How Much Does OptumRx Contribute To UnitedHealth Group’s Revenues & Growth?
UnitedHealth (NYSE:UNH)’s Optum division has three primary businesses – OptumHealth, OptumInsight and OptumRx. OptumRx specializes in pharmacy care services, catering to more than 66 million people in the U.S. through its network of over 67,000 retail pharmacies and home delivery centers. OptumRx has been the primary contributor to Optum’s revenues and growth over the last five year,s and delivered excellent results in the first quarter this year as well.
Going forward, we expect OptumRx to contribute about 71% of Optum division’s revenue growth over the next five years, accounting for about 30% of UnitedHealth group’s overall revenues in 2021 from an estimated 24% in 2016. However, its contribution to EBITDA is likely to be slightly lower at 50%.
In the first quarter this year, OptumRx’s revenues grew 72% year-over-year driven by the acquisition of pharmacy benefit management (PBM) firm Catamaran for $12.8 billion last year. The acquisition has made UnitedHealth one of the largest players in the PBM market, with about a 20% market share.
The company’s progress with respect to its strategy of delivering holistic health care solutions through Optum is reflected in its performance results for the last several quarters. One of the key drivers has been the company’s focus on five key areas of health care services – clinical care, pharmacy care services, information and technology solutions, government services and international business. In addition to an increase in revenues, the company continues to add more clients – individuals as well as enterprises. We believe that strong fundamentals, a comprehensive approach and a greater number of market opportunities should keep the division’s growth momentum strong going forward.
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