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UnitedHealth Group Looks Forward To Continued Growth In Non-Traditional Areas

|Includes: CI, CVS, UnitedHealth Group Incorporated (UNH)
Summary

UNH recently announced increased forward guidance on Tuesday ahead of its annual investor meeting.

As UNH faces pressure through competitor mega mergers UnitedHealth Group is looking to non-traditional areas for growth.

UnitedHealth Groups recent acquisition of Seattle based primary care clinic Polyclinic shows their continued dedication to bolstering their primary care provider portfolio.

United's continued ability to push stronger growth in non-traditional areas than their competition makes them a good long candidate.

The nation’s largest insurer, UnitedHealth Group (NYSE: UNH), has looked strong throughout 2018 rising 25%. Following the update of their full year outlook on Tuesday UNH is looking forward to continued growth and revenue boosts in non-traditional areas.

UnitedHealth Group released a 2019 financial outlook of revenues between $243 billion and $245 billion with consensus estimates calling for EPS of $14. 58 on revenue of $244.26 billion. Driving confidence is the companies continued ability to rely on the consistency of its core business, its UnitedHealthcare arm which provides health care coverage and benefits services and Optum which provides information and technology-enabled health services, coupled with their push into other areas as boundaries continue to blur within the healthcare space. United’s continued dominance in the space coupled with their ability to consistently reposition themselves within new growing areas is strong proof that you should be long UNH.

As healthcare spending in America continues to rise touching over $3 trillion in 2017, United is continually positioning themselves to capture growth outside of its traditional areas such as the actual delivery of healthcare. UnitedHealth Groups announcement of their pending acquisition of Seattle based primary care clinic Polyclinic is the most recent example of how the company is looking to rise above other healthcare businesses through diversification. The acquisition of Polyclinic supplements previous United deals in which they acquired Seattle based DaVita medical group and Washington based Northwest Physicians Network. Combined these three acquisitions add 2,000 plus physicians to the company’s physician group management focused Optum Health.

The long-term focus in the industry has been on value-based healthcare. Cutting costs for primary care providers through better, more efficient treatment allows savings to trickle downstream to members while also decreasing the burden on United. Bolstering its portfolio of primary care providers allows UnitedHealth Group to obtain a larger role in the placement and treatment of patients.

Acquisitions in the Optum Health area is just one piece of Optum’s unique make-up. Optum seamlessly integrates distinct areas including pharmacy benefit management, data analytics, and medical services. United should be able to rely on their Optum units to provide competitive advantages as large tech companies and other potential entrants look to move into the healthcare service space.

United faces continued pressure within the industry with the planned merger of CVS Health and Aetna as well as Cigna and Express Scripts. While competitors look towards vertical integration to form a model similar to what UNH currently has, UNH looks to stay a step ahead through buying up assets to gain exposure in areas outside of its traditional expectations.

UnitedHealth Groups boosted forward guidance is reiterates their ability to maintain a sustainable competitive ability to compete for market share with their peers through finding synergies with non-traditional acquisitions.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.