Good morning, and welcome to the UnitedHealth Group Fourth Quarter and Full Year 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 is some important introductory information. This call contains forward-looking statements under 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 the 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 will also reference non-GAAP amounts. A reconciliation of the non-GAAP to GAAP amounts is available on the Financial & 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 January 13, 2023, 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.

Thank you. Good morning, and thank you all for joining us today. Over the course of the past year, the extraordinary and dedicated people of Optum and UnitedHealthcare delivered strong, well-balanced growth, progress in developing our consumer-orientated capabilities and strengthened the many ways in which we deliver value-based care in multiple settings. Each of the five growth pillars we discussed with you at our November investor conference are powerful sources of opportunities on their own within large and expanding addressable markets. Yet what really unlocks the potential value we can provide to those we serve is the connectivity of capabilities across our enterprise. For example, this year, we expect 4 million people will participate in fully accountable value-based care provided by Optum Health, almost 1.8 million more than we served as we entered 2022. We're achieving this by connecting benefits, care and other services to support our patients. Many of these patients will have a Medicare Advantage plan offered by UnitedHealthcare, or one of the many other payers who are accessing Optum's expertise and capabilities in delivering this kind of comprehensive care. We will serve these patients in clinic settings, in their homes, integrating behavioral care, supported by our data-driven clinical incidents and next best actions, and all coordinated to provide the right care when and where they need it. Pharmacy is another area in which we are more deeply connecting consumers with our services. We engage 1 million people every day, finding the lowest cost options, managing their specialty drugs, offering vital in-person clinical advice at our community pharmacies, providing complex medication treatments right in their homes, or simplifying access through digital solutions in order to make the process uneventful for them. We believe this connectivity is a path to better outcomes for people and lower costs. It's also driving growth. By the end of 2023, we expect to have more than 750 community pharmacies, nearly 200 more than we had at the beginning of 2020. We continue to see the impact these services have at a very local and personal level, helping providers deliver more complete care and better outcomes, including medication adherence rates, which are about 90% compared to the 50% U.S. average. Our pharmacists are able to take the time to get to know their patients' treatment plans and support their medication management, collaborating with other care providers. We're guided in pharmacy by the principle of getting to the lowest cost for patients and clients. A good example, as more biosimilars come to market, we're positioned to offer patients their care providers and payers significantly more choices in how to secure the best prices for the therapies they need. In addition to biosimilars, we're driving affordability and prescription benefits by combining formulary and cash market pricing to ensure consumers will always get the best economics. Our life-saving drugs program has made very significant progress since our announcements last year. This program offers zero dollar out-of-pocket cost to consumers for drugs such as insulin and epinephrine. Our goal has been to make this available throughout the U.S. And as of today, we've been approved in 48 states for our fully insured business. Moreover, 1/4 of our self-funded employers have now chosen to add this offering for their employees, and we expect that number to rise. Getting to this point in such a short period of time was only possible through the work not just of our teams, but of state officials and others in the broader healthcare community and we're grateful for their support. Looking to the year ahead, let me focus you on a couple of themes you can expect to hear from us. One is continued scaling of our commitment to American consumers. You should and will have -- who should and will have an increasing influence over their care experience. Through our core innovations, product design, enhanced digital offerings and partnerships such as RVO Health and Walmart, you will see us driving this more broadly across the enterprise, becoming closer to the consumer, helping simplify their experiences and empowering their decision-making with greater transparency, speed, convenience and support. You will also hear how we are amplifying our technology capabilities. 2023 will see the emergence of an enhanced OptumInsight, bringing to life the opportunities that the legacy organizations from Optum and change creates, an acceleration of how technology can be used to healthcare providers and ultimately patients within the overall health system. We start this year well prepared to deliver upon the objectives we shared with you in late November, and with a deep sense of responsibility to do so on behalf of the people we are privileged to serve. With that, I'll turn it over to President and Chief Operating Officer, Dirk McMahon.

Thank you, Andrew. While the calendar shows we are two weeks into the New Year, our team's 2023 started many months ago; and in some cases, years ago. We have been laying the groundwork necessary to execute on our growth strategy and sustain our momentum heading into this year and beyond. To give you a sense of how this develops, I'll step through some of the work that has been longue durée to ready our organization to serve even more patients and customers in this new year and provide greater value for consumers across a broad range of initiatives. Take the many new patients we will serve under value-based care arrangements in 2023, deepening our presence in existing areas and adding new regions. Our team's preparations are extensive. That's because the transition to fully accountable care is not simply a matter of downloading a new app. The preparations include significant investments in clinical training, technology, network coordination and other activities to make certain we are ready to serve. These critical investments help us support both our current year needs and establish foundations for the growth into 2024 and beyond. Our ability to serve people effectively has expanded beyond the four-walls of the clinic with the rapid development of our in-home clinical capabilities. These services complement our clinic-based and digital offerings and bring high-quality care access to some of the most challenged and often underserved patients in this country. For instance, for value-based patients, our in-home services have reduced hospital visits by 15% versus fee-for-service, delivering comparable health outcomes and achieving an NPS of approximately 80. Within health benefits, you've heard us discuss how our innovation in commercial products is adding new growth opportunities. One of those is Surest, a unique solution to employers and employees who are looking for first dollar coverage and high transparency into quality and cost. The momentum behind Surest is strong and building. Just two years ago, one in 25 national accounts offered Surest as an option to more traditional plans. Thus far in 2023, it is one in nine, and we expect it will continue to rise. Our offerings for seniors are another area in which we plan, invest and build capabilities to provide new and valuable offerings for an extended period. For example, we continue to expand the range of clinical services we provide via our HouseCalls initiative. In 2023, we will increase the types of vaccinations offered, expand testing services and deploy even more real-time resources to address social determinants of health. Seniors place high value on being able to get care in their home. It comes with an NPS of 75 and is helping to drive improving retention levels as we head into 2023. In addition, our advocacy service solutions help members achieve better health. Our solutions led to a 42% increase in closing gaps in care, up to 15% lower ER visits and an over 10% increase in clinical program enrollment compared to customers who utilize standard offerings. Turning to health technology, let me offer a few early observations on our progress and long-term growth opportunities we see in this area. With the completed change healthcare combination, we are accelerating our investments to bring this vision of a more intelligent and simpler health system to market as rapidly as possible. We will continue to innovate in and deliver the software, data analytics, technology-enabled services, revenue cycle management and advisory services our customers expect. And we are executing on the synergies of this combination with most of the financial benefit coming from complementary growth. OptumInsight is uniquely positioned to offer integrated, end-to-end technology analytics and services across the entire healthcare value chain. Along these lines, we recently reached two new comprehensive health system partnerships, with Northern Light Health in Maine and with Owensboro Health in Kentucky. The services we provide typically feature a full breadth of our advanced solutions, including information technology, revenue cycle management, analytics and supply chain tools. The key here is that our comprehensive technology solutions are resonating in the market, and we expect to see increasing momentum across all of OptumInsight as we invest in and finalize our integration activities. With that, now I'll turn it over to Chief Financial Officer, John Rex.

Thank you, Dirk. The investments and innovations Andrew and Dirk described and that we shared with you in November, speak to a company that has tremendous growth potential as we head into '23 and well beyond. The opportunities to serve people more deeply are tangible and accelerating, building upon a foundation of strong growth in recent years, including our 2022 performance. Revenue in '22 of $324 billion grew by more than $36 billion or 13% over the prior year, with well-balanced double-digit growth at both Optum and UnitedHealthcare. Fourth quarter adjusted earnings per share of $5.34 grew 19% and brought full year adjusted earnings per share to $22.19, growth of 17%. Our capital capacities remain strong. Cash flow from operations in '22 was $26.2 billion or 1.3x net income. We returned $13 billion to shareholders through share repurchase and dividends, and deployed over $20 billion in growth capital to expand our capabilities for years to come. Turning to the performance of our businesses. OptumHealth's revenues grew by 32% in '22 to $71 billion as we expanded the number of patients served under value-based care arrangements by about 1 million. Revenue per consumer grew by 29%, driven by the increase in value-based care patients and in the levels of care we are able to offer. Consistent with our comments in November, OptumHealth is off to a strong start in '23 and will organically grow to serve an additional 750,000 value-based patients this year. OptumInsights revenues grew 20% to $14.6 billion in '22. We concluded the year with a revenue backlog of $30 billion, an increase of $7.6 billion over last year. As Dirk noted, we are advancing our investments to more rapidly unlock the positive impact OptumInsight can have for care providers and patients. We expect to make a significant portion of these important investments in the first half of the year. Optum Rx revenues grew 9%, approaching $100 billion for the year, driven by continued strong sales and the expansion of our pharmacy services businesses. Both customer retention and new customer wins were among the highest Optum Rx has ever delivered, laying a strong foundation for continued market-leading growth. At UnitedHealthcare, full year revenues of nearly $250 billion grew 12%. Our strong 2023 Medicare Advantage member outlook is consistent with the objectives we shared with you in November. We expect to serve up to 900,000 more people in '23 across our individual, group and dual special needs offerings, our 8th consecutive year of above-market growth. This consistent performance underscores the product innovation, benefit stability and high-value seniors have come to rely on from us. Our Medicaid growth outlook for '23 incorporates an expectation that states will resume eligibility redeterminations early in the second quarter. Our objective is to ensure that people will have continuous access to benefits. And when all redetermination activities are eventually completed, we expect to serve even more people than we do today across our state-based commercial and exchange-based offerings. Within our commercial offerings, we expect to serve about 1 million additional people in 2023. Our new and innovative products continue to gain momentum with employers and their employees, which will lead to increasing growth in this market over the next several years. In sum, while this year is just getting started, the early performance we are seeing across our businesses further validates our confidence in the 2023 growth and performance objectives we shared with you just six weeks ago. Now I'll turn it back to Andrew.

Thanks, John. As we head into 2023, we're determined to build upon the momentum we've just described this morning, further advancing our mission and delivering sustainable earnings growth of 13% to 16% over the long term. And with that, operator, let's open it up for questions. One per caller, please.

[Operator Instructions] We'll take our first question from the line of A.J. Rice with Credit Suisse. A.J. Rice: The company seems to be taking a lot of momentum across the board into '23. I wonder when you step back and look at the swing factors that say would push the company towards the higher end of the range that you've offered in EPS or towards the lower end, what are some of the biggest swing factors in your mind, potential positives or challenges?

A.J., thanks so much, and Happy New Year to you as well. I appreciate the question. Yes. So first off, we do feel that we're bringing a ton of momentum into 2023. We feel across the board last year, very strong performances. Most of our businesses closed out the year actually a little ahead of where we were anticipating even when we were at the investor conference. So strong from that perspective. As we look into this year, I think real standout for me maybe call out just two or three points. One is just the membership roles and just the scale of growth in our membership. If you look at UHC performance during '22, you heard us talk about that just now, we're anticipating, frankly, another 1 million plus. I wouldn't be at all surprised if we didn't exceed '22 numbers by the time we get to the end of '23. That is a huge plus and signals a tremendous amount of engagement from the marketplace in our product set across all lines of business, whether that's in the government books of business in the MA platform, our determination to make sure that we look after folks in Medicaid as they go through redetermination cycles and, of course, in our commercial books where you've seen tremendously strong growth. So that's really an area which I think is building for us a lot of confidence as we go forward. And then you go across to Optum, and let me just call out record selling seasons coming through from our Optum Rx platform. That's building a tremendous amount of pipeline growth for us within our business over the next several years. OptumHealth, of course, really rapid growth of value-based fully capitated lives. You'll see by the end of '23, we'll be looking after -- well, more than double the number of folks we were looking after at the end of '21. That's an extraordinary expansion, and we expect that to continue to grow hard. OptumInsight, this year will be an emergence of a new OptumInsight. That's a business where we know we can do better. We've known that for a long time. We've been itching to get going on the integration of change and OptumInsight, which we've now been able to do. We really leaned into that in the fourth quarter. You'll see that flow through very rapidly in the first couple of quarters of this year. That's going to give us a whole new cycle of product innovation. We expect that to be a big source of lift as we go forward, backed up by an increasing momentum of being able to sign up these very large health system partnerships. You've seen us do two since the investor conference in November in addition to the ones we already have. I remind you, these are very large scale, very sticky, multiyear relationships, really substantial sources of energy for the organization. So that really drives all of our momentum. I think where we land in the ranges we've given you is all about our ability to execute and making sure that our organization is focused on every single day, making sure we get every transaction right. We look after every patient in the right way. We make sure that we're looking after every consumer approach that we received in the right way. And so execution is going to be what determines where we come out. The raw material in terms of the momentum for the company is just extraordinary as we look into 2023. A.J., I appreciate the question. And maybe next question, operator, please?

Yes. The next question is from the line of Lisa Gill with JPMorgan.

Great. I was wondering if maybe you could just comment on the RADV expectations for February 1. We just had our conference this week, and there was a lot of talk about this and just what managed care is generally expecting out of that ruling?

Lisa, thanks very much for the question. Yes. I mean, we're not going to get into a ton of speculation because obviously, it's very, very potentially imminent. And so not sure there's tons of value there. But I would like to ask Tim Noel looks after our M&R business to maybe share some of his perspective on that. Tim?

Great. Thanks for the question, Lisa. We talked about this a bit at the investor conference and don't have a lot of new information to share this morning, but let me revisit a couple of the key elements that we discussed a couple of weeks ago. So first, risk adjustment is really critical to providing broad and equitable access inside the Medicare Advantage program. Also a really important part of ensuring there's no disincentives for caring for the most vulnerable. We also continue to remain very supportive of additional transparency. And here, that takes the form of more timely and consistent reviews. And a few of the key elements that we're thinking about with respect to these audits is it's very important for CMS to include a fee-for-service adjuster to make sure that we're comparing original Medicare and Medicare Advantage on the same basis. And also, very important that we don't conduct these audits decades in arrears. That comes with some challenges, of course. That said, without the final rule set, as Andrew alluded to, hard to get really narrow and specific, but we feel really good about how our results validated. Some of our sample sets were above, some of our sample sets were below. But likely more specifics to discuss at next quarter's call. Thanks, Lisa.

Tim, thanks so much. And Lisa, thanks for the question. I mean I think as you just, again, just maybe step up a little bit in the broader position, obviously the whole MA program is unbelievably successful and popular program for seniors across the U.S. And of course, the biggest proof of that is the number of folks who every single year volunteer to sign up to be part of this program. And we're seeing another record year of enrollment coming through as we speak. It's super important that any changes, whether it's in this particular circumstance or any other circumstance, it's super important that folks are thoughtful about collateral consequences, making sure that what is really impressive program in terms of quality of care, reassurance provided to seniors, ability to deliver good value for the senior, good value for society, making sure that any changes are made thoughtfully and holistically is what we would be hoping to see. And obviously, we look forward to working with the administration when and if any further updates come forth. With that, Lisa, thanks so much for the question. And let’s go to next question, operator.

The next question is from the line of Josh Raskin with Nephron Research.

I was wondering if you could speak to the progression of earnings when you add physicians or large physician groups in OptumCare and how that changes over time. I'm specifically looking for sort of margin ranges as you first get started in the first year. When you break even, how long that takes? And then how long it takes to get to the ultimate margins? And I'm curious if the scale that you've got now, half of this book is new in the last three years, does scale accelerate some of that opportunity?

Josh, listen, thanks so much for the question. It's a really -- that's a big question. Let me just give a few thoughts toward that. So one of the key capabilities you need to be in value-based care at scale is patients. Patients because it takes three or five years of getting to know medical practices before they become part of our network and as we go through our expansion. Patient then in terms of how you go through the process of building the capabilities and skills within the clinical practices to move from fee-for-service to value-based care. And of course, that patient size is reflected in how long it takes to go through this from an economic and financial perspective. And that's why as we see this rapid development now, it's kind of -- OptumCare, value-based care is kind of an overnight success that took 15 years to build. And that's -- it's really a truth. And we're seeing that scale now come to life and all credit to the teams who are doing that. In terms of what helps here, I think it's really building a muscle within your organization to continuously test, learn, correct, test, learn, correct in terms of how we work. This is a very -- so very -- it's a somewhat delicate system because what you're dealing with, obviously, highly professional clinical decision makers on the front line who are absolutely, ultimately responsible for every decision they make in front of every patient. But you're also trying to make sure they have the right information to be able to learn from the whole system, the information we know about those folks and what's likely to happen, what could happen, what might be the best practice. And how can we get the whole of the system to operate at a higher level. Those sorts of pieces of progress, those areas where we relentlessly invested, give us opportunities to improve the clinical care. If we can improve the clinical care, the economics follow. So within this whole model, getting the clinical care right, getting people in the right facilities, making sure people don't spend too long in care facilities when it's unnecessary, making sure that illness is delayed, deferred because they're treated well that prevention is the priority, that's what drives all of the economics. What we're seeing, Josh, is that over the last three or four years, we are indeed being able to bring our more recent cohorts to a better economic position more quickly. That's allowing us then to continue to invest more aggressively in bringing new patients into the system. And that -- it's really that mechanism, which you're seeing come to life at the moment. Hopefully, that helps a little bit. And next question please.

We'll take the next question from the line of Justin Lake with Wolfe Research.

Wanted to touch on cost trend. MLR was in line with your expectations for the quarter. But wanted to hear -- there's been questions about the impact of respiratory in the quarter. There's even been some discussion around a pickup in just overall utilization in December. So would love some comments on those to it, maybe just a little on how trend looked between the different businesses, commercial, Medicare and Medicaid?

Yes. Justin, thanks so much. I'm going to ask Brian Thompson to respond to that, please.

Yes. Thanks, Justin, for that question. Throughout the pandemic, we've been making these references to baselines, et cetera. I think, now being three years into this pandemic, I'd like to just ground an anchor more to our expectations as COVID has waned. And what I'm most encouraged by is that the fourth quarter played out as we had expected. And what we had set out inside our pricing trends are lining up really nicely as we look forward to 2023. To your comments around the flu, as I had suggested at our investor conference, we certainly saw that spike. We have now seen that start to wane for, I think, five consecutive weeks here as we're moving forward. So to put it out like we had expected, really not a meaningful impact as I'm looking forward versus what we've planned for. So what I'm most encouraged by is we're sort of out of that zone of the unknowns around comparing to baselines, et cetera, and really managing a book of business with greater predictability back to sort of the expectations that we had well pre-pandemic and encouraged about how all of those elements, including flu, are lining up as we look forward. Thanks, Justin.

Thanks so much, Brian. And Justin, thanks for the question. Next question please?

We'll take our next question from the line of Lance Wilkes with Bernstein.

Yes. Could you talk a little bit about the employer segment? And what I'm interested in is what was pricing like in 2023? If you think of the 6% commercial trend that used to be your pre-pandemic sort of levels, what was that like? And for those employer customers, how are they kind of waiting the need to get employees in the war for talent versus focus on maybe higher premium costs and how they're trying to control that?

Lance, thanks so much. Let me ask Brian to kick off on that.

Yes. Maybe I'll start, and then I'll hand it off to Dan Kueter. I'll start with the conversation around trend. As you well know, we used to share trend information back in the day, and stopped doing so simply because it became less instructive as we were pacing through this COVID environment. What I can share, and I think once we get to this zone of consistency, we'll return to those metrics, we're certainly encouraged by what we're seeing on the utilization front. I think we are seeing some durable shifts. We've seen it with respect to ER moving into urgent and in-patient to outpatient. But on the flip side, as we all know, in these labor markets, we're seeing stronger unit costs. And as we all know, unit costs still comprise the majority of the overall trend. And as I had suggested earlier in the year, we did have a higher trend planning for 2023 than 2022. But in reality, that was really a function of the first half of 2022. And again, I want to give that thought and belief that we are largely back to normal levels. And I think once we pace through 2023, we'll get to that zone where we can share those pricing trends. So with that, maybe a little bit more on the competitive dynamic, Dan.

Yes. Thanks, Brian, and thanks for the question, Lance. The competitive dynamics in the commercial market remain the same as they've been, always competitive. We continue to price to our forward trend, and we have continued to do that. As Brian indicated, there has been some modifications to that, but all within the range of what we've expected and all within the range of how we've priced. So we don't see any material deviations at all from what we've expected in our plan, so.

Thanks so much, Dan. Thanks, Lance. Next question?

And we'll take our next question from the line of David Windley with Jefferies.

In OptumHealth as you have added or about to add behavioral and home, more substantial home care opportunities and have talked about those in the context of value-based care. I'm wondering what influence those have on the trajectory of revenue per member served? That's already rising at a pretty rapid clip due to the full cap that you're transitioning lives into. So the home and behavioral adds to that.

Yes. So I'm going to ask Dr. Wyatt Decker to make a couple of comments in a second on that. But maybe just before he does, and I think we don't particularly break out what's driving the elements of that kind of consumer served number. But you can imagine that the move to value-based care is a big driver of that. Now one of the pieces within the home platform, just to pick out one of the two areas you called out, David, is, of course, within there, you have a substantial amount of D-SNP population, right? So that particular part of the business helps us do a much better job of looking -- giving a much better end-to-end wraparound care for complex folks often found in the D-SNP population. And of course, they represent a different type of revenue profile compared to more of a community patient. So I just make that point. So within the home piece, it kind of a derivative phenomenon that home creates a capability, which allows us to serve D-SNP folks better. That, of course, is going to be an accelerator to the metric you were focused on. And maybe ask Wyatt to go a little deeper though, around how you're bringing behavioral along as well as home please?

Yes. Well, thank you, David, for the question. And it's very timely. We view home health as one of the new frontiers of providing value-based healthcare because of the convenience it provides and the ability to access people, like dual special needs patients that often have very difficulty leaving their home to get care. So you will see us both developing if you will, the platform of home care increasingly in a comprehensive fashion, as well as integrating home care with our clinic-based care model. So it really creates two growth vehicles for us, if that makes sense. And similarly, with behavioral, as we've seen during the pandemic, the need for behavioral care is immense in the U.S. market. And our ability to embed behavioral healthcare services within our primary care and value-based care offerings has been differentiated and will continue to grow, as well as our utilization of virtual behavioral care solutions in both the home and clinic environments. And so we're pretty excited about how this is coming together, and we're creating a differentiated offering that helps accelerate value-based care growth and provide that comprehensive care that people made.

Thanks, Wyatt. Next question please?

The next question comes from the line of Gary Taylor with Cowen.

Just looking for a couple of numbers. One, just going back to respiratory. Our recollection was maybe 4Q for you guys was about 30 basis points of MLR from respiratory. I know Brian said not meaningfully higher. So I'm assuming that means there is another 15 bps or 20 bps or something from respiratory this quarter. And then just secondly, on the investment gain, about $400 million above The Street, about a couple of hundred million above the '23 guidance run rate. So just wondering, was there a realized gain in that quarter that's kind of above recurring or how we should think about that number?

Thanks so much, Gary. Let me ask John Rex to respond.

Gary, good morning. I will go back in order here. So just in terms of -- it’d be very similar with Brian Thompson's commentary in terms of what we were seeing in the quarter and I think forward. So those -- that incidence was modestly elevated in the 4Q, but I'd call it modestly elevated, but very much in line with what we would have expected -- and when we were in front of you back at the end of November in terms of flu and respiratory. Let's put those two together in terms of just combining that whole view. So elevated, when you take it into materiality in terms of the $50 billion of medical costs in the quarter, I wouldn't call it immensely material, though, in that element, but very consistent. In terms of investment income, probably wouldn't be very similar to what we reported 4Q a year ago in terms of the absolute level of investment income in there. I wouldn't -- just kind of like last year, probably wouldn't use that as my run rate stepping out into next year though. So we're still comfortable with how we established and guided for 2023 from that perspective also. So very consistent with that 4Q of last year, too.

Thanks, John. And thank you, Gary. Next question please?

The next question comes from the line of Scott Fidel with Stephens.

Just interested if you could summarize your key M&A priorities for 2023, and whether there's any sort of shift at all in sort of the key trends that we've seen over the last few years, which have been a big focus on adding the clinical capabilities and the scale at both OptumHealth and OptumInsight. Should we think about that continuing to be the core area of focus or any other additional elements that are worth considering?

Thanks so much, Scott. Before I ask John Rex to make a couple of comments on this, I'll maybe just make a few introductory notions. I wouldn't go into a ton of detail about where we're looking, but I would continue to say we fully anticipate continuing to deploy our capital effectively into the marketplace. You know that a hallmark of this company has been its ability to effectively and efficiently utilizes capital to supplement its organic growth, and that's been a big part of the success of the organization. We'll continue to do that. We have a substantial number of transactions in process as we speak. As you well know, we're obviously in the process now of bringing to life the Change OptumInsight integration, which is super important for us. As we look forward, it's a very interesting marketplace. I mean I would say that John will probably confirm this, I think what we see the pipeline of opportunities we see is probably bigger, deeper, more diverse than we've ever seen. That's been a trend that kind of picked up probably early last year, certainly continued. We'd expect to see this year to be a pretty interesting year for us. And it's -- you know our five growth pillars. You wouldn't be at all surprised to expect us to obviously align our M&A capital investment around our growth pillars. Beyond that, I'm not sure it would be necessarily wise for us to go too much more detail. But certainly, John, I'd love you to give a bit more perspective on how you're seeing the landscape and the environment.

Absolutely. Scott, yes, so I'd start with just echoing what Andrew mentioned there, the way we approach this very much aligned with our five growth pillars and how we evaluate, how we look for opportunities, I should say, and where we think we should be pursuing investments and relationships. I'd point out that these are certainly very long-lived in terms of the investments that we make, in terms of relational investments we make, in terms of understanding markets, particularly as we've heard us talk about before within the care delivery businesses and such as value-based care that these are. Most of the markets that we want to address are aren't established the way that we would like them to be established, so it's very greenfield in terms of our approach to M&A as we look at marketplaces and bringing together the capabilities that we would pursue. The environment itself that echo what Andrew previewed there, certainly a strong environment in terms of opportunity sets that we are seeing in the broad marketplace, in terms of the types of capabilities that are there, how they might fit within this enterprise and the potential. I think you would expect us to see like where we've been focused. Certainly, over the last number of years, you've seen us do a lot of development as it relates to components of value-based care. And you know we define that very broadly now in terms of how we think about capabilities within value-based care to bring in new capabilities also and across all the other elements. But I’d overall characterize the environment as strong and the opportunities as among some of the most interesting, I think, that we have seen as a company.

Yes. I'd agree with that completely, John. And I certainly, over the next several years, see this part of the agenda being a key part of our continued support of our long-term growth goals, and you should expect to see us be -- continue to be active in the space. Thanks so much, Scott. Next question please?

We'll take our next question from the line of Stephen Baxter with Wells Fargo.

I wanted to follow up on the home component of the value-based care opportunity. Wondering if you'd say potentially you're further along in the penetration with the home model inside the UHC book than other payers? Any color there would be great. And then, any sense of how the 4 million fully accountable lives break out by clinic versus home model with the primary care setting, or also how the 750,000 member growth breaks out for 2023 would be great?

Stephen, thanks so much for the question. So first off, let me just reiterate how important we see the development of the home model, the home care platform, and we've seen that grow very substantially over the last couple of years in particular. Super important though, to recognize that it kind of -- so of course, sometimes folks can be essentially managed within just the home environment or the home care platform, and that certainly happens sometimes. But of course, what always happens, what very often happens is the clinic environment, the home environment are connected together, which is really what we're building here. So it's not super instructive, I think, to think about folks who are just kind of clinic nominated or home nominated. That can happen. But not really, I think, necessarily the right way to look at it. I wouldn't look at it that way. I'd see -- I really think about it the way we've built the home capabilities as a substantial extension of what we're able to do in the clinical space. And it speaks to the reality of care. People -- a lot -- not everything happens in the 20 minutes you're in the clinic, right? A ton of things happen when you're at home, and making sure that we've got care capabilities there, especially for folks who find it difficult to get out of the home or for whatever reason, find it difficult to engage with the system. That's a super important part of the environment. What I'd say is that, that is resonating super strongly, not just with UnitedHealthcare, but with other payers as well. And there's no doubt that this side of the agenda has caught the imagination of other payers, and we're delighted to see the continued extension of the multi-payer dynamic of OptumHealth and Optum more generally. And this is one of the drivers of that. In fact, during Q4, our external growth rate -- revenue growth rate was analogous to our internal growth, or i.e. Optum was growing just as quickly with non-UHC payers as it was with UHC. And that's a super important signal for the strength of the company. So important area, you'll continue to hear more about home as we go forward. But I would look at it more as a strengthening as a whole rather than a kind of separate stream in which we would be thinking about it that way. Hopefully, that helps a little bit, Stephen. And let’s go to the next question.

Our next question comes from the line of Nathan Rich with Goldman Sachs.

The advance rate notice for '24 will be out in the coming weeks. It's clearly been well noted that the past few years have kind of been above the historical trend, and know that at some point we could see some moderation. I'd just be curious what your expectations are around that and how you view its relative importance in the context of your overall outlook for the MA market?

Nathan, thanks so much. Yes, as you rightly say, obviously, we're getting close to when we would likely hear the rate notification. And obviously, we don't know what that's going to be. I think where we would sit is -- we think MA is an incredibly important program for seniors. I think it's been demonstrated now repeatedly the value that delivers to the individuals, the value it delivers to society. And of course, the way in which seniors are essentially voting to become part of this program just signals how effective it is. We believe that one of the key elements of that effectiveness that we certainly focused on is our ability to deliver stable benefits year in, year out. So I mean bottom line for us is we hope year in, year out, that the rate notice essentially facilitates that and it allows us to continue to deliver that stability. And we look forward to seeing what that will be, and we'll work with that once it's communicated to us. Not much more we can say on that, to be honest, until we obviously get the right notice. So thanks for the question. Next question please?

Our next question comes from the line of Erin Wright with Morgan Stanley.

On Optum Rx, your near-term Optum Rx targets do imply passing on the savings from biosimilars, but can you detail some of the other levers you have here to drive the strength you're anticipating? How should we rank those drivers across pharmacy services, versus biosimilar benefits over the next, let's say, 12 to 18 months?

Great question, Erin. Before I ask Heather to give you a few more details, I think we're super pleased with the progress we've made, particularly on the biosimilar innovation that's coming this year in the next few weeks. And the work that's been done within Optum Rx to deliver a contracting strategy, which ensures that everybody who wants to use a HUMIRA molecule, whether that's the brand or whether it's a biosimilar, gets access to lower cost right out of the gate has been a super important innovation in terms of our contracting strategy. So without folks having to be shifted from drugs or dislocated in the marketplace, we found a way to bring lower cost to everybody in that environment. And I really want to give credit to Heather and her team for the work that she's done to lead on all of that. As you rightly say, we're passing those benefits directly back to the payers and the folks themselves. And with that, Heather, why don't you pick up and describe what else is driving the Rx growth this year?

Sure. So first, let me give you just another sense of maybe next phase when you think biosimilar and then let's hit the strength of the earnings for us in '23. So as Andrew said, we intended to set up the biosimilar strategy to allow the most value to pull through in year one that we can to clients, and we're proud of that. But this is a multiyear strategy, and the markets dynamic will continue to watch it. What's important here is creating a marketplace for competition of the originator with a biosimilar in the specific unique environment with HUMIRA and so many manufacturers coming to market. But over a period of maybe, say, the next 18 months with different attributes, our strategy allows them to compete based on their clinical criteria and product attributes, how the manufacturer support the product and then, obviously, the economics and the pricing. So that's the goal. We'll see that play out over the years. And the goal was to provide choice, not a lot of disruption and be able to extract value without restriction or exclusion. So we'll watch that play out. But when I think about the earnings and the strength of the position we're in or what we hoped to be by the end of '23, think of it as some of the stories you've heard us building and what we've been talking about for the last couple of years, and that's strengthen our pharmacy services. I'll give you an example. Yes, the community pharmacies are growing. They're expanding quickly. But our specialty pharmacies, our Frontier Therapies where we serve some of the more rare disease and orphan drugs are growing as quickly. And in many of those are getting scale. So for instance, the community pharmacies are scaling to the point where we're allowed -- we have central fill supporting because we have the volume of scripts going to those community pharmacies. And we're getting better with negotiations, we're able to negotiate harder on some of our procurement in those businesses. But also look at the PBM. You heard strong selling season again. We hope to have another strong selling season. The pricing is dynamic. We moved quickly with our pricing, with our product attributes. Our product adoption is up 40% year-over-year in our PBM products. And then we've got some return on some of the investments we made in the last year or two, Optum Frontier Therapies, our partnership with RVO. So that, I think, is when you look towards the next year, focus on those areas and look for us to drive earnings growth in those particular areas.

Heather, well said. And again, you've seen a real transformation of the Optum Rx platform. If you look at five years ago, about 1/3 of the revenues in that business came from non-PBM pharmacy services. Now it's at half. As a tremendous shift on the business' scale, really is significant. And I'd say one of the key themes, which is driving a lot of that is a relentless shift was the consumer in the way in which that business is orientated and building its product. Real focus on delivering the best possible deal for consumers, making sure they get the lowest net cost. And then you'll see through, as Heather just mentioned, partnerships like RVO Health, you'll see us to continue to innovate the way in which we engage with consumers to make that much more modern, much more as U.S. consumers should get and should expect. Heather, thank you so much. Next question please?

The next question comes from the line of Steven Valiquette with Barclays.

so regarding the acuity level of the elevated flu and respiratory costs in the fourth quarter, is there any sense for just how much of the elevated cost for, hate to call it, tripledemic, let's just call it that, I guess, for the quarter, how much of that was related to the hospital inpatient setting in particular? And then from your data, was there any sense that there may have been any slightly lower elective procedures or traditional non-COVID and non-flu-related care in the fourth quarter in light of the elevated flu and respiratory cost and utilization?

Stephen, thanks so much for asking that. Listen, I think -- listen, of course, it was Q4. There was a bit more flu and respiratory. But really, I'd say immaterial in the scheme -- in the grand -- in the way I'd say in the grand scheme of the healthcare costs of the U.S., almost not noticeable. I mean, almost nothing to see. And I think I wouldn't -- much as I think there was a lot of anticipation around what could be coming in this notion of different viruses all come, somehow creating this, I think you said triple pandemic, really not there. And the little elevation we saw was somewhat within the ranges of what you typically would expect in a normal Q4 early flu season, which, as Brian mentioned earlier, looks like it's -- we've seen the last five weeks coming down. That's pretty much it, yes. So I really wouldn't guide you to characterize this as a big deal within the overall mix of the total healthcare costs that we're dealing with. It really isn't. Next question?

Our next question comes from the line of Kevin Fischbeck with Bank of America.

Just wondering if you could talk a little bit about your expectations for redeterminations that you talked a bit about how you see that as a membership opportunity, but some more focus on the MLR implications. I guess, if you think about the potentially significant change in the membership of the Medicaid program and the implications for the risk pool there, how are you thinking about potential margin compression and how quickly rates might be able to reflect that, if it does play out?

Kevin, thanks so much. I'm going to ask Tim Spilker, who looks after our Medicaid business to talk to that. And maybe Tim, as you do that, you could also maybe just allude a little bit on the degree of visibility you have for your book of business as you roll into 2023. That might also be helpful.

Yes, absolutely. Thanks, Kevin, for the question. So certainly, a number of factors in play as we look ahead, certainly, the change in membership that we'll see as redeterminations resume. And then also acuity utilization, all of the factors really as things return to normal. So at this point, from where we look, we've got visibility at around 75% of our revenue for the year. And states, as they set that revenue, have taken all of those factors into account when setting their rates, and that revenue is in line with our expectations and consistent with the outlook that we shared in November. So we're appreciative of the balanced rational view that our states have taken as they've looked ahead, knowing that we've got many factors coming forward. Maybe one last thing, just as we look ahead, the redetermination process will be extended. We know it will take 10 to 12 months depending on the state. And that will give us opportunities to provide data, feedback and insights to our customers, work with them to adjust as things develop. So really no changes from what we communicated in November and with a little bit more certainty now in terms of our revenue.

Right. Thank you, Tim. I appreciate that, Kevin. Thanks for the question. Operator, we just have time for one last question, if we could go ahead, please?

Our next question comes from the line of George Hill with Deutsche Bank.

I wanted to come back to the specialty drug and pharmacy initiatives. And I guess, can you talk about what percent of these drugs are going through the mail channel versus the retail channel now? Kind of how do you expect the share to shift away from retail to mail? And then I'd tack on kind of how should we think about what the earnings power of the shifts can look like as you capture more of the specialty drugs in owned channels versus third-party channels?

George, thanks so much for the question. Let me hand it straight to Heather, please.

Sure, great question. As we continue to see the pipeline in specialty drugs, I hope you can feel the urgency around us driving. And you can see it in our growth, but also in our patient care and our clinical program. So our Optum Frontier Therapy, I think, is actually a good model. I know it serves only sort of rare disease and orphan drug, but we talked about the investor conference. It's got a comprehensive clinical model wrapping around it that supports not just the patients, the caregivers, the prescriber, the family, but also helps pharma to deliver the best service in those drugs. That is the model we're using to inform how we serve clients and how we serve patients in our specialty business as well. So think about that holistic support, patient advocacy, patient support, caregiver support, prescriber support, all while investing in automation. So even in our pharmacy -- in our specialty pharmacy today, our automation is up. We're actually seeing over 30% higher self-service in the specialty pharmacy. That's not just mail and maintenance, that's specialty. So we're investing in the automation. For those that have simple transactions and want to interact with us with these, but those that need more comprehensive care with complex conditions that need the value of our 24/7 pharmacist support, our team is there to help them. So we will always continue to work with our retail partners. We are -- we've got a very strong network of that. But we want to be able to serve our consumers and our clients with best-in-class specialty service.

Thanks, Heather. And George, thank you for the question. Listen, we come to the end of the call, I hope very much you leave the call with a sense of our optimism and focus on continued growth for the year ahead. We remain intent on expanding our ability to help improve healthcare at the system and individual levels and executing with excellence for all those we serve. We look forward to sharing our progress on this journey with you again in April. And in the meantime, thank you so much for your attention this morning. We appreciate it.

That concludes today's conference. Thank you for your participation and you may now disconnect.