Anthem Inc

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.

On Thursday, the Trump administration announced the withdrawal of the proposal to abolish rebates paid to pharmacy benefit managers by drugmakers.

Analysts expect Cigna’s (CI) operating cash flows to be $8.01 billion, $9.08 billion, and $9.69 billion, respectively, in 2019, 2020, and 2021.

On its fourth-quarter earnings conference call, Cigna (CI) guided for a 2019 medical care ratio in the range of 80.5%–81.5%.

In its fourth-quarter earnings press release, Anthem (ANTM) guided for 2019 GAAP (generally accepted accounting principles) EPS of more than $18.00.

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.

On April 12, Anthem (ANTM) closed at $252.85, 8.48% lower than its previous closing price.

On November 29, Express Scripts Holding’s stock price closed at $101.22, which is ~5% growth from the close of $96.81 on November 23.

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.

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

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.

Norfolk Southern, which is a premier transportation company in the US, was the S&P 500’s top gainer on April 25.

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.

In the second week of April 2018, St. Jude Children’s Research Hospital announced the launch of the St. Jude Cloud, which it described as the world’s largest public store of pediatric cancer genomics data.

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

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.

During its fiscal 2Q18 results, Oracle announced that it had added $12 billion to the company’s share buyback program.

Through May 26, 2017, 83% of healthcare stocks have delivered earnings above analysts’ estimates. About 16% of healthcare stocks have missed analysts’ estimates, while 2% reported earnings in line with analysts’ estimates.

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%.

In 1Q17, WellCare Health Plans’ (WCG) Medicaid business reported revenues close to $2.6 billion, which equals year-over-year growth of ~11.8%.

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.

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.

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) Optum business reported $21.2 billion in revenues, which represents year-over-year growth of around 7.9%.

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) 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%.

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.

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.

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).

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.

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.

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.

In the risk arbitrage world, a 2.8% annualized return is pretty small. There’s some overlap that could concern regulators. The main risk would be the timing risk.

In the case of Amsurg (AMSG) and Envision (EVHC), the gating item will depend on how closely antitrust regulators look at the transaction.

Amsurg and Envision are merging. Envision shareholders will receive 0.334 shares of Amsurg stock for each share of Envision they hold.

On June 15, Amsurg (AMSG) and Envision (EVHC) announced a merger. Envision will hold 53% of the new company and Amsurg will hold 47%.

The merger spread is trading at 1.1% gross—about 1.9% annualized. Even in an unusually low interest rate environment, that’s a low return.

If the Talen deal closes as advertised, you will make about $0.15. If the deal breaks, you will lose $1.85 per share. So, the risk-reward ratio is just over 12:1.

Given Talen’s close proximity to the Marcellus Shale region, it faces competition from other electricity generating companies that use cheap natural gas.

Salesforce.com is paying a pretty penny for Demandware at 11 times its revenue. This gives a good indication of just how much potential growth Salesforce.com sees in the space.

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.

Demandware (DWRE) was trading at about $48 per share before the deal was announced.

Competitive deals can make your quarter if you’re a merger arbitrage professional.

Traditionally, arbitrage desks would have a portfolio of 40–50 “safe” transactions, and these make up the bread and butter of their returns.

On June 1, Salesforce.com (CRM) announced it was buying Demandware (DWRE) in a $2.8 billion transaction.

Bayer AG sent a bear hug letter to Monsanto (MON) publicly stating its intent to purchase the company for $122 per share in cash.

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.

On May 23, Bayer confirmed it was interested in buying Monsanto for $122 in cash per share, or an aggregate value of $62 billion.

This transaction is a classic merger arb core position. There’s always the possibility of someone coming in over the top for St. Jude Medical (STJ).

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.

On May 1, Baker Hughes (BHI) and Halliburton (HAL) officially terminated their merger agreement. Halliburton will pay Baker Hughes the $3.5 billion reverse termination fee.

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.

Hatteras has a no-shop provision with a fiduciary out. This means that Hatteras isn’t allowed to solicit other buyers during the pendency of the merger.

On March 21, Starwood and Marriott amended their merger agreement to top Anbang’s offer. The amended merger spread is trading at an annualized return of 1.3%.

On March 14, Starwood Hotels & Resorts Worldwide (HOT) announced that it received an unsolicited takeover approach from a consortium of investors led by China’s Anbang Insurance Group.

The $28.50 purchase price was a high premium of over 24% to where The Fresh Market was trading on March 11, 2016—the day before the deal was announced.

The Fresh Market has a go-shop provision. It can solicit other bids for the first 21 days. Then, it will be held to the customary no-shop provision with a fiduciary out.

As with any private equity transaction, the goal is to buy the company, improve its performance, and then sell it back into the marketplace at a higher multiple.

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.

There’s the possibility of a bidding war. Arbs will probably have a small position in case there’s a bidding war. They will scale in if the spread widens.

The $42 purchase price was a high premium of over 33% to where Tumi (TUMI) was trading on March 2, 2016—the day before the deal was announced.

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.

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.

On March 3, Samsonite and Tumi announced that Samsonite will buy Tumi in a $1.8 billion deal. The deal will be a cash transaction set at $26.75 per share.

XLV rose 1.4% on February 22, 2016, as 52 of its holdings posted positive returns. Only four of XLV’s stocks ended in the red.

The ITC (ITC)-Fortis transaction is a utility deal and arbitrageurs tend to avoid them. State regulatory approvals are generally inscrutable.

ITC (ITC) was trading at ~$33 per share before the press reported it was in talks for a sale. If the deal breaks, will ITC’s share price return to its former level?

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.

On February 9, 2016, Fortis and ITC announced a merger. Fortis is buying ITC in a $6.6 billion deal. Including debt, the deal’s value is $11.2 billion.

After the closure of Centene-Health Net Deal, Centene expects to benefit from increased scale of operations and diversification of revenue base.

Centene believes that if all its existing markets adopt Medicaid expansion, it would result in 4 million additional members becoming eligible for Medicaid.

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

Centene posted its 4Q15 and 2015 earnings on February 09 and reported diluted operating EPS attributable to common shareholders of about $2.89 for 2015.

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%.

Abbott Laboratories is a leading pharmaceutical company that also makes diagnostic products, nutritional products, and vascular products.

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 plans to negotiate pharmaceutical pricing with Express Scripts in an effort to improve affordability, secure more members, and enroll new customers.