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UnitedHealth Group (UNH) Bolsters Presence With Contract Win

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UnitedHealth Group Incorporated’s (UNH - Free Report) business UnitedHealthcare has been chosen by the District of Columbia for executing its District Dual Choice program. The original tenure of the contract will run from Feb 1 to Dec 31 of this year, but it can be expanded for four more one-year periods.

Shares of UnitedHealth Group have lost 2% on Feb 17, replicating declines in broader markets.

Coming back to the latest contract win, UnitedHealthcare will partner with the state Medicaid agency of the District of Columbia — Department of Health Care Finance. Such joint efforts are expected to devise a robust District Dual Choice program aimed at extending an integrated health care service delivery system for individuals who qualify for and are enrolled in both Medicare and Medicaid programs.

By partnering with the agency that administers the District of Columbia District Dual Choice program as part of its Medicaid program, UnitedHealthcare will be able to provide personalized care and cater to the health and wellness needs of enrollees. This, in turn, is expected to result in better health outcomes throughout the District of Columbia. Initially, UnitedHealthcare will start catering to District Dual Choice program enrollees of around 12,300.

UnitedHealth Group has been working intensely for several years to expand access to care and eliminate hindrances in the way of members opting for care. Moves similar to the latest one not only aid that endeavor but also reflect UNH’s continuous efforts to strengthen its presence in the District of Columbia. Meanwhile, the company boasts a strong presence in the district, wherein it caters to over 500,000 members enrolled in Medicare, Medicaid and employer-sponsored health care plans. It is worth mentioning that UnitedHealthcare has contracts with over 6,000 providers and nine hospitals spread across the district.

The recent announcement seems to come at an opportune time as well due to the advent of new variants of the COVID-19 virus. Consequently, getting access to UnitedHealthcare’s services and extensive network is likely to come as a relief for District Dual Choice program beneficiaries.

Contract wins similar to the latest one is expected to bolster revenues of the selected UnitedHealthcare segment, which exhibited a strong performance (11% year-over-year revenue growth) in 2021. Some of the states that had chosen UNH to serve members last year include Ohio, Hawaii and Oklahoma. Such contract wins coupled with renewed agreements continue to provide a boost to the membership growth of the company. The number of people served through the UnitedHealthcare business rose 4.5% in 2021 from the 2020 figure. Meanwhile, the company has well-performing Medicare and Medicaid businesses in place through which it has been devising cost-effective health plans and reaching out to various parts of the country.

Similar to UnitedHealth Group, other healthcare providers such as Humana Inc. (HUM - Free Report) , Molina Healthcare, Inc. (MOH - Free Report) and Cigna Corporation (CI - Free Report) boast solid membership growth and have been awarded contracts from various states from time to time.

Centene makes use of its value-based care model, innovative technologies and provider collaborations for extending cost-effective healthcare services and programs throughout the United States. A well-diversified healthcare suite and solid nationwide presence have fetched numerous contract wins and deal renewals for CNC. Some of the states that chose CNC for serving members in 2021 include Arizona, Nevada and Ohio. These deals continue to boost the managed care membership metric of Centene, which improved 4% year over year as of Dec 31, 2021.

Humana has a strong Medicare and Medicaid business in place on the back of several contract wins and renewals, which have extended the company’s U.S. footprint and resulted in growing membership. Recently, the Louisiana Department of Health awarded HUM a contract for providing health care coverage to Medicaid beneficiaries in the state. Premiums from Humana’s Medicare, specialty, fully-insured and Medicaid and other businesses grew 7.6% year over year in 2021.

Molina Healthcare continues to benefit from factors such as increased membership, higher premium revenues, and contract wins similar to those in Nevada and Ohio. As of Dec 31, 2021, the membership of MOH witnessed growth of 29% from the prior-year comparable period on the back of well-performing Medicare, Medicaid and Marketplace businesses. Based on these tailwinds, Molina Healthcare’s revenues climbed 43% year over year in 2021.

Price Performances

Shares of UnitedHealth Group have gained 44.9% in a year compared with the industry’s rally of 44.1%. UNH currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Shares of Centene, Humana and Molina Healthcare have gained 42.8%, 12.7% and 44.8%, respectively, in the same time frame.

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