UnitedHealth Group Incorporated (NYSE: UNH), one of the largest health insurers in the United States, reported a positive performance in the first quarter of 2023, demonstrating balanced growth across its Optum and UnitedHealthcare business segments.
The company’s revenue increased by 15% to $91.9 billion in Q1:23, and its adjusted earnings per share rose by 14% to $6.26 compared to the same period last year. Year-to-date, UnitedHealthcare also expanded its customer base, serving 1.2 million more people in the United States, with half of this growth coming from its commercial offerings. Additionally, the OptumHealth segment reported a significant increase in the number of patients served under fully accountable value-based arrangements, reaching nearly 700,000 more patients compared to December 2022.
UnitedHealth Group’s consumer-oriented approach and focus on value-based care are instrumental in driving its growth. The company aims to serve more than 4 million patients in fully accountable value-based care arrangements through Optum in 2023, a significant increase from the 1.8 million patients it treated in these programs in 2022.
However, the potential unintended consequences of the changes in the risk adjustment model for Medicare Advantage (MA) are a concern for the company, as well as for several analysts during the Q&A portion of the April 15th earnings call. These changes could have an impact on adequate diagnosis and support for people with diabetes, complex behavioral needs and more.
In response, UnitedHealth Group CEO Andrew Witty did tell investors on the company’s earnings call that “we do appreciate” the Center for Medicare & Medicaid Services’ (CMS) decision in late March to phase in massive changes to risk adjustment in MA over the next three years. “This phase-in will allow for more time to minimize the impacts on beneficiaries,” said Mr. Witty. “[United Healthcare is] committed to working with CMS as stewards of the MA program.”
UnitedHealthcare is one of the largest players in the MA market, and together with Humana, they hold the majority of MA members, according to Brian Thompson, the CEO of UnitedHealthcare. Despite several Wall Street analysts’ questions regarding the growth potential of MA, the company executives remained confident in their outlook.
Mr. Thompson stated that UnitedHealthcare anticipates plenty of growth opportunities in 2024 as they prepare to submit their MA bids. He spoke about how the MA market, which has been a hot spot in health insurance for some time, is likely to continue growing due to the aging population, increasing demand for value-based care, cost-saving measures and improved benefits and services offered by insurance providers. Mr. Thompson further added that the company is “encouraged and optimistic” as it enters the bidding process.
UnitedHealth Group’s strong financial performance is a positive sign for the healthcare industry as a whole. The company’s focus on value-based care and improving the consumer experience is a clear indication of where the healthcare industry is headed.
On the M&A front, UnitedHealth Group kicked off the second quarter of 2023 with the acquisition of Crystal Run Healthcare by Optum, further reinforcing its commitment to value-based care. Crystal Run Healthcare is a multi-specialty physician group with 390 providers across more than 30 New York locations. Optum has been a key growth area for the healthcare giant, announcing five acquisitions in 2022 alone.
The Crystal Run Healthcare acquisition is UnitedHealth Group’s first deal of the year, but as the company enters the rest of 2023 and beyond, we can expect it to continue pursuing opportunities in value-based care.
