UnitedHealth's (UNH) Business Unit Collaborates With Merck

UnitedHealth Group, Inc.’s (NYSE:UNH) information and technology-enabled health services business “Optum” recently announced its collaboration with Merck & Co. Inc (NYSE:MRK) . The companies have primarily joined forces to develop and simulate the performance of contractual reimbursement models in which payment for prescription drugs is closely related to patient health outcomes.

Optum has carved a niche in terms of its expertise in pharmaceutical contracting, health economics and outcomes research, actuarial analytics, and health policy and regulation. Merck, on the other hand, boasts data science and outcomes research expertise, and a deep understanding of the pharmaceuticals marketplace. In addition, Merck’s vast experience of working with large private and public customers to create flexible pricing models across multiple therapy areas should help Optum cater to the needs of its customers more efficiently.

We note that Optum regularly upgrades its products and services through several partnerships and collaborations, which have resulted in UnitedHealth’s technological advancement on every front. Shareholders’ optimism about UnitedHealth’s digitalizing initiatives is clearly reflected in the company’s share price movement. In the last one year, the stock has gained 33%, slightly underperforming the Zacks categorized Health Maintenance Organization (HMO).

Through a shared “Learning Laboratory,” the companies are expected to study value-based and pay-for-performance models or Outcomes-Based Risk Sharing Agreements (“OBRSA”). These models are mainly focused on payers reimbursing drug manufacturers on the basis of clinical outcomes achieved. Depending on the success and failure of the drugs, prices of them can fall or rise. The companies plan to publicly share analytic insights, findings and recommendations that would help in understanding the use OBRSAs in the health care system.

Optum’s real data assets will facilitate assess to OBRSA models across different patient populations, clinical settings, and therapeutic areas aligned with Merck’s product portfolio.

Zacks Rank and Stocks to Consider

United Health has a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Other top-ranked medical sector stocks include Inogen Inc. (NASDAQ:INGN) , WellCare Health Plans, Inc. (NYSE:WCG) and Humana Inc. (NYSE:HUM) . While Inogen and WellCare sport a Zacks Rank #1 (Strong Buy), Humana holds a Zacks Rank #2 (Buy).

Inogen is a medical instruments seller that delivered positive surprises in all of the last four quarters with an average beat of 82.42%.

WellCare, the leading Health Maintenance Organization (HMO) in the United States, topped estimates in all of the last four quarters with an average beat of 59.23%.

Humana, another HMO behemoth, surpassed expectations in all of the last four quarters with an average beat of 3.75%

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