OptumCare Expected to Become Key Growth Driver for UnitedHealth
As OptumCare continues to branch out across multiple markets, it may have a favorable impact on reducing UnitedHealth Group’s medical care ratio.
In its bid to control healthcare costs, UnitedHealth Group’s (UNH) OptumRx segment has been actively deploying data analytics across its Optum platform.
UnitedHealth Group’s (UNH) Optum One is being used by about 700 hospitals and 7,000 medical clinics, which together cover about 140,000 healthcare providers.
UnitedHealth Group (UNH) has projected that in 2016, revenues for its OptumHealth segment will grow 14.0%–17.0% YoY.
Optum360, UnitedHealth Group’s (UNH) hospital revenue cycle management solution, is expected to reach $60.0 billion in billings for clients and partner organizations.
Wall Street analysts have projected UnitedHealth Group’s 2016 revenues to be about $183.9 billion, which is a YoY growth of 17.1%.
The consensus 12-month target price for UnitedHealth Group’s stock is ~$152.60, which represents a rise of 8.8% from the stock’s closing price of $140.30 on July 11, 2016.
In 2Q16, Wall Street analysts expect UnitedHealth Group to report adjusted EPS (earnings per share) of approximately $1.90.
UnitedHealth Group will release its 2Q16 earnings on July 19, 2016. Wall Street analysts estimate that UnitedHealth Group’s (UNH) revenues will reach approximately $45.0 billion in 2Q16.
In a Bloomberg survey of 23 brokerage firms reported on April 28, 2016, ~61.9% of the analysts rated Anthem as a “buy,” while 38.1% rated it as a “hold.”
In its 1Q16 conference call, Anthem updated its 2016 revenue guidance to $81 billion–$82 billion—higher than the previous projection by about $1 billion.
In 1Q16, Anthem’s (ANTM) medical care ratio, which measures medical costs against premium revenues, rose by 1.6% on a YoY (year-over-year) basis.
In 1Q16, Anthem’s (ANTM) public exchange enrollment witnessed a sequential increase of about 184,000 members and reached 975,000 lives.
Anthem’s government-sponsored business, including Medicare, Medicaid, and Federal Employee Program enrollments, earned revenues of $10.8 billion in 1Q16.
Anthem’s (ANTM) Commercial and Specialty business earned revenues worth about $9.5 billion in 1Q16, which represents YoY rise of about 1.5%.
Anthem posted its 1Q16 earnings on April 27, registering adjusted diluted EPS of $3.46, which is 10.2% higher than the EPS reported by the company in 1Q15.
On April 21, 2016, UnitedHealth Group was trading at a forward PE multiple of about 14.4x. Since January 1, it has traded in the range of 12.3x–14.5x.
In its 1Q16 conference call, UnitedHealth Group updated its 2016 revenue guidance to $182 billion, slightly higher than the previously projected revenue.
In 1Q16, UnitedHealth Group witnessed overall medical cost trends in the range of 5.5%–6.5%. This is in line with the 2016 guidance given in December 2015.
UnitedHealth Group’s healthcare delivery business, OptumHealth, managed to earn $4 billion revenues in 1Q16, which represents a YoY growth of about 22%.