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UnitedHealth Dives Into Digital Pharmacy With DivvyDose Buyout

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UnitedHealth Group Inc. (UNH - Free Report) has acquired Illinois-based DivvyDose, an online pharmacy startup.

Founded in 2015, DivvyDose is a full-service pharmacy. It delivers patients’ pills in pre-sorted packs at no extra cost. Customers receive a personalized roll of pre-sorted medications with clearly marked dates and time. This makes the company’s services extremely patient-friendly.

Its pocket-sized medication list called divvyCARD contains the current list of patients’ medications and dosages. Patients can carry the same in wallets or purses and can hand over the same (which is updated and accurate) to the respective medical professional, thereby saving time.

DivvyDose also keeps track of patients’ medications by proactively contacting their prescribers to get an authorization for refills well before the medicine run out of stock, avoiding supply-chain interruptions.

The most attractive feature of the services provided by DivvyDose is that these don’t involve any extra expense. Patient copays remain about the same as their 30-day fill prices. Copay is a fixed, flat fee for certain office visits, prescription drugs or other services that a patient with health insurance policy has to pay out of his own pocket. Doorstep delivery and all other services are free and the company accepts all major insurance plans.

The COVID-19 outbreak accelerated demand for online pharmacy services.  A number of players named Capsule, Genius Rx, PillPack in this field are providing services similar to DivvyDose’s offerings.

Other companies providing online pharmacy services are Amazon.com, Inc. (AMZN - Free Report) , which provides at-home prescription drug delivery via PillPack, acquired in 2019 for $753 million.  Walmart Inc. (WMT - Free Report) also provides its customers with medication management services via CareZone, which it acquired in June this year for $200 million.

The deal valued at $300 million will help UnitedHealth diversify into other health-care service businesses including care delivery, pharmacy benefits and technology.

The company has been focusing greatly on its services business named Optum, which contributed to nearly 47% of the company’s consolidated revenues in 2019. This segment expanded to account for 48% of the operating earnings in 2019 compared with 25% in 2014. From 2010 to 2019, the segment’s compounded revenues and earnings witnessed a CAGR of 19%.  In first-half 2020, revenues and earnings grew 20% and 9%, respectively.  

A number of acquisitions made in the Optum  segment, use of advanced technology, market-leading health analytics, modern care delivery and data-driven population health approaches bode well for Optum for the long haul. Each sub-segment is expected to deliver a solid performance, driving the overall segment’s growth in turn.

The latest acquisition also points to UnitedHealth’s growing interest in providing online medical services to its customers. In this vein, last year, the company acquired Vivify Health, which delivers a cloud-based, device-agnostic, ecosystem-connected remote care management platform.

UnitedHealth carries a Zacks Rank #2 (Buy), currently. The stock has gained 31.4% in the past six months compared with its industry’s growth of 25.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another stock worth considering in the same space is Anthem Inc. with the same Zacks Rank as UnitedHealth. Earnings of Anthem beat estimates in the last reported quarter by 4.9%.

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