Aetna Inc

UnitedHealth Group (UNH) released its Q3 2018 earnings today. UNH reported sales of $56.6 billion, up ~12.4% on a year-over-year basis.

On October 10, the US Department of Justice gave preliminary approval to the $69 billion deal between CVS Health (CVS) and Aetna (AET).

Of the 24 analysts covering UNH stock, ten have recommended a “strong buy,” and 13 have recommended a “buy.”

UnitedHealth Group is a leading managed healthcare firm in the United States.

UnitedHealth Group (UNH) is one of the largest Fortune 500 companies.

As of September 24, ten of the 24 analysts covering UNH stock have given it a “strong buy” recommendation.

UnitedHealth Group (UNH) has announced that its board of directors has authorized a cash dividend of $0.90 per share.

Of the 23 analysts covering UNH stock, all of them have “buy” or “strong buy” recommendations for UnitedHealth Group.

UnitedHealth Group (UNH) stock registered its 52-week high of $270.17 last week on August 30.

Today, UnitedHealth Group (UNH) reported its earnings results for the second quarter of fiscal 2018. The company reported sales of $56.1 billion, up ~12% on a (year-over-year) basis.

On June 28, UnitedHealth Group (UNH) ended the trading day at $244.90, ~4.6% lower than its 52-week low of $183.86 reached on July 18, 2017.

Today, CVS Health, the leading pharmacy benefit managers, is up ~5% after announcing the launch of its drug delivery service from all of its US locations.

Around 70% of the US population lives within three miles of a CVS store, while more than 75% of the population lives within five miles of a Walgreens store.

Of the 22 analysts tracking UNH stock on April 19, 50% rated it as a “strong buy,” and the remaining 50% of these analysts rated the company as a “buy.”

On April 17, UnitedHealth Group (UNH) reported its 1Q18 earnings results. UNH stock rose ~3.6% from its April 16 closing price.

UnitedHealth Group is, by revenue, the largest healthcare company in the world.

UnitedHealth Group is the world’s largest healthcare company in terms of revenue. In fiscal 2017, it generated revenue of $201 billion.

CNBC has reported that Walmart is looking to acquire PillPack, an online pharmacy startup, for less than $1 billion.

On March 14, 2018, UnitedHealth Group (UNH) ended trading at $225.38 per share.

On February 14, UnitedHealth Group authorized a quarterly dividend payment of $0.75 to shareholders of record on March 9, 2018.

Cigna (CI) has projected its expected annual revenue growth rate in the range of 6%–to 8% from 2017 to 2021, assuming completion of the Express Scripts acquisition.

Cigna (CI) expects the acquisition of Express Scripts to boost the EPS of the combined company in the double digits in the first full year.

On March 7, 2018, Cigna (CI) announced that it has entered into a definitive agreement to acquire Express Scripts (ESRX) for $67 billion.

According to a report by CNBC, talks between Walgreens Boots Alliance (WBA) and AmerisourceBergen Corp. (ABC) ended without an agreement.

Headquartered in Minnesota, Fortune 500 company UnitedHealth Group (UNH) is the world’s largest healthcare company based on revenue, which totaled ~$184 billion for UNH in fiscal 2016.

In December 2016, the U.S. Attorney’s office for the District of Massachusetts issued an indictment against six former Insys (INSY) employees.

CVS is paying more than 11 times the trailing 12-month EBITDA for Aetna.

CVS Health (CVS) announced its intention to acquire Aetna (AET) for $207 per share, or $69 billion.

CVS Health (CVS), America’s largest pharmacy chain, announced a $69 billion deal to purchase Aetna (AET), the country’s third-largest insurance company, on December 3, 2017.

With trailing 12-month sales of $181 billion, CVS Health is a pharmacy colossus. However, its focus seems to be on becoming more than just a retail pharmacy chain.

On October 26, Aetna started on a stronger note and rose to record high price levels. It was the S&P 500’s top gainer on October 26, 2017.

Aetna (AET) recorded a 5.0% rise in revenue in 2016 and a 4.0% rise in 2015.

Sage Therapeutics (SAGE) is focused on the development of the products for the treatment of life-threatening central nervous system (or CNS) disorders.

Medtronic’s (MDT) Hospital Solutions segment registered double-digit growth in fiscal 1Q18.

WellCare Health Plans has updated its earnings per share guidance from the previously estimated range of $6.00–$6.25 to the new range of $6.55–$6.80.

In 1Q17, WellCare Health Plans (WCG) reported revenues of ~$3.9 billion, which totals year-over-year growth of around 11.7%.

On April 28, 2017, WellCare Health Plans (WCG) completed the acquisition of Universal American Corp. This deal added 119,000 Medicare Advantage members from several major markets

Expense guidance for 2017 For full-year 2017, Anthem (ANTM) has projected the medical cost trend for its local group business to fall in the range of 6.5%–7.0%. To learn more about medical cost trends, please see Medical cost trend means rising premiums for health insurance. If Anthem’s actual medical cost trend for full-year 2017 turns out […]

Based on the company’s performance in 1Q17, Anthem (ANTM) has increased its 2017 revenue guidance by around $1.5 billion.

Centene (CNC) has projected its health benefit ratio (or HBR) for the full year 2017 to fall in the range of 87.0% to 87.5%.

In 1Q17, UnitedHealth Group’s (UNH) UnitedHealthcare business witnessed a 2.5 million year-over-year increase in customers.

In 1Q17, UnitedHealth Group’s (UNH) Optum business reported $21.2 billion in revenues, which represents year-over-year growth of around 7.9%.

In 1Q17, UnitedHealth Group’s (UNH) OptumHealth segment served 6 million more people on a year-over-year basis.

The healthcare bill’s failure had a negative impact on investor sentiment for health insurance carriers.

In its bid to control healthcare costs, UnitedHealth Group’s (UNH) OptumRx segment has been actively deploying data analytics across its Optum platform.

UnitedHealth Group’s (UNH) Optum One is being used by about 700 hospitals and 7,000 medical clinics, which together cover about 140,000 healthcare providers.

Optum360, UnitedHealth Group’s (UNH) hospital revenue cycle management solution, is expected to reach $60.0 billion in billings for clients and partner organizations.

Wall Street analysts have projected UnitedHealth Group’s 2016 revenues to be about $183.9 billion, which is a YoY growth of 17.1%.

Compared to the Russell 3000 Growth Index, SPECX is markedly overweight in the information technology and healthcare sectors.

The consensus 12-month target price for UnitedHealth Group’s stock is ~$152.60, which represents a rise of 8.8% from the stock’s closing price of $140.30 on July 11, 2016.

In its 1Q16 conference call, Anthem updated its 2016 revenue guidance to $81 billion–$82 billion—higher than the previous projection by about $1 billion.

In 1Q16, UnitedHealth Group witnessed overall medical cost trends in the range of 5.5%–6.5%. This is in line with the 2016 guidance given in December 2015.

UnitedHealth Group’s healthcare delivery business, OptumHealth, managed to earn $4 billion revenues in 1Q16, which represents a YoY growth of about 22%.

Given the high-risk profile of individual exchange enrollments, UnitedHealth Group has decided to offer plans only on a few public exchanges in 2017.

UnitedHealthcare’s Medicare & Retirement business reported revenues worth $14.1 billion in 1Q16, which represents a YoY increase of approximately 10%.

UnitedHealth Group (UNH) posted its 1Q16 earnings on April 19. The company registered diluted EPS of $1.81—17% higher than its EPS in 1Q15.

The rally seen in the healthcare sector over the last five years has largely been driven by biotechnology stocks.

Centene managed to increase its public exchange membership from 75,000 members in 2015 to 146,000 members in 2015.

In 4Q15, Centene’s Medicaid enrollments witnessed a solid YoY growth of about 24.5%, reaching about 5 million.

In 4Q15, Cigna’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin fell year-over-year (or YoY) by 0.7% to reach 9.7%.

In 2015, Cigna’s (CI) global supplemental benefits business earned revenues of about $3.1 billion, year-over-year (or YoY) growth of about 4.8%.

In 4Q15, Anthem’s medical care ratio, a ratio of medical costs against premium revenues, rose by 2.5% YoY. Its medical care ratio for fiscal 2015 was 83.3%.

Anthem’s Government business earned revenues of $40.8 billion in 2015, a YoY increase of 20.8%. The division’s revenues were $10.6 billion in 4Q15.

Anthem’s diluted earnings per share in 4Q15 fell short of estimates by $0.04. The results represent the company’s lowest quarterly adjusted EPS in 2015.

Aetna’s PE multiples have been supported mainly by better-than-expected growth of its Medicare and Medicaid business. But its valuations have been affected negatively by high exposure to the ACA.

Aetna’s Humana acquisition is mainly aimed at increasing the combined companies’ exposure to the high-growth Medicare business. The deal is currently being scrutinized by antitrust regulators.

Government-sponsored programs such as Medicare and Medicaid are expected to be key drivers of Aetna’s (AET) revenue growth in 4Q15.

UnitedHealth Group’s (UNH) Medicare & Retirement segment currently serves one of every five Medicare beneficiaries in the United States.

UnitedHealth Group (UNH) released its 4Q15 and full year 2015 earnings on January 19, 2015. The company registered diluted EPS attributable to common shareholders of $1.26 in 4Q15 and $6 for 2015.

The large-cap stocks of the iShares US Healthcare Providers ETF (IHF) rose marginally with a return of 0.35%. They outperformed IHF and SPY.

On December 1, the healthcare-services subgroup outperformed all other subgroups in XLV with a return of 3.3%. The biotechnology subgroup returned 0.8%.

UnitedHealth Group updated its prior guidance for fiscal 2015 on its 3Q15 conference call, projecting earnings of about $6 per share.

UnitedHealth Group rose 1.4% on November 10, 2015. The company announced a dividend of $0.5 per share to be paid on December 15, 2015.

In 3Q15, UnitedHealth Group’s consolidated medical care ratio, which is the ratio of medical costs to the premium revenue, fell by 0.9% on a year-over-year (or YoY) basis.

To strengthen their presence in international markets, health insurance companies have been involved in mergers and acquisitions with local insurance companies in these markets.

In 3Q15, UnitedHealth Group’s (UNH) UnitedHealthcare segment added 1.7 million people year-over-year across the commercial, Medicare, and Medicaid benefits markets in the US.

In 3Q15, despite a rise of total revenues by 27% year-over-year, which includes 10% organic growth, UnitedHealth Group reported a decline of about 1% in net profit margins.

Aetna’s EBITDA margins rose from 10.6% in 1Q14 to 11.3% in 1Q15. Enrollment growth and an effective cost optimization strategy led to the high margins.

The growth of the ASEAN member nations has been extraordinary, to say the least. The GDP for the region expanded at a whopping 313% between 2001 and 2013.

With a market cap of $27 billion, Humana is one of the leading companies in the healthcare service subgroup. HUM stock rose 4.34% for the period August 25–31, 2015.

PanAgora and Renaissance Technologies are both investment management firms that use a quantitative-based investment approach.

The Cigna–Anthem merger deal will be subject to all sorts of headlines that will affect the spread. You can make a decent return trading around the position by keeping your head .

If the Cigna–Anthem merger closes, you end up making about $35 a share. If the deal breaks, then you would have to cover at $52 a share.

In the case of the Cigna–Anthem merger, Anthem (ANTM) is buying Cigna (CI) for a headline amount of $188 a share, comprised of 0.5152 shares of Anthem and $103.40 in cash.

Based on market capitalization, UnitedHealth Group appears to be a stronger partner for Cigna.

The second-largest health insurance company in the US, Anthem is planning to acquire Cigna. Lack of consensus on leadership and governance-related issues seem to be delaying the deal.

With the health insurance industry witnessing a wave of consolidations, it is expected that a majority of acquirers may risk overpaying for their targets.

The Centene–Health Net deal is expected to be completed by early 2016, pending approval by the shareholders of both companies.

Centene projects that Health Net’s acquisition will help Centene realize pre-tax synergies worth $150 million by the end of the second year after the closure of the deal.

Centene aims to position itself as a leader in the fast-growing Medicaid market. Health Net’s acquisition will add ~1.7 million Medicaid members to the company’s portfolio.

On July 2, Centene announced the acquisition of Health Net for a combination of cash and shares amounting to $6.8 billion. This includes the assumption of Health Net’s $500 million debt.

Scenario analysis  In the risk-arbitrage world, a 12.2% expected return means a deal that has a lot of risk. Arbitrageurs sometimes refer to risk as “hair.” This deal is guaranteed a second request, and the regulators may simply be unable to get comfortable with the transaction, no matter what the companies offer in the way […]

Aetna is buying Humana for about $37 billion, which works out to be about 0.73x trailing 12-month revenues and 13.7x trailing 12-month EBITDA.

Aetna projects that its Humana acquisition will help Aetna realize annual synergies worth $1.25 billion in 2018.

If the Aetna-Humana acquisition is approved by anti-trust regulators, Aetna’s government-sponsored enrolments will rise.

The merger of Anthem and Cigna is all about extracting synergies and driving down costs. As the Affordable Care Act puts pressure on health insurers, they need to cut costs to maintain margins.

Aetna (AET) announced its 1Q15 earnings on April 28, 2015. The company posted EPS of $2.30, beating Wall Street EPS estimates of $1.94.

Analysts projected that Anthem’s revenue will be higher in 1Q15 compared to 1Q14. However, the company will likely experience a drop in EBITDA margins.

In addition to strong Medicaid enrollments, Anthem has projected a decent growth in its commercial enrollments, especially in the individual segment.

Cigna’s revenue is estimated to be $9.3 billion, and its EBITDA margin is expected to be ~9.0%. Its net income is expected to be around $480.6 million.