UnitedHealth Group said its business selling insurance and providing health care in South America should generate about $11 billion in revenue this year, up by more than one-third compared with 2017.
The Minnetonka-based company added to the business earlier this year by acquiring a health plan and hospital operator in Chile, Colombia and Peru with 2.1 million insurance customers and 13 private hospitals with more than 1,900 beds.
With the purchase, the company's UnitedHealthcare Global division now operates 6,300 hospital beds in South America while selling health and dental benefits to more than 8 million people, said David Wichmann, the UnitedHealth Group chief executive, during an investors conference last week.
"Looking forward, we expect strong and consistent performance in global with measured investment to establish foundational market presence in countries with attributes similar to those we've invested in thus far," Wichmann said in a transcript released by the company.
With more than $200 billion in annual revenue last year, UnitedHealth Group is the nation's largest health insurer. The company also operates a fast-growing division called Optum for pharmacy benefits, health care data and patient care services. The global business, by comparison, is much smaller and hasn't shown consistent revenue growth over the years.
In 2012, UnitedHealth announced a deal to purchase a majority stake in Amil Participacoes, a large insurer and health care provider in Brazil, for $4.9 billion. Year-over-year revenue in the global business declined in 2015 as turmoil in the Brazilian economy downsized the ranks of those with Amil's employer-sponsored coverage.
Revenue of $5.5 billion in 2015 for UnitedHealthcare Global grew to $7.8 billion last year.
In December, UnitedHealth announced plans to purchase Empresas Banmédica in a deal that valued the South American company at about $2.8 billion. During the first three quarters of 2017, Banmédica had operating earnings of $136 million on $1.87 billion of revenue; net income to shareholders during the period was $69 million.
About 70 percent of Banmédica's revenue comes from Chile, where health care spending accounted in 2014 for about 7.8 percent of gross domestic product. Chile saw average yearly growth in health care spending of nearly 10 percent between 2009 and 2014, according to background materials from UnitedHealth on the Banmédica deal.
"Chile, Peru and Colombia are among the most stable and open countries in Latin America with democratic political systems and growth-oriented government policies," UnitedHealth Group stated in the materials. It added: "Public health systems offer basic care for all citizens, but a growing middle class is driving demand for access to better quality health care currently provided in the private systems."
Operating margins in the international business at UnitedHealth are improving again in 2018, said Wichmann during Bernstein's 34th Annual Strategic Decisions Conference last week in New York.
When sizing up international markets, UnitedHealth Group considers political and regulatory volatility in the country — and typically studies the market for anywhere from five to 10 years before making a deal, Wichmann said. The company looks for places where UnitedHealth could apply its experience using information to better manage the health of populations and boost efficiency, he said.
"When we talk about investing international, we talk about that at a measured pace — and that word 'measured' is very important," Wichmann said. He added: "We do have expectations ... around where we might invest globally in the future."