All information is publicly available via our quarterly earnings calls and SEC filings.
Several transactions contributed to the $3.3 billion gain1, including a number of full dispositions. A handful were businesses (each profitable) where we partnered with equity investors and retained an interest. As we have done consistently under US GAAP (Generally Accepted Accounting Principles), these portfolio refinement gains2 and losses were reported in operating costs.
Transactions may be structured as joint ventures where strategic partners bring specific knowledge, skill, expertise and other value to enhance existing assets, and here we were interested in our partners’ potential to expand the business’s external opportunities. Previous interest held can be purchased via call and put options3 to provide us with optionality and the ability to capture long-term value. The structure enabled us to advance a business relationship in a timely way, while retaining optionality for additional even further value-enhancing evolutions of these partnerships in the future – which we could still pursue if it makes sense.
UnitedHealth Group accounted for portfolio refinement and strategic transactions gains and losses within operating costs as permitted under Generally Accepted Accounting Principles (US GAAP). Our 10-K disclosures represent our future potential put payment for these profitable businesses – and these payments would be a small part of our annual capital deployment. This transparency provides UHG with the optionality and ability to capture the long-term value of an enhanced asset that benefited from a strategic joint venture under terms of the agreements.
Additional information about South America
Exiting South America was a fundamentally different action and of a different nature than typical portfolio refinements. It was a major, one-time strategic decision4 to withdraw from an entire market where we were a substantial participant. This also uniquely (for us) reflected significant losses related to foreign currency translation effects. As such, it was properly included and disclosed in our 10-K5 within loss on sale of subsidiary and subsidiaries held for sale on the Consolidated Statement of Operations.
Additional information about executive compensation
The Compensation Committee6 did not make any adjustments to the annual and long-term incentive plans that would have resulted in any benefit to management from the Change Healthcare cybersecurity incident or the $3.3 billion gain from portfolio refinement activities.
Sources
[1] 10-K (bottom of page 64)
[2] Q4 Earnings Release (page 2)
[3] 10-K (bottom of page 64)
[4] Earnings Release (Non-GAAP Disclosure) (page 7)
[5] 10-K (middle of page 64)
[6] Shareholder Q&A (page 2)
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