UnitedHealth Group’s UNH Optum Rx recently announced a major step toward modernizing pharmacy payments, a decision that could strengthen its market position and financial outlook. By adopting a cost-based reimbursement model, Optum Rx aims to provide fairer payments to pharmacies while improving medication access and affordability for consumers. Epic Pharmacy Network has partnered with Optum Rx to implement this model.

This shift is especially beneficial for independent and community pharmacies, which have long struggled with rising drug prices and unpredictable reimbursement rates. With over 24,000 independent pharmacies in its network, Optum Rx’s new model ensures financial stability for these businesses, helping them maintain better medication stocks and improve patient care.

This move bodes well for UNH as it is expected to increase pharmacy participation in Optum Rx’s network, enhancing service delivery and consumer satisfaction. By eliminating retroactive payment adjustments and reducing administrative burdens, Optum Rx is making it easier for pharmacies to operate efficiently. These improvements could lead to stronger partnerships and higher retention rates among pharmacies, employers and health plans.

Alignment of payment models with actual drug costs enhances Optum Rx’s credibility and transparency. Additionally, its commitment to passing 100% of drug rebates to clients by 2028 positions it as a leader in ethical and consumer-friendly pharmacy management. This transparency could attract new clients and solidify Optum Rx’s reputation as a reliable pharmacy benefits manager (PBM). UNH expects Optum Rx’s revenues to be between $145.5 billion and $146.5 billion for 2025, and its long-term growth rate to be 5-8%.

Shares of UnitedHealth Group have gained 4% in the past year against the industry’s 3% decline. UNH currently carries a Zacks Rank #3 (Hold).

Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks in the broader Medical sector are Pediatrix Medical Group, Inc. MD, The Ensign Group, Inc. ENSG and Addus HomeCare Corporation ADUS. While Pediatrix Medical currently sports a Zacks Rank #1 (Strong Buy), Ensign and Addus HomeCare carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Pediatrix Medical’s current-year earnings increased 3 cents in the past week. MD beat earnings estimates in each of the trailing four quarters, with an average surprise of 19.4%. The consensus mark for its current-year revenues is pegged at $1.9 billion.

The Zacks Consensus Estimate for Ensign’s current-year earnings indicates 13.5% year-over-year growth. ENSG beat earnings estimates in each of the trailing four quarters, with an average surprise of 1.5%. The consensus mark for revenues implies a 14.3% increase from the year-ago period.

The Zacks Consensus Estimate for Addus HomeCare’s current-year earnings indicates a 13.5% increase from the year-ago reported figure. ADUS beat earnings estimates in three of the trailing four quarters and met once, with an average surprise of 5.8%. The consensus mark for its current-year revenues is pegged at $1.4 billion, which indicates 21.7% year-over-year growth.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

Pediatrix Medical Group, Inc. (MD) : Free Stock Analysis Report

Addus HomeCare Corporation (ADUS) : Free Stock Analysis Report

The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research