UnitedHealthcare Added 1.8 Million Organic Enrollments in 2015
UnitedHealth Posts 4Q15 Results: Growth Is Strong, Diversified
UnitedHealthcare’s performance
UnitedHealthcare, UnitedHealth Group’s (UNH) managed care business, is currently responsible for offering health insurance services to 46.4 million medical members, mainly in North and South America. In 2015, the company witnessed year-over-year (or YoY) organic growth of 1.8 million enrollments. Enrollments rose 300,000 in 4Q15.
The total members enrolled in UnitedHealth Group’s health plans across both government and commercial segments have increased by 13.5 million or 40% from 2010 to 2015. To know more about UnitedHealth Group’s business segments, please refer to What are UnitedHealth Group’s key business segments?
The above graph shows that UnitedHealthcare’s total revenues increased by about 7.9%, from $30.4 billion in 4Q14 to $32.8 billion in 4Q15. Operating income declined by 45% from $1.7 billion to $949 million in the same time frame.
A similar trend was observed in UnitedHealthcare’s full year 2015 performance. Total revenues earned by the segment increased 10% YoY to reach $131.3 billion. But operating margins declined by 5.1% on a YoY basis. This is mainly attributed to losses borne by the company in the public health insurance exchange offerings.
Innovations are driving performance
To increase their market share, health insurance companies such as UnitedHealth Group, Aetna (AET), Anthem (ANTM), and Cigna (CI) have been actively introducing innovative and efficient processes to better serve customers. UnitedHealth Group serves about 25 million customers through its Advocate4Me service model, where members are more invested in their health and make effective healthcare decisions.
Advocate4Me is UnitedHealth Group’s service innovation based on predictive personalization. Members can contact a specialist from pharmacy, financial, clinical, behavioral, or other related areas through toll-free numbers or other preferred communication to solve their issues. The company uses technology, member data, and analytics for early identification of a member’s health needs. This helps in early detection and controlling future healthcare costs borne by UnitedHealth Group.
About 23 million members have also joined UnitedHealth Group’s digital health applications, which provide messages on selecting primary care physicians, opting for urgent care over emergency care, adopting health and condition management programs, and opting for early screenings for diseases.
The Real Appeal digital medical service is targeted at weight management and reducing the probability of diabetes. It has already enrolled 1 million people in 2H15 and has 0.5 million committed to join in 1H16. All these innovations will improve the quality of life for members and reduce the company’s total medical costs.
You can invest in the SPDR Dow Jones Industrial Average ETF (DIA) and reduce excessive company-specific risks of investing directly in UnitedHealth Group. UnitedHealth Group accounts for about 4.8% of DIA’s total holdings.
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