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UnitedHealth (UNH) Wins New Medicaid Contract in Nebraska

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UnitedHealth Group Incorporated (UNH - Free Report) recently announced that the company was selected by the Department of Health and Human Services in Nebraska to manage the state's Medicaid program. Along with UNH, Centene Corporation (CNC - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) were also chosen to administer the program, Heritage Health.

The latest award allows the UNH unit, UnitedHealthcare Community Plan of Nebraska to continue its operations in the state to build a strong Medicaid program. UnitedHealthcare is serving for 26 years and employs more than 750 people in the state. It boasts a network of 100 hospitals and more than 14,000 physicians and caregivers in the state. It serves over 500,000 individuals in the region.

The latest contracts are for five years and incorporate options of two renewals of 1-year span. The values of the contracts are estimated at billions of dollars. Apart from UnitedHealthcare Community Plan of Nebraska, Centene subsidiary, Nebraska Total Care, and Molina Healthcare of Nebraska have also won the new contracts.

UnitedHealth’s government business, which consists of Medicaid and Medicare Advantage, is expected to witness continued growth. Similar to the 2021 Medicare enrollment season that exhibited the company’s largest Medicare Advantage footprint expansion in five years, 2022 is anticipated to display yet another year of record growth. The company remains on track to cater to an additional 800,000 people through its Medicare Advantage business this year.

UNH expects continued growth in Medicaid, owing to transitions in coverage and net new market gains. It has plans to further expand its service area in 2022. Contract renewals and new wins will drive its bottom line. It expects 2022 adjusted net earnings to be in the range of $21.40-$21.90 per share, with the mid-point of the updated outlook suggesting a 13.8% improvement from the 2021 figure.

Price Performance

The stock has rallied 27.5% in the past year, outperforming the industry’s 25.3% rise.

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Zacks Rank & Key Pick

UnitedHealth currently has a Zacks Rank #3 (Hold). A better-ranked stock in the medical space is Alignment Healthcare, Inc. (ALHC - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Alignment Healthcare’s 2022 bottom line indicates a 29% year-over-year increase. ALHC’s earnings beat estimates in three of the last four quarters and missed once, the average surprise being 7.9%.

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