UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified health care company in the United States. It operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health and well-being services to individuals age 50 and older, addressing their needs for preventive and acute health care services, as well as services dealing with chronic disease and other specialized issues for older individuals; Medicaid plans, children’s health insurance program, and health care programs; medical and dental benefits; and hospital and clinical services. The OptumHealth segment provides access to networks of care provider specialists, health management services, care delivery, consumer engagement, and financial services. This segment serves individuals directly through care delivery systems, employers, payers, and government entities. The OptumInsight segment offers software and information products, advisory consulting arrangements, and managed services outsourcing contracts to hospital systems, physicians, health plans, governments, life sciences companies, and other organizations. The OptumRx segment provides pharmacy care services and programs, including retail network contracting, home delivery, specialty and compounding pharmacy, and purchasing and clinical, as well as develops programs in areas, such as step therapy, formulary management, drug adherence, and disease/drug therapy management. UnitedHealth Group Incorporated has partnership with the University of California, San Francisco to expand the mental health workforce in California. UnitedHealth Group Incorporated was incorporated in 1977 and is based in Minnetonka, Minnesota.
As a health insurer, UnitedHealth Group continued to collect its premiums from existing customers while adding new customers. This helped UnitedHealth Group’s revenue increase 6.2% year over year from $242.2 billion in 2019 to $257.1 billion in 2020. Since UnitedHealth Group will likely pay out $5.80 in dividends per share this year, its adjusted EPS payout ratio will be in the high-20% to low-30% range. This leaves the company with ample ability to cover its dividend, which should translate into a 1.4% dividend yield with high growth potential.
Trading at around 22 times this year’s average EPS forecast and 19 times next year’s average EPS forecast, UnitedHealth Group is priced at a sensible valuation for long-term investors looking to own a mighty health insurer. UNH, the mega-cap health insurance company, should be on a radar of dividend investors as well. More than 89 hedge funds own UNH in their portfolios, which show that UNH is a long term investment.