Health insurance and services conglomerate UnitedHealth Group has appointed John Rex, the chief financial officer of UnitedHealth's Optum unit, as its next CFO.
Tapping Rex as the companywide CFO shows how much Optum has grown and how it's become just as important as UnitedHealth's health insurance division, UnitedHealthcare.
Rex, 54, told analysts during a first-quarter conference call this year that he and other executives believe Optum's potential domestic and global market opportunity is $1.2 trillion. UnitedHealth also owns a hospital and health insurer system in Brazil.
Rex will take the reins from David Wichmann, who had been serving as UnitedHealth's president and CFO. Wichmann will now only serve as president, managing the Minnetonka, Minn.-based company's operations. Many analysts see the move as a clear sign of succession planning, with Wichmann expected to lead UnitedHealth once CEO Stephen Hemsley steps down.
Tami Reller, Optum's chief marketing officer, will take Rex's CFO spot.
During an executive reshuffling in 2014, some observers believed Dan Schumacher, the CFO of UnitedHealthcare, would eventually become UnitedHealth's top finance chief.
Optum has become the most profitable force behind UnitedHealth, posting higher operating margins than the UnitedHealthcare division in each of the past two years. Optum's revenue totaled $67.6 billion in 2015, a 77% increase from 2013. UnitedHealthcare's revenue is much higher, but it rose at a slower 15% rate over that same span.
Optum is divided into several parts—ranging from a growing pharmacy benefits manager to data analytics consulting with hospitals to care management. Optum also owns some physician practices.
More health insurers are expanding into technology and consulting, like UnitedHealth has done with Optum, as a way to supplement their traditional business model of managing medical claims and setting premiums.
Rex's base salary as UnitedHealth's CFO will be $800,000, and he's eligible to receive up to $920,000 in annual cash bonuses. UnitedHealth also gave Rex—who has been with Optum since 2012 and is a former director at banking giant JPMorgan & Chase Co.—$2.5 million in stock for the promotion. UnitedHealth is trading around $140 per share and is up 21% so far in 2016.
Wichmann made $11.6 million last year, nearly the same amount as Optum CEO Larry Renfro.
