UnitedHealth Group has the very best price per share of any company on the Dow Jones Industrial Average and it is the tenth heaviest-weighted stock on the S&P 500.
The truth is, not only is UnitedHealth the largest health-care conglomerate in the US based on market cap and revenue, it’s even larger than JPMorgan Chase, the nation’s largest bank.
And it’s a Wall Street darling, with experts optimistic in regards to the company’s future: 22 of 25 analysts currently label it a buy.
“If I had to select one stock, just one stock to purchase, I’d buy United[Health],” said Ana Gupte, principal at AG Health Advisors.
UnitedHealth “has had superior stock performance over everybody else for 2 reasons,” said Lance Wilkes, managing director and senior research analyst at Bernstein Research. “One could be strategic vision and the opposite is strategic capital management.”
UnitedHealth has increased its annual revenue since 2012 by greater than $100 billion, when adjusted for inflation. It achieved this by engaging in a singular acquisition strategy. It began with smaller deals which have grown while lots of UnitedHealth’s competitors resembling Aetna and Humana or Anthem and Cigna tried to broker much larger ones, only to be stopped by regulators.
Conversely, UnitedHealth leaned right into a vertical-integration strategy, buying up smaller corporations and constructing them into its growing health-care business.
UnitedHealth’s size makes it “relatively resistant to economic cycles” as a result of the corporate’s wide diversity, Gupte said. “It makes it very attractive from an economic cycle and a macro environment perspective.”
Until recently, its acquisition strategy allowed it to grow without catching an excessive amount of scrutiny from regulators. But in January 2021, UnitedHealth and Change Healthcare announced a virtually $8 billion all-cash deal that was challenged by the Department of Justice as a result of antitrust concerns.
Health-care corporations “have gotten increasingly more [like] utilities,” Wilkes said. “Consequently, I believe they are going to have very large market shares because … you would not want redundant services through the system.”
“I believe at this point you we might consider UnitedHealth Group just form of like … core health infrastructure at this point in America,” said Matt Stoller, director of research on the American Economic Liberties Project and writer of “Goliath: The Hundred 12 months War Between Monopoly Power and Democracy.” “It’s too big to administer.”
“UnitedHealth Group is committed to improving the health system for everybody, advancing evidence-based practice and aligning incentives across the system to make sure people get the precise care at the precise time in the precise place,” UnitedHealth Group told CNBC.
“Because we serve people throughout every aspect of the health system, we’ve got a singular ability to discover opportunities to raised integrate care and advantages, develop solutions and deploy them at scale to enhance access, lower costs and make the experience higher for patients and providers,” it said.
Watch the video above to find out how UnitedHealth Group grew so big and what which means for the U.S. health-care system.
