Becker's Hospital Review

17 CFO / FINANCE UnitedHealth posts $3.4B profit; Optum CEO to take leave of absence By Morgan Haefner U nitedHealth Group ended the first quarter of 2020 with a $3.4 billion profit, according to fi- nancial results released April 15. UnitedHealth said its first-quarter re- sults "reflect minimal impact from the progression of the COVID-19 virus across the U.S." as coverage expan- sions and funding initiatives large- ly took place at the back end of the quarter. UnitedHealth committed to accelerating payments to providers and funding other initiatives during the COVID-19 pandemic. In the first quarter of this year, United- Health saw overall revenue grow 6.8 percent year over year to $64.4 bil- lion, which the company said reflected growth in its Optum and UnitedHealth- care businesses. Optum continued its double-digit growth in revenue, posting $32.8 bil- lion in revenue for the first quarter of 2020, up 24.6 percent year over year. The segment, which includes a phy- sician business and other health ser- vices, saw $2.1 billion in earnings from operations in the first quarter of 2020, up 12.2 percent year over year. UnitedHealthcare, the health insur- ance arm of UnitedHealth Group, saw first-quarter revenues grow by 4.4 per- cent to $51.1 billion, primarily driven by growth in Medicare Advantage and dual special needs plans. The unit posted $2.9 billion in earnings from operations for the first quarter, similar to a year prior. Separately, UnitedHealth announced that UnitedHealth President and Op- tum CEO Sir Andrew Witty will be taking a leave of absence to help lead the World Health Organization's COVID-19 vaccine initiative. He is slated to return to his positions after the assignment. n 7 ways COVID-19 could affect healthcare M&A By Morgan Haefner H ospitals are facing extreme financial pressures due to COVID-19 that will have lasting effects on the healthcare merger and acquisition market, according to investment banking firm Juniper Advisory. Seven ways COVID-19 could affect healthcare M&A: 1. More sellers than buyers will make up the post-pandemic market. 2. Hospitals that maintain some sense of solvency during the pandemic may have a larger appetite for M&A. 3. Competitors, like private equity firms and telemedicine companies, are rapidly growing as hospitals become entrenched in their COVID-19 respons- es. 4. Independent hospitals are working with peers in their market to best optimize care for patients, and health systems are using their scale to transfer patients, staff and supplies between facilities. 5. Resuming business after the pandemic will be difficult as staff retention and financial performance worsen, and buyers and sellers who can jump back into clinical services will be more attractive in M&A deals. 6. In general, current business combinations are still set to close as planned. 7. Some development teams at hospitals are still exploring partnerships despite the challenges. n Distributor hikes price of possible COVID-19 drug as demand spikes By Maia Anderson A s global demand spiked in early April for hydroxychloroquine — the drug President Donald Trump expressed hope for as a treatment for COVID-19 — a distributor that supplies the key ingredient of the drug hiked its price about 350 percent, STAT reported April 10. Spectrum Chemical, which sells hydroxychloroquine sulfate to compounding phar- macies that make hydroxychloroquine pills, raised the wholesale price of a 100-gram container of the ingredient by about 350 percent to $1,160, and the price for a 1,000- gram container 230 percent, to $5,932, according to STAT. A spokesperson for Spectrum Chemical told STAT the spike in demand for the drug has made it hard to obtain the active ingredient and that its suppliers have been ship- ping partially filled orders or canceling orders outright. As regular pharmacies run out of hydroxychloroquine, compounding pharmacies — those that make custom drugs — may become the go-to source of hydroxychloroquine for patients who need it to treat lupus and rheumatoid arthritis, according to STAT. But if distributors of the active ingredient raise prices, compounding pharmacies may have to pass those costs down to consumers, raising the price and limiting patient access to hydroxychloroquine. n

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