UnitedHealth Group (UNH) proves health insurance is a lucrative business. For example, UnitedHealth reported $92.903 billion in quarterly revenues on 30 June 2023.
Incredibly, those revenues grew from $80.332 billion on 30 June 2022. I calculate UnitedHealth’s quarterly revenues grew by $12.571 billion between June 2022 and June 2023. Astonishingly, UnitedHealth reported five straight quarters of double-digit revenue growth between June 2022 and June 2023. For example, UnitedHealth’s revenues grew by 15.65% in the quarter ending on 30 June 2023.
Data shows UnitedHealth Group keeps that revenue. For example, UnitedHealth reported a $22.887 billion quarterly gross profit on 30 June 2023, That quarterly gross profit grew from $19.643 billion on 30 June 2022.
Similarly, UnitedHealth reported an $8.057 billion quarterly operating income on 30 June 2023. The quarterly operating income grew from $7.132 billion on 30 June 2022.
UnitedHealth Group (UNH) generates incredible amounts of cash
UnitedHealthGroup (UNH) can generate important amounts of cash. For example, it generated a $41.913 billion quarterly ending cash flow on 31 March 2023.
Similarly, UnitedHealth reported an $11.032 billion on quarterly operating cash flow on 30 June 2023. The quarterly operating cash flow fell from $16.327 billion on 31 March 2023. The quarterly operating cash flow rose from -$4.533 billion on 31 December 2022 and fell from $18.549 billion on 30 September 2023. Plus, the quarterly operating cash flow ws $6.871 billion on 30 June 2022.
There was also a quarterly ending cash flow of $14.233 billion on 30 September 2022. However, the quarterly ending cash flow fell to -$15.48 billion on 31 December 2022 and -$100 million on 30 June 2023.
Enormous Value Growth at UnitedHealth (UNH)
There is enormous value growth at United Health Group Inc. (NYSE: UNH).
For example, UnitedHealth’s total assets grew from $230.172 billion on 30 June 2022 to $280.184 billion on 30 June 2023. Hence, UnitedHealth gained $50.012 billion in assets in a year.
UnitedHealth’s share price reflects the value and growth. Mr. Market paid $480.21 for UnitedHealth on 1 September 2023. Interestingly, the share price fell from $517.68 on 6 September 2022.
Investors share in UnitedHealth’s growth. The company has scheduled nine $1.88 dividends between 19 September 2023 and 19 September 2025. Overall, UnitedHealth Group offered a $7.52 forward divdiend and a 1.58% forward dividend yield on 1 September 2023.
Conversely, UnitedHealth’s debts are growing. The total debts grew from $45.799 billion on 30 September 2022 to $59.268 billion on 30 June 2023.
Strangely, UnitedHealth borrows money. It reported a $13.19 billion quarterly operating cash flow of $13.19 billion on 30 March 2023. The quarterly operating cash flow rose from $4.392 billion on 31 December 2023 and fell to -$10.459 billion on 30 September 2023.
Is UnitedHealth’s Growth a Political Problem?
I think UnitedHealth’s growth will become a political problem because of the high cost of American healthcare.
Total US healthcare expenditures grew to $4.255 trillion in 2021 from $2.677 trillion in 2011, Peterson-KFF estimates. Healthcare spending grew by 13.2% between 2019 and 2021. In contrast, US national health expenditures fell from $387 billion in 2020 to $111 billion in 2021.
Healthcare expenditures comprised 18.3% of the US Gross Domestic Product (GDP) in 2021. Healthcare expenditures comprised 17.2% of the GDP in 2010 but rose to 19.7% in 2020 because of the COVID-19 pandemic.
Americans grumble about this system because the US spends more on healthcare than other countries but receives poorer outcomes. For example, average per person healthcare spending in wealthy Organisation for Economic Co-operation and Development’s (OECD) countries was $6,414 in 2022, the Peter G. Peterson Foundation estimates.
US Healthcare is a Failure
Moreover, the second-highest spending on healthcare in the OECD was in Switzerland where they spent $8,049 per person. In contrast, the United Kingdom spent $5,438 per person on health care and Japan’s system spent $5,251 per person on healthcare.
Yet Japan had the best outcomes in the healthcare areas of life expectancy at birth, infant mortality, unmanaged asthma, and unmanaged diabetes, the Peter G. Peterson Foundation claims. In contrast, US outcomes were close to the bottom. The US also ranked low in safety during childbirth but middle of the road for heart attack morality.
Critics will blame companies such as UnitedHealth Group for this situation. To explain, UnitedHealth’s purpose is to make money for its investors not provide good healthcare. Financial data shows UnitedHealth (UNH) achieves that goal. Critics will note that UnitedHealth controlled 12% of the US health insurance market in 2023.
UnitedHealth claims to provide health insurance to 49.1 million Americans. For instance, UnitedHealth Employer & Individual services covers 27.1 million people. Thus, most Americans already get their health insurance from giant centralized bureaucracies.
Hence, UnitedHealth has many incentives to preserve the current the system and no reason to change the system. This makes reforms such as Medicare for All (single-payer health insurance) difficult. To explain, UnitedHealth does not want to compete against Medicare which has Congress behind it. Instead, UnitedHealth wants to profit from Medicare through its 13.6 million Medicare policies.
Obviously, UnitedHealth did not create America’s terrible healthcare system. Congress did. Yet politicians will need a scapegoat to blame for America’s dismal health outcomes. I think UnitedHealth will make a great scapegoat because of the money it makes.
I predict UnitedHealth (UNH) will keep making a lot of money. Yet, UnitedHealth will face enormous political pressure in the years ahead. In the final analysis, I consider UnitedHealth a terrific stock Mr. Market overprices. Ultimately, UnitedHealth operates in a business that could be unsustainable because of politics and costs.