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UnitedHealth’s 3 revenue components (1) UnitedHealthcare Employer & Individual, (2) UnitedHealthcare Medicare & Retirement, and (3) Optum RX, have contributed more than 70% of gross revenues over the last 3 years. Further, we expect them to contribute roughly $214 billion (70%) of Gross Revenue estimate of $306.6 billion for full-year 2019
UnitedHealth Business Model
What Does UnitedHealth Offer?
UnitedHealthcare Employer & Individual / Private Health Insurance: It offers individual insurance and employer sponsored health insurance plans for employees
UnitedHealthcare Medicare & Retirement / Medicare: This segment provides healthcare services, primarily to individuals aged 65 or older
UnitedHealthcare Community & State / Medicaid Managed Care: This division provides managed care solutions and insurance coverage to beneficiaries under Medicaid program of U.S. government
UnitedHealthcare Global: It provides healthcare services to governments, corporates, and individuals in more than 130 countries, with a strong presence in Brazil.
OptumHealth: It offers health and wellness services to individual, business and government customers
OptumInsight: It deals in software products along with information, advisory and outsourcing services for healthcare industry
OptumRx: It is responsible for processing and paying prescription drug claims of its clients
Eliminations: Due to the overlapping nature of UnitedHealth's revenue streams, certain revenue components are included in more than one segment. These overlapping components are categorized as Eliminations, and are deducted from Gross Revenues.
Who Are The Clients?
UnitedHealth Group provides individual insurance, employer sponsored health insurance, managed care, private healthcare, health and wellness services, healthcare advisory & technology solutions and pharmacy benefits management services to –
PhysiciansHospitalsLife sciences companiesHealthcare providersGovernmentsRetail customersEmployers
What Are The Alternatives?
UnitedHealth’s business model faces stiff challenges and competition from offerings by its global competitors such as:
UnitedHealth’s Gross Revenues (before eliminations) have swelled 23% from $233 billion in 2016 to $286 billion in 2018, and we expect the figure to reach almost $350 billion by 2021
Gross Revenues [=A+B+C+D+E+F+G]
YOY change in Gross Revenues
UnitedHealthcare Employer & Individual revenues have struggled over the last three years.
The lackluster performance could be attributed to drop in number of policyholders over the last three years, from 30.6 million in 2016 to 26.9 million in 2018. However, we expect the numbers to improve in subsequent years and cross 27.5 million by 2021.
Average monthly health insurance premiums increased by 17% y-o-y in 2018. Further, it is expected to grow at an average annual rate of 2% and cross $183 by 2021.
This would enable the segment revenues to grow at an average annual rate of 3% and cross $60.3 billion by 2021.
UnitedHealthcare Employer & individual [=A*B]
United HealthCare Employment and Individual Policyholders [A]
UNH's Average Monthly Health Insurance Premiums [B]
YOY change in UnitedHealthcare Employer & individual
UnitedHealthcare Medicare & Retirement revenues are expected to cross $97.5 billion by 2021
Although medicare enrolments have grown at an average annual rate of 5% over 2016-2018, we expect the growth rate to slow down in the coming years.
Strong growth in monthly medicare premiums is expected to continue over subsequent years, resulting in the figure reaching $539 by 2021
This would enable segment revenues to grow at an average annual rate of 9% and cross $97.5 billion by 2021.
UnitedHealthcare Medicare & Retirement [=A*B*12]
United HealthCare's Medicare Enrollments [A]
UNH's Average Monthly Medicare Premiums [B]
YOY change in UnitedHealthcare Medicare & Retirement
UnitedHealthcare Community & State is expected to grow at a slower pace over the next three years.
Medicaid enrollments jumped by 14% in 2017, before reporting a decline of 4% in 2018. We expect the enrollments to recover in coming years and cross 7 million by 2021.
Average monthly medicaid premiums are expected to grow at an average annual rate of 3% over the next three years -- from $561 in 2018 to $608 by 2021.
This would allow segment revenues to cross $51 billion by 2021.
UnitedHealthcare Community & State [=A*B*12]
United HealthCare's Medicaid Enrollments [A]
UNH's Average Monthly Medicaid Premiums [B]
YOY change in UnitedHealthcare Community & State
UnitedHealthcare Global has added 2 million enrollments over 2016-2018, however it is expected to add only 400K over the next three years
International enrollments are expected to grow at a slower pace over the coming years -- from 6.2 million in 2018 to 6.6 million by 2021.
We expect the monthly premiums to grow at an average annual rate of 3% and cross $138 by 2021.
This implies segment revenues will cross $10.8 billion by 2021.
UnitedHealthcare Global [=A*B*12]
United HealthCare's International Enrollments [A]
UNH's Average Monthly International Premiums [B]
YOY change in UnitedHealthcare Global
Optum Health revenues are expected to cross $33.3 billion by 2021
The segment revenues have increased by 43% over the last three years, from $16.9 billion in 2016 to $24.1 billion in 2018. We expect segment revenues to grow steadily over coming years, albeit at a slower rate than what has been seen over recent years.
Optum Health [E]
YOY change in Optum Health
Optum Insight revenues would cross $10.8 billion by 2021
The segment revenues have grown at an average annual rate of 11% over the last three years. However, we expect the growth rate to reduce by half in the coming years.
Optum Insight [F]
YOY change in Optum Insight
Optum RX revenues are expected to increase by 22% over the next three years.
Number of retail prescriptions has seen steady growth over 2016-2018. We expect the same trend to continue and enable the figure to increase by 200 million in the next three years.
Similarly, revenue per retail prescription would increase from $51.8 in 2018 to $58.2 by 2021.
This would enable the segment revenues to maintain its current momentum and cross $84.6 billion by 2021.
Optum RX [=A*B]
Number of retail prescriptions filled by Optum RX [A]
Revenue per retail prescription processed [B]
YOY change in Optum RX
Total Eliminations are expected to increase 1.22x (about $13.1 billion) in the next three years, while its share of Gross Revenues would remain the same
YOY change in Eliminations