561  3,015  2,085  1,836  2,282 
Valuation allowances (170) (147) (84) (64) (55)
Deferred income tax assets 3,391  2,868  2,001  1,772  2,227 
U.S. federal and state intangible assets (2,588) (2,370) (2,131) (1,998) (3,055)
Non-U.S. goodwill and intangible assets (606) (735) (709) (602) (584)
Capitalized software (731) (683) (603) (530) (707)
Depreciation and amortization (346) (301) (266) (236) (332)
Prepaid expenses (216) (172) (152) (223) (228)
Outside basis in partnerships (342) (317) (300) (279) — 
Lease right-of-use asset (1,179) (887) —  —  — 
Net unrealized gains on investments (400) (177) —  —  — 
Other, non-U.S. (350) (219) (314) (86) (82)
Deferred income tax liabilities (6,758) (5,861) (4,475) (3,954) (4,988)
Net deferred income tax assets (liabilities) (3,367) (2,993) (2,474) (2,182) (2,761)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Item Description The company
Deferred income tax assets, before valuation allowances Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. UnitedHealth Group Inc. deferred income tax assets, before valuation allowances increased from 2018 to 2019 and from 2019 to 2020.
Deferred income tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. UnitedHealth Group Inc. deferred income tax assets increased from 2018 to 2019 and from 2019 to 2020.
Net deferred income tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. UnitedHealth Group Inc. net deferred income tax assets (liabilities) decreased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

UnitedHealth Group Inc., deferred tax assets and liabilities, classification

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Deferred income tax liabilities 3,367  2,993  2,474  2,182  2,761 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Item Description The company
Deferred income tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. UnitedHealth Group Inc. deferred income tax liabilities increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

UnitedHealth Group Inc., adjustments to financial statements

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Liabilities
Total liabilities (as reported) 126,750  111,727  95,994  87,036  82,621 
Less: Noncurrent deferred tax liabilities, net 3,367  2,993  2,474  2,182  2,761 
Total liabilities (adjusted) 123,383  108,734  93,520  84,854  79,860 
Adjustment to Shareholders’ Equity Attributable To UnitedHealth Group
Shareholders’ equity attributable to UnitedHealth Group (as reported) 65,491  57,616  51,696  47,776  38,274 
Less: Net deferred tax assets (liabilities) (3,367) (2,993) (2,474) (2,182) (2,761)
Shareholders’ equity attributable to UnitedHealth Group (adjusted) 68,858  60,609  54,170  49,958  41,035 
Adjustment to Net Earnings Attributable To UnitedHealth Group Common Shareholders
Net earnings attributable to UnitedHealth Group common shareholders (as reported) 15,403  13,839  11,986  10,558  7,017 
Add: Deferred income tax expense (benefit) (8) 230  42  (965) 81 
Net earnings attributable to UnitedHealth Group common shareholders (adjusted) 15,395  14,069  12,028  9,593  7,098 

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).


UnitedHealth Group Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

UnitedHealth Group Inc., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net Profit Margin
Reported net profit margin 6.03% 5.76% 5.33% 5.28% 3.81%
Adjusted net profit margin 6.02% 5.86% 5.35% 4.79% 3.86%
Financial Leverage
Reported financial leverage 3.01 3.02 2.94 2.91 3.21
Adjusted financial leverage 2.87 2.87 2.81 2.78 2.99
Return on Equity (ROE)
Reported ROE 23.52% 24.02% 23.19% 22.10% 18.33%
Adjusted ROE 22.36% 23.21% 22.20% 19.20% 17.30%
Return on Assets (ROA)
Reported ROA 7.81% 7.96% 7.87% 7.59% 5.71%
Adjusted ROA 7.80% 8.09% 7.90% 6.90% 5.78%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. UnitedHealth Group Inc. adjusted net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
UnitedHealth Group Inc. adjusted financial leverage ratio increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. UnitedHealth Group Inc. adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. UnitedHealth Group Inc. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

UnitedHealth Group Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to UnitedHealth Group common shareholders 15,403  13,839  11,986  10,558  7,017 
Revenues 255,639  240,269  224,871  200,136  184,012 
Profitability Ratio
Net profit margin1 6.03% 5.76% 5.33% 5.28% 3.81%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to UnitedHealth Group common shareholders 15,395  14,069  12,028  9,593  7,098 
Revenues 255,639  240,269  224,871  200,136  184,012 
Profitability Ratio
Adjusted net profit margin2 6.02% 5.86% 5.35% 4.79% 3.86%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Net profit margin = 100 × Net earnings attributable to UnitedHealth Group common shareholders ÷ Revenues
= 100 × 15,403 ÷ 255,639 = 6.03%

2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to UnitedHealth Group common shareholders ÷ Revenues
= 100 × 15,395 ÷ 255,639 = 6.02%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. UnitedHealth Group Inc. adjusted net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 197,289  173,889  152,221  139,058  122,810 
Shareholders’ equity attributable to UnitedHealth Group 65,491  57,616  51,696  47,776  38,274 
Solvency Ratio
Financial leverage1 3.01 3.02 2.94 2.91 3.21
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Total assets 197,289  173,889  152,221  139,058  122,810 
Adjusted shareholders’ equity attributable to UnitedHealth Group 68,858  60,609  54,170  49,958  41,035 
Solvency Ratio
Adjusted financial leverage2 2.87 2.87 2.81 2.78 2.99

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity attributable to UnitedHealth Group
= 197,289 ÷ 65,491 = 3.01

2 Adjusted financial leverage = Total assets ÷ Adjusted shareholders’ equity attributable to UnitedHealth Group
= 197,289 ÷ 68,858 = 2.87

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
UnitedHealth Group Inc. adjusted financial leverage ratio increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Adjusted Return on Equity (ROE)

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to UnitedHealth Group common shareholders 15,403  13,839  11,986  10,558  7,017 
Shareholders’ equity attributable to UnitedHealth Group 65,491  57,616  51,696  47,776  38,274 
Profitability Ratio
ROE1 23.52% 24.02% 23.19% 22.10% 18.33%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to UnitedHealth Group common shareholders 15,395  14,069  12,028  9,593  7,098 
Adjusted shareholders’ equity attributable to UnitedHealth Group 68,858  60,609  54,170  49,958  41,035 
Profitability Ratio
Adjusted ROE2 22.36% 23.21% 22.20% 19.20% 17.30%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROE = 100 × Net earnings attributable to UnitedHealth Group common shareholders ÷ Shareholders’ equity attributable to UnitedHealth Group
= 100 × 15,403 ÷ 65,491 = 23.52%

2 Adjusted ROE = 100 × Adjusted net earnings attributable to UnitedHealth Group common shareholders ÷ Adjusted shareholders’ equity attributable to UnitedHealth Group
= 100 × 15,395 ÷ 68,858 = 22.36%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. UnitedHealth Group Inc. adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020 not reaching 2018 level.

Adjusted Return on Assets (ROA)

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to UnitedHealth Group common shareholders 15,403  13,839  11,986  10,558  7,017 
Total assets 197,289  173,889  152,221  139,058  122,810 
Profitability Ratio
ROA1 7.81% 7.96% 7.87% 7.59% 5.71%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to UnitedHealth Group common shareholders 15,395  14,069  12,028  9,593  7,098 
Total assets 197,289  173,889  152,221  139,058  122,810 
Profitability Ratio
Adjusted ROA2 7.80% 8.09% 7.90% 6.90% 5.78%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROA = 100 × Net earnings attributable to UnitedHealth Group common shareholders ÷ Total assets
= 100 × 15,403 ÷ 197,289 = 7.81%

2 Adjusted ROA = 100 × Adjusted net earnings attributable to UnitedHealth Group common shareholders ÷ Total assets
= 100 × 15,395 ÷ 197,289 = 7.80%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. UnitedHealth Group Inc. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.