UnitedHealth bets on Optum
UnitedHealth built its reputation selling insurance, but its future growth will depend more on a business segment that strays well beyond that core.
Operating earnings for the company’s Optum segment surged 28 percent to nearly $1.5 billion in the third quarter. That’s actually pedestrian compared to growth of more than 40 percent in previous quarters, thanks to a roughly $12-billion acquisition completed in 2015 to bolster its OptumRx pharmacy benefits management business.
OptumRx competes with national players like Express Scripts in a hot market filled with employers and insurers seeking help controlling soaring prescription costs. It does that in part by negotiating drug prices and providing programs that help customers stick with their prescriptions. UnitedHealth has said it expects OptumRx to manage nearly $80 billion in pharmaceutical spending this year. Optum also runs urgent care centers and doctor offices, analyzes data and provides revenue management services, among other products.
Health insurance is still UnitedHealth Group’s main business, and the company uses Optum to make those insurance products better as well as bring in outside business, said Mizuho Securities USA analyst Sheryl Skolnick.