UnitedHealth Group has the highest price per share of any company listed on the Dow Jones Industrial Average and is the tenth most weighted company on the S&P 500.
In actual fact, UnitedHealth shouldn’t be only the largest healthcare conglomerate in the United States by market capitalization and revenue, it’s even larger than JPMorgan Chase, the largest bank in the country.
And it is a Wall Street darling, with experts optimistic about the company’s future: 22 out of 25 analysts now describe it as a buy.
“If I had to select one share, only one to buy, I’d buy United[Health]said Ana Gupte, director of AG Health Advisors.
UnitedHealth “had a greater stock market record than everyone else for 2 reasons,” said Lance Wilkes, managing director and senior analyst at Bernstein Research. “One could be strategic vision and the other could be strategic capital management.”
UnitedHealth has increased its annual revenue since 2012 by greater than $100 billion, adjusted for inflation. It has achieved this by engaging in a novel acquisition strategy. It began with smaller deals that grew while many of UnitedHealth’s competitors like Aetna and Humana or Anthem and Cigna tried to broker much larger deals but were stopped by regulators.
Conversely, UnitedHealth relied on a vertical integration strategy, buying smaller corporations and embedding them into its growing healthcare business.
UnitedHealth’s size makes it “relatively resilient to economic cycles” due to the company’s wide range, Gupte said. “This makes it very attractive from an economic cycle and macro-environment perspective.”
Until recently, its acquisition strategy allowed it to grow without being overly scrutinized by regulators. But in January 2021, UnitedHealth and Change Healthcare announced a virtually $8 billion money deal that was challenged by the Department of Justice due to antitrust concerns.
There are increasingly more corporations in the medical industry [like] public utilities,” said Wilkes. “Subsequently, I believe they are going to have very large market shares because … you would not want redundant services in the system.”
“I believe at this point we might consider the UnitedHealth Group to be something of a… basic health infrastructure right here in America,” said Matt Stoller, director of research at the American Economic Liberties Project and creator “Goliath: The Hundred Yr War Between Monopoly Power and Democracy. “It’s too big to manage.”
“UnitedHealth Group is committed to improving the healthcare system for all, advancing evidence-based practices, and aligning incentives across the system to ensure people get the right care at the right time in the right place,” UnitedHealth Group told CNBC.
“Because we serve people in every aspect of the healthcare system, we now have a novel ability to discover opportunities to higher integrate care and services, develop solutions and deploy them at scale to improve access, reduce costs and improve the patient and healthcare provider experience,” it said.
Watch video above to learn how the UnitedHealth Group grew to this size and what it means for the US healthcare system.