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UnitedHealth Investors Aren’t Worried About Bernie

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UnitedHealth, the largest health insurance company in the U.S., reported a record quarter on Wednesday.  United’s revenue was up 4.25% year-over-year as they added more than 800k commercial customers and 300k Medicare Advantage customers.

Zooming Out:


Over the last decade UnitedHealth shares have risen by nearly 10x.  You might be thinking, how could that be possible?  They didn’t change how the world watches television (like Netflix did) or crack the code for super-personalized advertising (like Facebook did).  They just collected more insurance premium dollars than they paid out in medical services, right?

Sort of: The company’s health insurance unit is very profitable, but that’s been the case for a long time.  Many analysts are pointing to UnitedHealth’s successful push for vertical integration as a key to its success:

The Playbook: UnitedHealth has invested in product lines beyond just insurance.  In 2018 they acquired Genoa, a pharmacy chain and provider of telepsychiatry services, for $2.5 billion.  Last year United acquired Equian, a healthcare payment processing firm that helps reduce billing errors and overpayments, for $3.2 billion.The

The Takeaway:

Investors need to keep an eye on politics.  Should either Bernie Sanders or Elizabeth Warren win the Democratic nomination, it could get bumpy for United.  The week after Bernie introduced his Medicare-for-All bill, United shares fell more than 10%.  But overall, investors don’t seem too concerned.  Goldman Sachs even has United on their conviction buy list. We’ll get to those guys next.

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