Despite intensifying regulatory scrutiny on its deals, UnitedHealth Group (NYSE: UNH) remains poised for further acquisitions.
During the past two years, the insurance giant has completed a slew of acquisitions spanning much of the health care continuum — including hospice, palliative care and home health — as well as health care technology, largely through its subsidiary Optum. Within Q1 2024, the company began the process of purchasing the primary care provider Steward Healthcare.
More transactions are likely on the way, according to UnitedHealth Group CEO Andrew Witty.
“I continue to see a very interesting, diverse pipeline of M&A opportunities across the marketplace in terms of business areas that we have interest in … ” Witty said during a Q1 earnings call. “We have a good strong strategy for how we navigate through this dynamic. You’re seeing that play out super well in the first quarter performance of Optum Health and [United Healthcare]. It gives us a sense of real confidence as we look not just in terms of our performance, but potentially how we might think about M&A opportunities.”
Optum Health currently serves more than 4.1 million patients in value-based care arrangements across all of its clinical business lines. This reflects patient census growth of about 900,000 people during 2023. The company in Q1 saw revenues rise to $61.1 billion, up from $59.5 billion in the prior year’s quarter.
On a consolidated basis, UnitedHealth Group earned $99.8 billion, up from $91.9 billion year-over-year. This includes an $870 million headwind resulting from the massive cyberattack earlier this year for the company’s tech and data arm, Change Healthcare. The data breach caused widespread disrupting in claims processing and other activities.
UnitedHealth Group has taken steps to stabilize Change Healthcare and resume normal operations, with a full financial recovery expected in early 2025.
“Fortunately, we were able to bring to bear the substantial resources of UnitedHealth Group to drive the recovery and begin to mitigate the impact on resources, which are standalone that Change Healthcare would not have had access to on its own,” Witty said. “We rapidly deployed resources to develop alternative solutions and move promptly to restore claims and payment services. We’ve made substantial progress, and we will not rest until care providers connectivity needs are met.”
Among the company’s many large investments are acquisitions of large home health and hospice companies. Optum in June 2023 penned an agreement to acquire Amedisys in an all-cash transaction of $101 per share, or about $3.3 billion. This followed its $5.4 billion acquisition of LHC Group, which closed last February.
UnitedHealth Group executives had no comment on the pending Amedisys deal during the Q1 earnings call. This may be due to an ongoing investigation into the transaction by the U.S. Justice Department due to antitrust concerns.
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