Part of UnitedHealth Inc. UNH maintained its strong operating performance trend in 2019 over the past several years, but its shares did not reflect the same trend.
The stock rose by 17.5% in 2019, underperforming the industry’s 18.4% rise. Certain firms like Humana Inc. in the same room. HUM, Inc. by Anthem. ANTM and Healthcare Molina, Inc. MOH, which has gained 28.4%, 16.3%, and 16.9% respectively over the last year.
UnitedHealth’s shares became subject to uncertainty when consumers shied away from their business due to regulatory risks arising from different political initiatives, the most famous being’ Medicare For All’ to overhaul the healthcare system.
Due to its two overlapping business strategies, UnitedHealth retains its leadership position in the health insurance industry, including Optum for health services and UnitedHealth for health benefits. Total registration is expected to reach 49.8-50.4 million by 2020, driven by Medicare Advantage growth as management expects to further expand the market share of the company.
For Medicaid, the return of the Health Insurance Levy for 2020 would result in premiums being somewhat under strain year after year. The division of Optum provides a good diversification of sales.
It turned UnitedHealth from a health insurance company into a healthcare company by opening up a number of affiliated companies Sub-segments OptumHealth, OptumInsight and OptumRx include data and analytics, care delivery, population health management and engagement, health financial services, health IT, benefit and care and pharmacy services.
In 2020, sales from Optum will be driven primarily by a large boost from OptumHealth led by OptumInsight and Optum RX. Management expects revenue of $260-262 billion for the coming year, reflecting a 7-8 percent increase from its $242 billion upward updated 2019 forecast. The top line of UnitedHealth is expected from $208 billion to $210 billion, while the sales of Optum are projected from $127 billion to $128 billion.
Operating earnings are forecast to range from $21.7-22.3 billion, which suggests a mid-point margin of approximately 8.5 percent. While the organization will continue to perform well in 2020, political uncertainty from multiple healthcare reform initiatives will persist until the presidential elections in 2020.