UnitedHealth’s Q1 earnings reveal its booming business—but its big business is sounding alarm bells from regulators, competitors

UnitedHealth released its Q1’21 earnings report, and reported strong growth in members and financial performance:

  • Its membership grew by more than 1 million, largely due to seniors signing up for privatized Medicare Advantage (MA) plans.
  • Meanwhile, its profits soared over 40% annually to $4.9 billion, and revenues ticked up 9% to $70.2 billion—a little over half of which came from its health services arm, Optum.

While the pandemic put many healthcare organizations in a pinch, UnitedHealth and its health services subsidiary Optum ramped up their digital health strategy—which is what set the stage for strong Q1 performance:

  • UnitedHealth and other insurers partly benefited from the impacts of the pandemic. As millions of patients deferred care and elective procedures were put on the backburner in the first half of 2020, it lowered the insurer’s healthcare spending.
  • And it’s had a busy year extending across the healthcare gamut via M&As. In the last year alone, it acquired prescription delivery startup DivvyDose for $300 million in September 2020, scooped up acute care management platform NaviHealth for reportedly over $1 billion in May 2020, and made its blockbuster $13 billion acquisition of data analytics company Change Healthcare in January 2021.

However, with such aggressive growth comes pushback from competitors and regulatory bodies:

  • The Biden administration is gearing to implement antitrust laws to regulate consolidation in the healthcare industry—and UnitedHealth’s acquisition of Change Healthcare is already facing scrutiny. After the American Hospital Association lobbied US regulators to examine the deal, citing that it threatened healthy competition in the market, the DOJ began a probe into the transaction earlier this year.
  • UnitedHealth’s vertical integration strategy makes it an all-seeing giant—meaning it could pose a massive threat to competitors across the healthcare ecosystem. For example, by acquiring Change Healthcare (which processes 1 in 3 US patient health records), UnitedHealth would be able to decipher its competitors’ business strategies.