UnitedHealth Group Incorporated provides healthcare services in the United States. Its Uniprise segment delivers health care and well-being services to employers, individual consumers, and other health care organizations; and provides consumer-driven health plans and consumer activation services, as well as health-care-focused financial services. It also offers transactional processing services to intermediaries and health care entities. The company’s Health Care Services segment offers consumer-oriented health benefit plans and services; administrative and other management services to customers that self-insure the medical costs of their employees and their dependents; and non-employer based insurance options for purchase by individuals, which are designed to meet the health coverage needs of consumers and their families. This segment provides health and well-being services for individuals age 50 and older, addressing their needs for preventive and acute health care services, as well as for services dealing with chronic disease and other specialized issues for older individuals. It also offers health insurance products and services; and network-based health and well-being services to beneficiaries and other government-sponsored health care programs. UnitedHealth Group’s Specialized Care Services segment offers employee benefit offerings, provider networks, and related resources focusing on behavioral health and substance abuse, dental, vision, disease management, complex and chronic illness, and care facilitation, as well as solutions in other areas. Its Ingenix segment offers database and data management services, software products, publications, consulting services, outsourced services, and pharmaceutical development and consulting services. As of December 31, 2006, UnitedHealth Group offered its services and resources through 520,000 physicians and other care providers, and 4,700 hospitals. The company was founded in 1974 and is based in Minnetonka, Minnesota.

Health Care Industry Analysis

WikiWealth.com Industry Description: The health care industry or health profession treats and tends to patients who are injured, sick, disabled, or infirm. The delivery of modern health care depends on an expanding interdisciplinary team of trained professionals. The healthcare industry includes the delivery of health services by health care providers. Usually such services are paid for by the patient or by the patient's insurance company; although they may be government-financed (such as the National Health Service in the United Kingdom) or delivered by charities or volunteers, particularly in poorer countries…Read More. Also see the Industry Analysis Home Page.

WikiWealth.com Industry Analysis: Health Care stocks tend to be less sensitive to economic changes. During economic recessions, consumers tend to decrease discretionary expenses to save money, but they can not decrease purchases of health care, because it is needed for everyday living. Spending on health care generally remains constant, because investors maintain their health care coverage, which helps health care stock prices. Health care insurance and related industries could decline during recessions, because unemployed workers decrease health care coverage, which decreases revenue to those stocks.

During economic recoveries, health care stock prices generally under perform the stock market, because revenue and profit growth is faster in companies, which declined the most during the proceeding recession. Health care insurance stock prices may increase as more employees receive health care benefits. During longer economic expansions, health care investments tend to growth at the same rate as the general stock market.

Government intervention is another important factor in health care investments, since government spending in health care is a very large portion of overall health care spending. When the government changes spending plans, different sub-sectors in the industry are significantly affected. To account for this added risk, Wikiwealth.com makes conservative assumptions about revenue, profits and risk.

Biotechnology companies are significantly impacted by specific drugs in their pipeline. If a drug passes different stages along the road to commercial use, then the drug company's stock price increases; the reverse is also true.

¹ WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.

² Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.

WikiWealth.com Profit Analysis: The best way to profit from health care stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, different sectors of health care stocks will perform better or worse than the general stock market. Consumers generally maintain health care spending during recessions, but don't increase purchases during economic expansions. Eventually other stock investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to buy health care stocks if you must invest in the stock market, because they are the least risky equity investments in a declining stock market. As investors search for safe (less risky) stock investments, they tend to buy health care stocks. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. For more information on stock research ratings click here.

Biotech stocks behavior very different from other health care stocks. Before drugs companies become profitable, they are constantly worried about their cash balance. For unprofitable biotechnology companies, the ability to raise cash is easiest during good economic conditions, but difficult during recessions; the stock price rises and falls accordingly to the cash raising environment and drug pipeline potential. It is generally unwise to invest in biotechnology companies, because much of what drives the stock price is speculation about the drug pipeline, test results and government intervention. Unless the biotechnology is large and profitable and you have extensive industry experience (10 plus years), the only way to make a non-speculative investment in biotechnology is if you have inside information, which is illegal (see Martha Stewart). Warren Buffett does not own biotechnology companies for these specific reasons.

Investment Moats

Investment Moats are fundamental investing theories developed by Warren Buffett and adapted to the SWOT analysis. Investment moats are general characteristics that separate great investments from average stock investments. The wider the investment moat the better. Read more: Investment Moats. For company-specific investment moats: SWOT Analysis.

SWOT Strengths Increase Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

SWOT Weaknesses Decrease Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

Stock Price Triggers

Triggers were developed by WikiWealth.com to predict changes in stock price direction, which depend on events outside of the control of the company. In general, if SWOT opportunities are greater than SWOT threats, the stock price should raise; the opposite is also true. For more precise measures, examine each SWOT opportunity and threat, then rank them according to importance and timing. The more important the investment characteristic, the greater the impact on stock direction. The sooner a investment trigger may occur, the more influence it will have on stock price direction. Read more: Stock Price Triggers. For company-specific stock price triggers: SWOT Analysis.

SWOT Opportunities are Positive Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

SWOT Threats are Negative Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

Long Company Description (help)

UnitedHealth Group Incorporated NYSE: UNH is a managed health care company. According to its company literature, UnitedHealth Group is a diversified health and well-being company dedicated to making health care work better. Headquartered in Minneapolis, Minn., UnitedHealth Group offers a broad spectrum of products and services through seven operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, OptumHealth, Ingenix, and Prescription Solutions. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. In 2004 the company posted a gross profit of $10.2 billion (Lexis Nexis Online - Company Financial Reports).

United Health Group It is the parent of UnitedHealthcare, one of the largest health insurers in the U.S. It was created in 1977, as UnitedHealthCare Corporation (it renamed itself in 1998), but traces its origin to a firm it acquired in 1977, Charter Med Incorporated, which was founded in 1974. In 1979, it introduced the first network-based health plan for seniors. In 1984, it became a publicly traded company.

Acquisitions

In 1995, the company acquired The MetraHealth Companies Inc. for $1.75 billion. MetraHealth was a privately held company formed by combining the group health care operations of The Travelers Insurance Company and Metropolitan Life Insurance Company also known as MetLife. In July 2004, UnitedHealth Group acquired Oxford Health Plans and all of United Healthcare's New York-based small group contracts (2-49 lives) are now Oxford Health Plans products. In December 2005, the company received final regulatory approval for its $9.2 billion purchase of PacifiCare Health Systems. It agreed to divest parts of PacifiCare's commercial health insurance business in Tucson, Arizona and Boulder, Colorado to satisfy antitrust regulator concerns, and also agreed to end its network access agreement with Blue Shield of California.

In March 2007, United Health Group signed a definitive agreement to acquire Sierra Health Services Inc. for $2.6 billion. Sierra provided health benefits and services to 310,000 members in Nevada and another 320,000 people in senior and government programs throughout the United States.

In a recent insurance industry publication, Business Insurance, United was named Readers ChoiceTM winner 2007 for "Best Managed care organization".

To contrast with that, however, in a recent non-insurance industry survey of health care executives who have dealt with the company, United received a 91% unfavorable rating - the worst ranking among all listed.

SWOT Analysis

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