UnitedHealth Group: Robust Revenue Expected



Robust revenue growth?

UnitedHealth Group (UNH) has projected its 2016 revenues to be approximately $200.0 billion. Adjusted EPS (earnings per share) in 2016 is expected to be 20.0% higher YoY (year-over-year).

The company also expects its 2016 cash flow from operations to be close to $12.0 billion. These performance estimates indicate the company’s confidence in its organic growth potential.

With its robust revenue run rate, UnitedHealth Group accounts for about 5.0% of the overall annual healthcare expenditures in the United States, which are around $3.3 trillion. The company also seems to be close to achieving its long-term annual revenue target of $250.0 billion.

Wall Street analysts have projected UnitedHealth Group’s 2016 revenues to be about $183.9 billion, which is a YoY growth of 17.1%. Although analysts have predicted a robust rise in 2016 revenues, the estimate is slightly lower than the company’s guidance numbers.

For 2016, peers such as Aetna (AET), Anthem (ANTM), and Cigna (CI) are expected to earn revenues of about $63.2 billion, $83.6 billion, and $39.6 billion, respectively.

If UnitedHealth Group manages to surpass analyst estimates, it may have a positive impact on the company’s share prices as well as those of the SPDR S&P 500 ETF (SPY). UNH makes up about 0.78% of SPY’s total portfolio holdings.

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Quality focus

UnitedHealth Group is seeking to be recognized as a market leader based on the Net Promoter Score (or NPS). According to Net Promoter Network, “Net Promoter Score, or NPS, measures customer experience and predicts business growth.”

UnitedHealth Group has managed to achieve high NPS scores for its Medicare Advantage and managed Medicaid businesses. That’s an indication of the company’s high customer retention.

UNH has also been focusing on data analytics to improve its strategic decisions such as product development, network development strategies, and customer management.

In the next part of this series, we’ll take a look at Optum360, UnitedHealth Group’s revenue cycle management solution, and analyze its growth prospects.


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