• UNH’s revenue rose 2.41% to stand at $206.324 billion in Q4 2021 from $201.478 billion raised in 2019. 
  • UNH announced the application of predictive analytics in 2021 that will open up 300 markets. 
  • The planned mergers between Change Healthcare and UNH will help UNH improve data analytics and payment processes into 2022.

UnitedHealth Group Incorporated (UNH) declined 0.91% on July 14, 2021, from the previous day’s close. It lost 3.80 points and fell to $414.74 (2.64% below the 52-week high of $425.98). Over the past year, the stock has gained 34.43%, with its next earnings date scheduled for July 15, 2021. On post-market trading, UNH had lost an additional 0.18% and was trading at $414.00.  

In the financial year ending in December 2020, UNH’s revenue gained 2.41% to stand at $206.324 billion from $201.478 billion raised in 2019. Despite the 7.22% increase in quarterly revenue from $65.467 billion in Q4 2020 to $70.196 in Q1 2021, analysts project lower earnings into the second quarter. 

Consensus reports project a 16.00% decline in the EPS estimate at $4.45 in Q2 2021 from $5.31 realized in Q1 2021. Quarterly revenue is also expected to fall 0.98% from $70.196 to $69.51 in Q2 2021. The decline may confirm a downtrend in UNH’s stock price.    

UnitedHealth’s Q1 2021 revenue surged 9.0% (YoY) or $5.8 billion in association with its Optum-its subsidiary. This collaboration saw the expansion of UNH that led to a 34.9% (YoY) growth in operational earnings at $1.7 billion to reach $6.7 billion in Q1 2021. 

Predictive analytics

UNH announced the application of predictive analytics to identify the factors determining health and social wellness in employer-sponsored plans.

Under this capability, UNH (in association with Optum) can use more than 100 metrics to analyze up to 300 markets in the US alone. Employers in this scheme identify areas of support that their employees can benefit from before subscribing to the UNH packages. The development of Covid-19 as a social-economic pandemic also calls for a stronger focus on predictive analytics.  

Application of Predictive analytics in healthcare

Application of Predictive analytics in healthcare

UNH has invested in determining social factors affecting health by providing more than 1 million referrals to the accessibility of social services. Additionally, the health giant has contributed more than $500 million towards affordable housing in America. First-quarter (2021) revenue for Optum shot up 10.8% to $36.4 billion. Operating margins increased to $2.6 billion (+24.8%). 

Incoming mergers and collaborations

Investors expect to see the association of OptumInsight and Change Healthcare (CHNG) before the end of 2021. This combination will help to simplify payment mechanisms, improve clinical/ administrative roles and provide affordable health outcomes. Deployment of data analytics and management of revenues drove OptumInsight’s revenue to $20.8 billion (an increase of $1.6 billion or 8.33%) in Q1 2021. 

Collaboration between Change Healthcare and OptumInsight would see the latter harness payment solutions systems. In its Q4 2021 report, Change Healthcare earnings the solutions systems totaled $804 million (+2.3%), with the adjusted EBITDA at $272 million. Consolidated revenue also rose 1.4% to $855 million from $843 million realized in Q4 2020. An increase in revenue was attributed to robust pipeline activity. Investors are watching for an impending merger between Change Healthcare and UnitedHealth Group (UNH) expected before the end of 2022. 

Technical analysis

The UnitedHealth (UNH) Group Inc stock formed a descending broadening wedge, with the decline visible from May 11, 2021, to June 18, 2021. It is expected that the pattern will lead to a short-term bullish trend continuation. 

UnitedHealth (UNH) Group Inc stock chart

There is an increase in the buying volume that also confirms the uptrend. The 14-day RSI is at 68.15 near the overbought zone at 70.00, indicating the increase in the number of buyers. We may see a higher price movement towards 422.24. If the uptrend fails to hold above 422.24, the price may pull lower to 408.85.