Just as deregulation tends to boost industry-wide returns and valuation multiples, the imposition of regulations tends to spook investors and compress multiples. Certainly life has changed quite a bit for health insurance companies in the last four years, but Wall Street may yet be expecting a worst-case scenario that is unlikely to materialize. Although UnitedHealth (UNH) is facing more government influence and interference in its operations, UnitedHealth's scale and operational performance should allow it to still win in the end.
A Good Close To The Year
UnitedHealth is so big now that it doesn't actually turn on a dime. Nevertheless, there were definitely some encouraging developments this quarter.
Reported consolidated revenue rose about 8% (and more than 2% sequentially) as sluggish growth (up less than 2%) in the core managed care business was augmented by 54% growth in OptumHealth and 19% growth in OptumRx. Reported revenue growth at OptumInsight seemed non-existent, but this was due to the disposal of the clinical trials basis; on a like-for-like basis, revenue actually grew 18%.
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UnitedHealth Posts Positive Earnings; Looks Like A Good Contrarian Bet
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