By Jeff Goldsmith
A forty -year growth saga is coming to an end
After the closing of the market on Wednesday, April 16, United Group reported its profits from the first quarter of 2025. UNH lost its 1st earnings expected by 9 cents per share, but the company also reduced its estimation of profit from the year 2025 complete in 12%. On Thursday, the opening, investors reacted with unbridled fury and stripped UNH of more than one hundred billion in market capitalization in a matter of hours. In the glow of the retrospective, UNH was a price for perfection in a ratio of pricing 38, six higher points than Amazon and eight higher points than Microsoft, which could explain the savagery of correction.
Definitive answers to the question: what is happening with United’s business mass. Impossible because the company is a black box of $ 400 billion. The main companies of United (health insurance, care provision, management of pharmacy and intelligence benefits/business services, more or less intertwined with each other, who only joined CFO John Rex and some other senior gains. What follows is some speculation about the fundamental causes of United United Products.
First, an important driver of the last two decades of United Leg’s earning growth leg using a large part of his amazing monthly cash flow (which was approaching $ 3 billion per month) bought other colleagues. This party could have finished. Historically, United has spent approximately half of its accumulated wealth on dividends and recompasses of shares, that is, paying shareholders to remain shareholders.
However, a large taxpayer and not revealed to the Growth of UNH’s profits has Leges acquisitions, which have occurred in an almost uninterrupted chain for forty years. From 2019 to 2023, United spent an amazing $ 118 billion buying other companies, almost all of which ended up in Optum. Thanks to the great discipline of the executive president of UNH Stephen Hemsley and the president of CFO-NOW JOHN REX, UNITED almost invariably bought profitable companies in transactions that were accumulated for the profits.
United seems to be without accumulated transactions. With the scarcity of new important transactions, it is likely that the cash horde of $ 81 billion of $ 81 billion United (larger than Exxon Mobil) will be re -shown even more. This will make people wonder why United is increasing their rates to employers or shaking suppliers for deeper discounts when they are sitting in a growing mountain of cash.
United cannot buy more health insurers (both CIGNA and Human have been on sale for years) because federal antimonopoly executors will stop them. There are no more accumulated medical group agreements. Hospitals currently employed a third of exercise doctors in the United States (a very unhappy state affairs for both parties). But these hospital acquisitions have limited the universe of warning medical transactions for United.
The Transmission of United in bankruptcy in bankruptcy, the medical group of Steward Healthcare (administration) showed us that they are recent or buying hospital -owned groups, most of which are losing money cubes. UNH has also remained away from medical groups owned by investors such as Envision or Team Health that service, that is, vampire hospitals. FTC/Justice has raised the red flag on the purchase of health companies at home after its multimillionaire agreement in accordance with the Pandemic-LHC and Amedisys group.
When Optumhealth was a quarter of its current size, only seven years ago, it was a 10%margin business. Since then, Optumhealth’s margins have decreased by more than 25%. As the changes in costs and multiple leadership changes decide the corporate culture of Optumhealth, wait for a wave of renunciations and union activity to be extended through OH medical groups, further damaging the general margins of health and UNH.
Optuminsight- The United Business and Corporate Services Intelligence business was a margin business of almost 28% before the hasty and reckless acquisitions of Equian, Change and Navalth Dering the Pandemic. Now it is a margin business of 16.5%. Optuminsight and United were severely damaged by Hackcare Hack of February 2024.
CHANGE, WHICH ARE USED TO PROCESS A INTERNSHIP $ 1.5 TRILLION, OR ONE-THIRD OF ALL US MEDICAL CLAIMS, LOST A LOT OF ANGRY CUSTOMER AFTER THE DISCVERED THAT CHANGE CURRENT Damageed Damageed Damageed Damageed Damageed Damageed Damagoned Damageed Damagoned Damageed Damagoned Damageed Damageed Damageed Damageed Damageed Roll-Ups. Flow and operating costs. UNH would be nonsense to buy more data businesses, since the change episode showed that they cannot execute them safely.
Therefore, the two largest companies in UNH, health insurance and health services, which have seen decreases in the operating margin in the last five years, cannot be rescued by more accumulated transactions. United remains firmly selfless in having hospitals. Rather, UNH has worked diligently to surround and cannibalize hospitals.
Second, the kindness of strangers has followed its course. A strategic challenge raised by the growth of Optumhealth was that when United bought large medical slots with risk of risk such as medical care partners, Atrius and Kelsey Seybold, he also bought the Healdth’s compromise competitive with competitors of competitors of competitors. Almost $ 23 billion of Optumhealth’s revenues (more than one fifth), and probably a higher percentage of their profits, come from a great advice of Medicare with the tastes of Blue Shield of California, Blue Cross Blue Shield of Massachetts, etc.
From the pandemic, Optumhealth has been experiencing the same cost problems as all these hospitals: unbridled nursing and expenses of doctors of billing and temperature agencies, supply costs, etc., it is likely that many increases Woutdery Saidy Saidy Optumhealth optumhealth to recover those costs.
Optumhealth cannot undermine contracts with competition health insurers without causing more bad advertising and possible to trigger antitrust consultations. Then, the UNH APALANCE serious problems when negotiating with its competitors. Almost sure, inadequate rates of renewal of the Medicare Advantage contract for their own medical groups cut the margins of Optumhealth Ma. It is unlikely that these competitive health plans will maintain the margins of United/Optum is a priority.
And like the rest of the industry, United expects new reductions in the registration of administered medical care, and almost certain payment reductions of the new administration. The profit perspective for Optum as a whole is bleak. The long -term deterioration on the margins of Optum, which fell from 8.1% in 2018 to 6.1% in the 1T25, have caused real damage to the general profits of United. Optum’s growth was the main taxpayer to the remarkable growth of United profits. That exceptional growth streak probably ends.
Third, the cold heart strategy of administering attention remotely through algorithms driven by AI has reached a point of decreasing yields. Following the terrible murder of Brian Thompson and the brutal exhibitions in Stat and the Wall Street Journal about enthusiastic denials and coding practices of UNH, some analysts have speculated that UNH may have marked the denial and payment of tea of medical services, including services covered by Medicare regular.
Giving lies to this speculation, UNH’s health insurance margins increased by 1T25, to 6.1% compared to 5.2% for all 2024. However, denials of claims to care suppliers are killing a political one. They will lead to many more cinnamon contracts by suppliers, demands and continuous qualifications of mediao consumer satisfaction. United has a net promoter score minus 12, a suggestion that UNH is not delighting its dozens of millions of customs.
We should expect Sir Andrew Witty to pretend to be the CEO of UNH and return to England to attend to his flock and fly fish. It has an unfortunate and insensitive performance. And the loss of market capitalization of 25% after the first quarter of profit call has damaged the virtual probabilities of John Rex president/CFO, to happen. The brilliant and collective Executive President of United, Stephen Hemsley, who has done a remarkable job in growing this company since he successful Bill McGuire in 2006, has a demon or a succession challenge.
The greatest growth history in the history of the US corporate health company seems to be coming to an end. I have a shareholder in this remarkable company on multiple occasions, but I am no longer, having lost faith in this ambitious administered care project. While we wait for Trump47’s blood and the unfortunate Republican Congress, it is difficult to discern a reason to invest in UnitedHealth Group. The real change of the United of a gigantic pile of health assets acquired in a real business can be an impossible management challenge.
Jeff Goldsmith is a futuristic veteran of medical care, president of Health Futures INC and regular THCB taxpayer. This comes from your Personal subck
