UnitedHealth Group, Inc.
(UNH)
Closing Price of the Stock
At 4:01PM ET: 47.96 0.52 (1.10%)
November 15, 2006
Hugh Armstrong, Stefanie Hilton, Anna Kriajeva, Nirav Mehta, & Simon Yu
UnitedHealth Group, Inc.
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Index: NYSE
Sector: Healthcare
Industry: Health Care Plans
Employees: 55,000
Senior Management: 5 members
Board of Directors: 10 members
Serves approximately 70 million individuals
Company Overview
• Customer Information
– Mid-sized and small employers
– Individuals and families
– State sponsored Medicaid
– Senior Citizens (50+)
Company Overview
• Services
Uniprise
Delivers healthcare and well-being services to employers, consumers,
and health care organizations
Healthcare Services
Provides health benefit plans and services
State sponsored Medicare programs
Specialized Care Services
Provides employee benefit offerings
Dental, vision, disease management, complex chronic illness and care
facilitation
Ingenix
Offers database and data management services,
software products, publications, & consulting services
Capital Structure
Debt/Total Capital
Cash $Mil
Total Debt $Mil
Cash Flow from Operations $Mil
29.9 %
8,361
7,523
6,079
The company moderately finances its growth with debt.
http://quicktake.morningstar.com
UNH Key Statistics
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Market Cap: 62.110 B
Price/Sales: 0.97
Price/Book: 3.20
Profit Margin: 6.12%
% of Shares Held by Institution: 86%
• S&P Quality Ranking A+ (highest)
The ratings measure how likely the firm is to default and the protection
creditors have in the event of default.
Balance Sheet
Financing
Long Term Debt
Short Term Debt
Other Liabilities
Increasing
Increasing
Increasing
% of Assets
Intangibles
Current Assets
Long Term Assets
2005
4.80%
25.72%
21.68%
2004
4.30%
30%
28%
2003
1%
35%
38%
% of Debt
Current Liabilities
Long Term Liabilities
2005
70.40%
16.29%
2004
66%
19.50%
2003
70%
14%
Cash and Cash Equivalents
Significant Changes
Goodwill Increase
Other Assets Increase
Assets Overall Increase
Current Liabilities Increase
Retained Earnings Increase
Total Equity Increase
Turnover Ratios
A/R Turnover
A/P Turnover
Inventory Turnover
$5,421,000
$3,991,000
$2,262,000
$9,470,000
$76,000
$27,879,000
$11,329,000
$7,616,000
$10,717,000
to
to
to
to
to
to
$16,206,000
$1,890,000
$41,374,000
$16,644,000
$10,789,000
$17,733,000
10.7807
4.0947
18.1907
33.8 days
89.1 days
Income Statement
• Total Revenue
$45.365 B
• Cost of Goods Sold
$32.725 B
• Gross Profit
$12.64 B
• Earnings Before Interest and Taxes
$5.373 B
• Net Income
$3.3 B
Liquidity
• Times Interest Earned (TIE) Ratio
22.29
• Total Debt
7.35B
• Current Ratio
.835
• Quick Ratio
.66
• Debt to Equity
.375
What do ratios mean:
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Current ratio measures a company's ability to pay short-term
obligations.
UNH .835
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measures company's ability to meet its short-term
obligations with its most liquid assets.
The higher the ratio, the better the position of the company
(usually around 1).
Quick ratio
UNH .66
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Times interest earned ratio used to measure the ability of a company
to meet its debt obligations, indicates how many times a company
can cover it's interest charges on a pretax basis since failure to meet
these obligations could force a company into bankruptcy.
UNH 22.29
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http://www.investopedia.com
Beta 0.18
• Beta measures
stock's volatility in
relation to the market
as a whole.
• The higher the beta, the
more the stock goes up
when the market heads
up and drops when the
market heads down
(S&P 500)
UNH- low beta stock:
 less volatile than the
stock market as a whole.
 holds its value even when
the market plunges
 low risk
 stable performance
Stock Performance
Orangeindustry
Red- UNH
GreenS&P 500
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http://quicktake.morningstar.com
Mergers and Acquisitions
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2006
– Acquired NWH, Inc. through subsidiary Ingenix
– Reached an agreement to buy the assets of Student Resources, an
operating division of The MEGA Life and Health Insurance Company,
from HealthMarkets
2005
– $9.2 Billion acquisition of Pacificare
– Acquisition of John Deere Health Care through subsidiary
UnitedHealthcare
2004
– Acquired Mid Atlantic Medical Services, Inc., through subsidiary
UnitedHealthcare
– $4.9 Billion acquisition of Oxford Health Plans
– Acquired Definity Health Corporation
2002
– Acquired AmeriChoice
2000
– UnitedHealth Group Inc. merged with United Healthcare Corporation
Competitors
Private Companies
• Centers for Medicare & Medicaid Services
• Blue Cross and Blue Shield Association
• Medco Health Solutions
Public Companies
• Caremark Rx, Inc.
• HCA, Inc.
• WellPoint, Inc.
• Aetna, Inc
Largest Competitors
WellPoint, Inc.
• Market Cap: $45.19B
• Employees: 42,000
• Revenue: $54.28B
• Quarterly Revenue Growth: 29.30%
Aetna, Inc.
• Market Cap: $21.01B
• Employees: 28,200
• Revenue: $24.65B
• Quarterly Revenue Growth: 10.50%
Blue Cross Blue Shield
•Private Company
•Employees: 150,000+
•Revenue: $238.9 B
Positive news
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Democrats taking over the Congress…
Democrats favoring Medicaid and Medicare programs
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United Health Inks deals with Walmart, HAC
– place kiosk in Walmart stores to inform people about Medicare
advantage and drug plans
– new agreement giving its members access to HAC hospitals (150+
hospitals nationwide)
In The News
Concern:
UnitedHealth Group, Inc.
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Former CEO Group is expected to face charges by SEC
for backdating, William McGuire stepped down last month
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New executive management team
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CEO and CFO has agreed to remove all personal benefits
from any past option grants that was questioned in a prior report
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Returning $300 million worth of stock option back to the
company
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UNH has to re-evaluate all their option
reports from 1994 to present
Discounted Cash Flow Model
Conclusion
UNH is a low risk stock
Stable company with steady growth
Great for portfolio diversification