Could the Rite Aid–Walgreens Merger Get Competitive?
In the Rite Aid–Walgreens merger, Walgreens is paying about 0.6x trailing-12-month revenues and 13.6x trailing-12-month EBITDA.
Analysts’ Recommendations for Anthem in 2017
Based on the company’s performance in 1Q17, Anthem (ANTM) has increased its 2017 revenue guidance by around $1.5 billion.
What’s UnitedHealth Group’s outlook for 2015?
It’s projected that UnitedHealth Group’s revenue and earnings growth in 2015 will be driven by the strong performance of the Optum segments.
Why UnitedHealth Group Plans to Reduce Its Public Exchange Exposure
Given the high-risk profile of individual exchange enrollments, UnitedHealth Group has decided to offer plans only on a few public exchanges in 2017.
Is the Cigna–Anthem Merger a Setup?
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 .
The Risk-to-Reward Ratio of the Cigna–Anthem Merger
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.
Decoding Humana’s Revenue Stream in 2015
Humana reported revenues of about $54.3 billion in its 2015 results. This amounts to a 12% revenue growth in 2015, compared to ~$48.1 billion in 2014.
UnitedHealth Group Goes Ex-Dividend Today
UnitedHealth Group (UNH) has announced that its board of directors has authorized a cash dividend of $0.90 per share.
Allergan–Pfizer merger: What Does Pfizer Make besides Viagra?
The Allergan–Pfizer merger will change Pfizer’s domicile to Dublin, Ireland, and allow them to gain access to overseas cash without a US repatriation tax.
UNH’s Stock Price Performance in June
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.
Could the Plum Creek Timber-Weyerhaeuser Merger Get Competitive?
In the Plum Creek Timber-Weyerhaeuser merger, Weyerhaeuser is paying about 7.4x trailing-12-month revenues and 25.4x trailing-12-month EBITDA.
UNH Stock Up 4.1% on Solid Q3 2018 Results, View Up
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.
Jefferies Raised Its Target Price on UNH Stock: What’s the Outlook?
UnitedHealth Group (UNH) is one of the largest Fortune 500 companies.
Is the Cigna-Anthem Merger a Setup?
Cigna has been put ‘in play,’ which means other buyers will be taking a look. The spread is wide, but there are major unanswered questions. It makes sense to give this one a wide berth.
Anthem Files Bear Hug Letter for Cigna on June 21
On June 21, Anthem (ANTM) filed a bear hug letter for Cigna (CI). A bear hug letter is a formal press release in which an acquiring company discloses its interest in a target company.
UnitedHealth Group Reports Q2 2018 Earnings, Stock Down 1.9%
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.
Negative Sentiment Will Impact Health Insurance Companies
The healthcare bill’s failure had a negative impact on investor sentiment for health insurance carriers.
UnitedHealth Group Posted 4Q15 Earnings: What You Should Know
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.
UnitedHealth Group Stock at 52-Week High, Up 22% Year-to-Date
UnitedHealth Group (UNH) stock registered its 52-week high of $270.17 last week on August 30.
What’s the Rationale for the ITC-Fortis Merger?
Fortis (FRTSF) is buying ITC (ITC) in the largest Canadian purchase of a US utility. Fortis intends to sell a 19% stake in order to help finance the transaction.
Rationale for the Starwood-Marriott Merger
With the Starwood-Marriott merger, the companies expect to generate at least $200 million in annual cost savings beginning in the second year after the deal closes.
Analyst Ratings for UnitedHealth before Q3 2018 Earnings
Of the 24 analysts covering UNH stock, ten have recommended a “strong buy,” and 13 have recommended a “buy.”
Rising US Dollar Dampens April Jobs Report—SPY Down 0.41%
Investor sentiment in the US was dampened by the weak April jobs report that was released May 6. The non-farm private payroll gained 169,000 jobs against median expectations of 200,000.
UnitedHealth Group’s Recent Stock Performance
On March 14, 2018, UnitedHealth Group (UNH) ended trading at $225.38 per share.
Goldman Sachs: Trade War Boosts Risk of Recession
Goldman Sachs (GS) has cut its Q4 growth forecast by 20 basis points. It now foresees the trade war impacting growth more than it previously forecast.
This Rebate Decision Saw Health Insurers Soar Yesterday
On Thursday, the Trump administration announced the withdrawal of the proposal to abolish rebates paid to pharmacy benefit managers by drugmakers.
ANTM or CI: Comparing Their Revenue Growth in 2019
In its fourth-quarter earnings press release, Anthem (ANTM) guided for 2019 operating revenue of $100 billion, a YoY (year-over-year) rise of $8.7 billion.
Wall Street Expects 9% Upside Potential for UnitedHealth Stock
As of September 24, ten of the 24 analysts covering UNH stock have given it a “strong buy” recommendation.
Analysts Raise Target Prices on UNH Stock in September
Of the 23 analysts covering UNH stock, all of them have “buy” or “strong buy” recommendations for UnitedHealth Group.
UnitedHealth Group Posted Strong 1Q18 Performance
On April 17, UnitedHealth Group (UNH) reported its 1Q18 earnings results. UNH stock rose ~3.6% from its April 16 closing price.
Insys Has Legal Issues Galore
In December 2016, the U.S. Attorney’s office for the District of Massachusetts issued an indictment against six former Insys (INSY) employees.
Medicare Business Expected to Drive WellCare Health Plans’ Margin Growth
In 1Q17, WellCare Health Plans’ (WCG) Medicare Health Plans business reported revenues close to $1.1 billion, which represents year-over-year growth of ~12.4%.
Medicaid Business—A Key Revenue Driver for WellCare Health Plans in 2017
In 1Q17, WellCare Health Plans’ (WCG) Medicaid business reported revenues close to $2.6 billion, which equals year-over-year growth of ~11.8%.
Why Centene’s Health Benefit Ratio Improved in 1Q17
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%.
Centene Saw Robust Rise in Medicaid Enrollments in 1Q17
In 1Q17, around 12.1 million members were enrolled in Centene’s (CNC) various healthcare plans, which is a year-over-year (or YoY) rise of around 600,000 beneficiaries.
UnitedHealth Group Witnessed Robust Customer Growth in 1Q17
In 1Q17, UnitedHealth Group’s (UNH) UnitedHealthcare business witnessed a 2.5 million year-over-year increase in customers.
OptumRx Continues to Boost UnitedHealth’s Pharmacy Care Services
In its bid to control healthcare costs, UnitedHealth Group’s (UNH) OptumRx segment has been actively deploying data analytics across its Optum platform.
Optum360: Will It Become UnitedHealth’s Key Growth Driver?
Optum360, UnitedHealth Group’s (UNH) hospital revenue cycle management solution, is expected to reach $60.0 billion in billings for clients and partner organizations.
How Is Mylan’s Generics Segment Doing?
Mylan’s (MYL) 3Q16 revenues were mainly driven by a 17.0% rise in sales for its Generics segment. The segment reported $2.6 billion in sales in 3Q16.
Parsing the Starz-Lions Gate MAE Clause, Part 3
If the merger caused cable providers to drop Starz because they didn’t want to work with Lions Gate, it wouldn’t be a MAE (material adverse effect).
Parsing the Starz-Lions Gate MAE Clause, Part 2
According to the MAE (material adverse effect) clause of the Starz-Lions Gate deal, legislation that limits intellectual property protection wouldn’t be considered a MAE.
Parsing the Starz-Lions Gate MAE Clause, Part 1
In the merger deal between Lions Gate Entertainment (LGF) and Starz (STRZA), the MAE (material adverse effect) clause lays out the circumstances under which either party can back out of the transaction.
The Amsurg-Envision Material Adverse Effect Clause: Part 2
In this part of the series, we’ll look at the MAE clause of the Amsurg (AMSG) merger agreement with Envision Healthcare (EVHC) and how Amsurg could back out of the deal.
What Will Arbitrageurs Think of the Demandware Deal?
Traditionally, arbitrage desks would have a portfolio of 40–50 “safe” transactions, and these make up the bread and butter of their returns.
What Is the Risk-Reward of the Demandware Deal?
Demandware (DWRE) was trading at about $48 per share before the deal was announced.
What Does the Demandware-Salesforce Merger Entail?
Salesforce.com (CRM) is buying e-commerce cloud computing firm Demandware (DWRE) in a $2.8 billion transaction. The merger is structured as a tender offer.
Salesforce Buys Demandware to Increase Growth
On June 1, Salesforce.com (CRM) announced it was buying Demandware (DWRE) in a $2.8 billion transaction.
What’s the Rationale for the Bayer-Monsanto Deal?
In the Monsanto-Bayer deal, Bayer’s shareholders should expect to see mid-single-digit accretion to core EPS (earnings per share) in the first year and double-digit accretion thereafter.
Behind OptumHealth’s and OptumInsight’s Strong Revenue Growth in 1Q16
UnitedHealth Group’s healthcare delivery business, OptumHealth, managed to earn $4 billion revenues in 1Q16, which represents a YoY growth of about 22%.
What You’ll Want to Know about Anthem’s Guidance for 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.
Abbott Buys St. Jude Medical for $85 per Share in Cash and Stock
On April 28, Abbott Labs and St. Jude Medical announced an agreement where Abbott will buy St. Jude for $30 billion in cash, stock, and assumed debt.
Can the Samsonite-Tumi Merger Get Antitrust Approval?
Samsonite will need to file for merger approval under the Hart-Scott-Rodino Antitrust Improvements Act. The companies will need to file for Canadian antitrust approval.
What’s the Rationale for the Samsonite-Tumi Transaction?
Hong Kong-based Samsonite is buying luxury brand Tumi (TUMI) in a $1.8 billion deal. Samsonite is mainly known as a utilitarian luggage company.
What Subsidy Eligible Membership Could Mean for Centene’s Public Exchange Revenues
Centene managed to increase its public exchange membership from 75,000 members in 2015 to 146,000 members in 2015.
Humana Acquisition Could Be Aetna’s Key Long-Term Growth Driver
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.
The Baxalta–Shire merger: Basics of Shire Pharmaceuticals
Shire is a biopharmaceutical company that focuses on rare diseases. Shire is best known for its treatments in ADHD, and the market here is quite large.
Growth and Synergies Drive the Baxalta–Shire Merger
The Baxalta–Shire merger could create the top platform for rare diseases in the world. Baxalta brings Advate, a treatment for hemophilia, a rare blood disease.
Parsing the Merger Material Adverse Effect Clause, Part 3
The MAE (material adverse effect) clause is one of the first things arbitrageurs look at in a merger agreement. Let’s examine the Allergan–Pfizer merger’s MAE.
Parsing the Allergan–Pfizer Merger Material Adverse Effect Clause
In the case of the Allergan–Pfizer merger, the MAE clause lays out the circumstances where Pfizer (PFE) can back out of its merger with Allergan (AGN).
IHF’s Large-Cap Stocks Gave Positive Returns
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.
What Is the Risk-to-Reward Ratio of the Allergan-Pfizer Merger?
If the Allergan-Pfizer merger closes, the spread goes to zero, and you make about $52. If the deal breaks, you lose about $70.
Allergan–Pfizer Merger: What Does Allergan Make Other than Botox?
This is a second series related to the Allergan-Pfizer merger. We’ll discuss the background of the two companies and look at the Material Adverse Effect Clause.
Rationale for the Allergan-Pfizer Merger
The Allergan-Pfizer merger will generate estimated peak synergies of $2 billion per year, which will take about three years to realize.
Will Arbitrageurs Set up the Plum Creek Timber-Weyerhaeuser Deal?
Given the antitrust risk in the Plum Creek Timber-Weyerhaeuser merger, it probably should trade at a risk-to-reward ratio of about 5:1, which works out to a spread of $1.66 and an annualized spread of 9%.
Risk-to-Reward Ratio of the Plum Creek Timber-Weyerhaeuser Merger
The spread in the Plum Creek Timber-Weyerhaeuser merger is trading slightly negatively (about 6 cents), but the positive dividend carry gives the deal a positive spread.
SPY Heavy as UnitedHealth Group Forewarned Profit
The Health Care Select Sector SPDR ETF tumbled -1.7% on November 19 after UnitedHealth Group lowered its profit expectations for 2015 and cut its earnings forecast.
Parsing the Rite Aid-Walgreens MAE Clause: Part 3
The MAE (material adverse effect) clause lays out the circumstances under which Walgreens Boots Alliance (WBA) can back out of its merger with Rite Aid (RAD).
Rationale for the Plum Creek Timber-Weyerhaeuser Merger
In the Plum Creek Timber-Weyerhaeuser merger, Weyerhaeuser (WY) and Plum Creek Timber (PCL) anticipate annual cost synergies of $100 million.
Basics of the Plum Creek Timber-Weyerhaeuser Merger
The equity value of the Plum Creek Timber-Weyerhaeuser merger is about $8.4 billion and $11.4 billion if you include debt.
The Plum Creek Timber-Weyerhaeuser Merger
In the Plum Creek Timber-Weyerhaeuser merger, Weyerhaeuser Company (WY) has agreed to buy Plum Creek Timber Company (PCL) for $8.4 billion in stock.
Rationale for the Rite Aid–Walgreens Merger
The Rite Aid–Walgreens merger is expected to be accretive to Walgreens Boots Alliance’s adjusted earnings per share in the first year after completion.
Why UnitedHealth Group’s Net Profit Margins Fell
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.
Parsing the Cigna-Anthem Material Adverse Effect Clause: Part 1
The MAE clause is one of the first things arbitrageurs look at in a merger deal. In the Cigna-Anthem deal, the MAE clause states when either company can back out of the deal.
Is UnitedHealth Group a Better Partner for Cigna?
Based on market capitalization, UnitedHealth Group appears to be a stronger partner for Cigna.
Centene–Health Net Entity Could Be Medicaid Leader
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.
The Cigna-Anthem Situation: Different Than a Typical Deal
The key to the merger between Cigna (CI) and Anthem (ANTM) is understanding the process companies go through when approached with an unsolicited proposal.
What’s the Expected Return on the Anthem-Cigna Deal?
Anthem refers to the deal premium based on Cigna’s stock price on May 28. That date is as good as any to fix the Anthem stock ratio. On May 28, Anthem closed at $164.22.
Humana’s Commercial Enrollments Face Pressure in 1Q15
Humana’s (HUM) revenues from commercial enrollments increased by 28.4%, from $2.2 billion in 1Q14 to $2.8 billion in 1Q15.
What Stage of the Business Cycle Are We In Now?
Looking at the US economy for the last three years might help us understand which phase of the business cycle the US economy is in right now.
What Are Centene’s Key Risks?
Centene (CNC) faces a unique combination of business risks as well as risks specific to the health industry (IYH). Centene has a highly concentrated business mix.
Anthem: Mergers and Acquisitions Target Medicaid, Medicare
Anthem’s mergers and acquisitions strategy mainly targets the company’s government-sponsored business.
Medical Care Ratio – Centene Compared to Its Peers
For health insurance companies, the medical care ratio is the ratio of total money spent on healthcare claims to premiums earned—adjusted for tax and regulatory expenses.
Anthem’s Medical Care Ratio Improves, Boosts Profit Margin
Anthem’s medical care ratio declined from 87.8% in 2013 to 83.1% in 2014, as a result of its favorable enrollment mix.
Anthem’s Key Business Segments
In 2014, of Anthem’s three business segments, Commercial and Specialty accounted for 53.7% of total revenues, and Government Business contributed 46.3%.
Cigna’s Commercial Business Mostly Self-Insured
In the commercial business, self-insured coverage means the employer is responsible for the probable claim obligations of the employees.
What key risks does UnitedHealth Group face?
UnitedHealth Group (UNH) is a health insurance provider. It faces a unique combination of business risks, including business mix and competition risks.
Why Aetna’s Medical Care Ratio Declined in 4Q14
The medical care ratio measures a health insurance company’s financial health. Aetna’s (AET) medical care ratio declined from 83.9% in 4Q13 to 83% in 4Q14.
UnitedHealth’s operating expenses compared to its peers
In the private health insurance industry, the operating expenses mainly involve the costs for providing hospital benefits and emergency services.
How Does Aetna Make Payments to Its Provider Network?
Managed care organizations (XLV) enter into a contract with a set of health care providers, or a provider network, to provide care for members at reduced costs.
How Does Aetna Manage Its Commercial Business?
Aetna (AET) derives 58% of its operating revenues from its commercial business, which involves offerings such as fully insured health plans and self-insured health plans.
A Key Overview of Aetna, One of the Largest Insurance Providers
With a market capitalization of $35.1 billion, Aetna (AET) is one of the largest insurance providers in the US.
UnitedHealth’s diversification strategy improved its performance
Health insurance companies (XLV) use diversification strategies across markets, products, and services to maintain their operating margins.
UnitedHealth Group’s OptumInsight – improving medical care
In 2014, OptumInsight released a population health analytics tool—OptumOne. It enables hospitals to improve the quality of care.
UnitedHealth Group provides services to Medicare beneficiaries
Medicare Part D is a federal government program. It subsidizes prescription drug expenses for Medicare beneficiaries.
What are UnitedHealth Group’s consumer engagement products?
The private health insurance industry offers a diverse range of products. The products combine health plans with financial accounts to cater to different consumers’ needs.
UnitedHealth Group’s employer-sponsored and individual insurance
Employer-sponsored coverage, a major form of insurance, increasingly adopted self-insured plans. They’re more cost-effective and flexible than fully-insured plans.
Humana’s integrated care delivery strategy
Humana’s core strategy is an integrated care delivery model. Its Healthcare Services segment provides the required ancillary services.
Humana’s Retail Insurance business segment is biggest earner
Humana’s retail insurance business segment contributes 66.5% of overall company revenues. Employer-sponsored programs follow with 27.6%.
Humana: Unraveling the history of a health insurance giant
Humana (HUM) is the third-largest health insurance provider in the US, with over 13 million customers. Humana is also 73rd in Fortune 500 rankings.
Understanding health insurance companies’ major operating expenses
The operating expenses of the private health insurance industry depend on the design of health plans and on the life history, age, and health of enrollees.