UnitedHealth Group has the highest price per share of any company on the Dow Jones Industrial Average and is the tenth-highest weighted stock in the S&P 500.
In fact, not only is UnitedHealth the largest healthcare conglomerate in the United States by market capitalization and revenue, it’s even bigger than JPMorgan Chase, the nation’s largest bank.
And it’s a Wall Street darling, with pundits optimistic about the company’s future: 22 out of 25 analysts currently rate it as a buy.
“If I had to choose one stock, one stock to buy, I would buy United[Health]“said Ana Gupte, director at AG Health Advisors.
UnitedHealth “outperformed everyone else on the stock market for two reasons,” said Lance Wilkes, managing director and principal research analyst at Bernstein Research. “One would be strategic vision and the other would be strategic capital management.”
UnitedHealth has increased its annual revenue since 2012 by more than $100 billion, after adjusting for inflation. It has achieved this by engaging in a unique acquisition strategy. It started with smaller deals that grew as many of UnitedHealth’s competitors such as Aetna and Humana or Anthem and Cigna attempted to broker much larger deals, only to be stopped by regulators.
Conversely, UnitedHealth has leaned on a vertical integration strategy, buying up smaller companies and integrating them into its growing healthcare business.
UnitedHealth’s size makes it “relatively immune to economic cycles” due to the company’s great diversity, Gupte said. “That makes it very attractive from a business cycle perspective and from a macro environment perspective.”
Until recently, its acquisition strategy allowed it to grow without too much scrutiny from regulators. But in January 2021, UnitedHealth and Change Healthcare announced an all-cash deal for nearly $8 billion that was challenged by the Justice Department due to antitrust concerns.
Companies in the health sector “are becoming more and more [like] utilities,” Wilkes said. “So I think they’re going to have very large market shares because … you wouldn’t want redundant services through the system.”
“I think at this point we would consider UnitedHealth Group to be … basic health infrastructure at this point in America,” said Matt Stoller, research director at the American Economic Liberties Project and author of “Goliath: The Hundred Years War Between Monopoly Power and Democracy.” “It’s too big to handle.”
“UnitedHealth Group is committed to improving the healthcare system for all, advancing evidence-based practice, and aligning incentives across the system to ensure people receive the right care at the right time and at the right time. right place,” UnitedHealth Group told CNBC.
“Because we serve people in all aspects of the healthcare system, we have a unique ability to identify opportunities to better integrate care and benefits, develop solutions and deploy them at scale to improve access, reduce costs and improve the patient and provider experience,” it said.
Watch the video above to learn how UnitedHealth Group got so big and what it means for America’s healthcare system.