UnitedHealth Group Inc (NYSE:UNH) stock has been doing very well this year, especially considering the turmoil over Obamacare. It’s up 45% in the past 12 months, even during all the chaos in Washington over repeal and replace and whether the government was going to pay insurers for their Obamacare insurance plan subsidies.
UNH beat earnings expectations for 15 consecutive quarters during all the previous upheaval in the healthcare sector as Obamacare was implemented and fought over. CEO Stephen Hemsley has been at the helm the entire time.
But, on September 1, that will no longer be the case.
Starting then, current president and 20-year UNH veteran David Wichmann will be taking over that role. This transition should be a calm affair, since there’s little need to change what has been working for UNH for many years now.
Hemsley noted in his exit statement that it is a good time to leave, while everything is going well. And so it is.
The UnitedHealthcare division’s Medicare Advantage now privately insures 35% of Medicare recipients, and the company’s goal is to get more than half on its roles in coming years, according to Forbes. For decades, UNH has been working to transition public Medicare to a privately managed system, and it seems to be working.
Also working is UNH’s Optum Health division. According to Q2 numbers, revenue for the group was up 10% compared the same quarter a year ago. And each individual group saw double-digit increases, meaning the entire operation is growing at a strong clip. It’s not just one division that is carrying the rest.
The OptumRx division, which focuses on pharmacy benefit management and care services saw an increase of 16 million prescriptions for the quarter. This at a time when competition in this sector and margins are making it hard on many pharmacies.
UNH is optimistic that its Optum Care services (outpatient and ambulatory care facilities and management) have another 10 years of strong growth ahead.
To that end, just this week UNH announced the purchase of The Advisory Board Company’s healthcare analytics, consulting and research division for a mere $1.5 billion. UNH plans to roll this division into its Optum family, which will continue to add diversity to its growth.
And all this comes at a time when one of the largest demographics in the U.S., the baby boomers are entering their retirement years. There is significant growth to be had for smart companies. And given UNH stock’s 261% return over the past five years, it proves that point well.
