UnitedHealth Group (NYSE:UNH) will sell its Brazilian operations to a local entrepreneur at a loss.
UnitedHealth is taking a $7 billion write-down on assets bought for $4.9 billion in 2012. The sale includes all its assets under the Amil label and the Americas Hospitals. UNH CEO Andrew Witty has worked to sell the assets since becoming CEO in 2021.
UnitedHealth stock was unchanged on the news at about $529 per share, representing a market capitalization of $485.5 billion. The sale is considered good news because UnitedHealth was taking continuing losses.
A Giant Steps Back
UnitedHealth has become the “900-pound gorilla” in America’s healthcare industry this century. It has nearly five times the market cap of any other U.S. health insurer. Elevance (NYSE:ELV), which owns Anthem, is second at $110 billion. In third is CVS (NYSE:CVS), the drug store chain that owns Aetna, at $101 billion.
What would be a staggering loss for rivals barely registers for United, which said its earnings for 2024 will not be impacted. United next reports earnings on Jan. 12. Analysts expected $5.98 per share of earnings on $92 billion of revenue before the write-down.
UnitedHealth has used technology to build its lead in the sector, buying a host of health IT concerns through its Optum brand. The company was worth about as much as Anthem right after the 2008 financial crisis. Within seven years, it was worth four times more, and it hasn’t looked back.
UnitedHealth first reported an offer for the Brazilian assets on Dec. 21, from Nelson Tanure, who specializes in distressed assets. The winning bidder, José Seripieri Filho, is said to be close to Brazilian President Lula and previously founded a local health insurer called Qualicorp.
What Happens Next for UNH Stock?
UnitedHealth has its critics, but it will remain a dominant force in U.S. healthcare. The stock consistently delivers a combined return of more than 20% each year to shareholders, including $7.52 per share in dividends over the last year.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
