United Healthcare 2008 Annual Report Download - page 44

contracts were excluded from the divestiture. Also, we retained Sierra’s Medicare Advantage HMO plans in
Nevada. The results of operations and financial condition of Sierra have been included in our consolidated results
and the results of the Health Care Services, OptumHealth and Prescription Solutions reporting segments since the
acquisition date.
Fiserv Health, Inc. On January 10, 2008, we acquired all of the outstanding shares of Fiserv Health, Inc. (Fiserv
Health), a subsidiary of Fiserv, Inc., for approximately $740 million in cash. Fiserv Health is a leading
administrator of medical benefits and also provides care facilitation services, specialty health solutions and
pharmacy benefit management (PBM) services. This transaction allows us to expand the capacity of our existing
benefits administration businesses and enables existing and new customers to leverage our full range of assets,
including ancillary services, our national network and technology tools.
The results of operations and financial condition of Fiserv Health have been included in our consolidated results
and the results of the Health Care Services, OptumHealth, Ingenix and Prescription Solutions reporting segments
since the acquisition date.
2008 RESULTS COMPARED TO 2007 RESULTS
Consolidated Financial Results
Revenues
Revenues consist of premium revenues from risk-based products; service revenues, which primarily include fees
for management, administrative and consulting services; product revenues; and investment and other income.
Premium revenues are primarily derived from risk-based health insurance arrangements in which the premium is
fixed, typically for a one-year period, and we assume the economic risk of funding our customers’ health care
benefits and related administrative costs. Service revenues consist primarily of fees derived from services
performed for customers that self-insure the medical costs of their employees and their dependants. For both
premium risk-based and fee-based customer arrangements, we provide coordination and facilitation of medical
services; transaction processing; health care professional services; and access to contracted networks of
physicians, hospitals and other health care professionals. Through our Prescription Solutions PBM business,
revenues are derived from both products sold and administrative services. Product revenues also include sales of
Ingenix publishing and software products.
Consolidated revenues for 2008 increased from 2007 primarily due to the increase in premium revenue in the
Health Care Services reporting segment. The following is a discussion of consolidated revenues for each of our
revenue components.
Premium Revenues. The premium revenue growth generated by our Health Care Services reporting segment was
the primary driver in the consolidated premium revenues increase. This increase was due to the growth in
individuals served by our Public and Senior Markets Group, premium rate increases for medical cost inflation
and acquisitions completed in 2008, partially offset by a decline in individuals served through both
UnitedHealthcare risk-based products and Medicare Part D prescription drug plans.
Service Revenues. The increase in service revenues for 2008 was driven by an increased number of individuals
served by fee-based product arrangements in the Health Care Services reporting segment, primarily due to the
Fiserv Health acquisition. In addition, our Ingenix reporting segment generated service revenue growth from its
health intelligence and contract research businesses as well as from business acquisitions.
Product Revenues. Product revenues for 2008 increased due to increased prescription volume at our Prescription
Solutions reporting segment, primarily related to the Fiserv Health acquisition.
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