Insurance Week In Review: UnitedHealth Group

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UnitedHealth Group

Last week, UnitedHealth (NYSE:UNH) announced new plans for Medicare 2015 enrollments which will be offered in the upcoming enrollment period. [1] United HealthCare Medicare and Retirement provides health insurance plans to senior citizens and eligible younger people with disabilities, administered by the Centers for Medicare and Medicaid Services (CMS). The company provides coverage in return for a fixed monthly premium per member from CMS. Premium amounts are determined by factors such as area of residence, demographic factors like age and gender and the individual’s health condition.

Placing an emphasis on affordable healthcare, as well as access to benefits, services and features, the company unveiled features enabling greater savings on medication and the inclusion of prescription drug coverage in most of its plans. For 2015, the company has also increased its number of medications, with the addition of generic versions of common drugs such as Lipitor, Synthroid, Actos, Coumadin, Fosamax, Singulair and 72 other drugs.

As part of the new plans, the company expects to widen its collaboration with physicians and has an additional focus on general wellness and preventive healthcare for its members. At present, UnitedHealth has the largest Medicare membership in the U.S. for all the three types of Medicare plans: Medicare Advantage plans, Part D prescription drug plans and Medicare supplement plans. [1]

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The company also continued to strengthen its fast-growing Optum segment, just a few weeks after it gave a boost to its Optum Labs division. [2] UnitedHealth will acquire MedSynergies, a healthcare service provider headquartered in Texas. [3] The acquisition will widen Optum’s client base with the addition of around 9,300 healthcare providers in the U.S. that MedSynergies currently serves. [2]  MedSynergies’ expertise in physician practice management and revenue management for hospitals and healthcare systems will particularly add value to Optum’s Insight business. For a detailed analysis of the deal and its implications for UnitedHealth, refer to our article UnitedHealth’s MedSynergies Acquisition To Aid Optum’s Growth.

UnitedHealth’s stock was about flat around $86 on the week. We have a price estimate of $83 for UNH’s stock, valuing the company at approximately $80 billion compared to the current market cap of nearly $84 billion. The company had over $122 billion in revenues in 2013, of which around 25% came from the Optum division and 30% from the Medicare and Retirement division. [4]

See Full Analysis For UnitedHealth Group Here

Notes:
  1. UnitedHealthCare Introduces 2015 Medicare Plans, UnitedHealth Press Release [] []
  2. Four New Partner Organizations Join Optum Labs Research Collaborative, UnitedHealth Press Release [] []
  3. Optum to Acquire MedSynergies to Help Physician Groups Enhance Patient Care, Improve Practice Performance, UnitedHealth Press Release []
  4. SEC 10-K Filing []