‘Medicare for All’ Is No Reason to Drop Healthcare Stocks
While the media caters to Millennial preferences, there’s one economic sector that’s shifting to a more seasoned crowd: healthcare stocks.
What Are Leon Cooperman’s Top Holdings?
In Q3, billionaire investor Leon Cooperman’s top five holdings were Fiserv, Alphabet, United Continental, Chimera Investment, and Cigna.
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 Cash Flows and Capital Investments in 2019
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.
ANTM or CI: Comparing Their Operating Expenses in 2019
On its fourth-quarter earnings conference call, Cigna (CI) guided for a 2019 medical care ratio in the range of 80.5%–81.5%.
ANTM or CI: Comparing Their Earnings Growth in 2019
In its fourth-quarter earnings press release, Anthem (ANTM) guided for 2019 GAAP (generally accepted accounting principles) EPS of more than $18.00.
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.
What Are Analysts Recommending for ANTM and CI?
On April 12, Anthem (ANTM) closed at $252.85, 8.48% lower than its previous closing price.
Dan Loeb Increased Third Point’s Position in These Stocks in Q4
In Q4 2018, Third Point initiated a new position in Cigna (CI), which is an American healthcare services organization.
United Health Group Stock Has Risen 28% in 2018
On November 29, United Health Group’s (UNH) stock price closed at $282.55, which is ~8% growth from its close of $261.62 on November 23.
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.
How Does UNH’s Valuation Look in October?
UnitedHealth Group is a leading managed healthcare firm in the United States.
Jefferies Raised Its Target Price on UNH Stock: What’s the Outlook?
UnitedHealth Group (UNH) is one of the largest Fortune 500 companies.
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.
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.
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 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.
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.
BSX Focuses on Advancing Its Cardiac Rhythm Management Portfolio
Boston Scientific expects the results from its UNTOUCHED trial by 2020.
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.
Amazon’s Healthcare Venture: An Opportunity for Microsoft?
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.
How Is UNH’s Optum Business Positioned in the Industry?
UnitedHealth Group is, by revenue, the largest healthcare company in the world.
Walmart Eyes Growth Avenues—Healthcare Could Be One
CNBC has reported that Walmart is looking to acquire PillPack, an online pharmacy startup, for less than $1 billion.
UnitedHealth Group’s Recent Stock Performance
On March 14, 2018, UnitedHealth Group (UNH) ended trading at $225.38 per share.
UnitedHealth Group’s Dividend Payment of $0.75 Payable March 20
On February 14, UnitedHealth Group authorized a quarterly dividend payment of $0.75 to shareholders of record on March 9, 2018.
Cigna Expects to Report Robust Revenue Growth in the Future
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.
Could Cigna–Express Scripts Deal Be Earnings Accretive in Year 1?
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.
Cigna Expects Acquisition of Express Scripts by End of 2018
On March 7, 2018, Cigna (CI) announced that it has entered into a definitive agreement to acquire Express Scripts (ESRX) for $67 billion.
How Has Universal Health Services Fared Compared to Peers?
Between November 22 and February 21, Universal Health Services stock has risen 19% to reach $117.
How Amazon Could Upend the Healthcare Sector
Amazon has joined forces with Berkshire Hathaway (BRK.A) and JPMorgan Chase (JPM) to create a not-for-profit healthcare company.
WellCare Health Plans Expected to Report Solid Rise in EPS in 2017
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.
WellCare Health Plans Expects Robust Revenue Performance in 2017
In 1Q17, WellCare Health Plans (WCG) reported revenues of ~$3.9 billion, which totals year-over-year growth of around 11.7%.
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 and OptumInsight May Witness Robust Growth Trends in 2017
In 1Q17, UnitedHealth Group’s (UNH) Optum business reported $21.2 billion in revenues, which represents year-over-year growth of around 7.9%.
OptumCare Is a Major Driving Force for UnitedHealth Group in 1Q17
In 1Q17, UnitedHealth Group’s (UNH) OptumHealth segment served 6 million more people 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.
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.
Will UnitedHealth’s Optum One Improve Decision-Making in 2017?
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: 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.
UnitedHealth Group: Robust Revenue Expected
Wall Street analysts have projected UnitedHealth Group’s 2016 revenues to be about $183.9 billion, which is a YoY growth of 17.1%.
Will the ARM Holdings-Softbank Merger Attract Arbitrageurs?
Arbitrageurs will certainly be interested in setting up the ARM Holdings (ARMH) spread, especially if they can get an 8% return using the ordinary shares.
Risk-Reward Ratio of the ARM Holdings-Softbank Merger
ARM Holdings (ARMH) was trading at about $47 per share before the deal with Softbank was announced. The risk-reward ratio is about 12:1.
Could the ARM Holdings-Softbank Deal Get Competitive?
Softbank is paying a pretty penny for ARM Holdings (ARMH). The premium to the prevailing share price was in the low 40%.
Regulatory Conditions to the Softbank-ARM Holdings Deal
Softbank decided to waive any antitrust or regulatory conditions to the transaction. It doesn’t care if the regulators have issues—it’s buying the company.
What Are the Conditions for the ARM Holdings-Softbank Merger?
ARM Holdings and Softbank are merging in a cash transaction. In an unusual step, there aren’t regulatory or antitrust conditions to the transaction.
What’s the Rationale for the Softbank-ARM Holdings Merger?
The Softbank-ARMS Holdings merger intends to increase Softbank’s growth so that it can position itself as a leader in Internet of Things.
Making a Big Splash: Softbank Acquires the UK’s ARM Holdings
On July 18, Japan’s Softbank and the United Kingdom’s ARM Holdings (ARMH) announced a merger where Softbank will buy ARM for 1,700 pence in cash.
What Do Analysts Recommend for UNH ahead of 2Q16 Earnings?
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.
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’s the Main Regulatory Risk of the Envision-Amsurg 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.
Can the Amsurg-Envision Transaction Get Antitrust Approval?
In the case of Amsurg (AMSG) and Envision (EVHC), the gating item will depend on how closely antitrust regulators look at the transaction.
What’s the Rationale for the Amsurg-Envision Merger?
Amsurg and Envision are merging. Envision shareholders will receive 0.334 shares of Amsurg stock for each share of Envision they hold.
Amsurg and Envision Merge to Form a Healthcare Services Juggernaut
On June 15, Amsurg (AMSG) and Envision (EVHC) announced a merger. Envision will hold 53% of the new company and Amsurg will hold 47%.
Why Is the Talen-Riverstone Spread Trading Tight?
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.
What’s the Risk-Reward Ratio for the Talen Transaction?
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.
Why Going Private Is a Good Result for Talen
Given Talen’s close proximity to the Marcellus Shale region, it faces competition from other electricity generating companies that use cheap natural gas.
What’s the Rationale for the Demandware-Salesforce Merger?
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.
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.
What Is the Risk-Reward of the Demandware Deal?
Demandware (DWRE) was trading at about $48 per share before the deal was announced.
Demandware’s Stock Price Hints at a Competing Buyer
Competitive deals can make your quarter if you’re a merger arbitrage professional.
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.
Salesforce Buys Demandware to Increase Growth
On June 1, Salesforce.com (CRM) announced it was buying Demandware (DWRE) in a $2.8 billion transaction.
XLV’s Holdings: How Are the Moving Averages Trending?
As of May 31,178 of XLV’s stocks were trading above their 20-day moving averages and 25% were trading above their 50-day moving averages.
Anticipated Steps for the Monsanto-Bayer Merger
Bayer AG sent a bear hug letter to Monsanto (MON) publicly stating its intent to purchase the company for $122 per share in cash.
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.
Bayer Sends a Bear Hug to Monsanto
On May 23, Bayer confirmed it was interested in buying Monsanto for $122 in cash per share, or an aggregate value of $62 billion.
Pfizer Purchases Anacor in a $5.2 Billion Cash Deal
On May 16, 2016, Pfizer (PFE) announced that it was acquiring dermatology pharma company Anacor (ANAC) in a transaction valued at $5.2 billion.
Will Professional Arbitrageurs Set Up the St. Jude-Abbott Merger?
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).
Rationale for the St. Jude Medical-Abbott Merger Transaction
Abbott Labs is buying St. Jude Medical for about $30 billion in cash, stock, and assumed debt to become a dominant player in the cardiovascular health space.
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.
Baker Hughes and Halliburton Terminate Their Merger
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.
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.
Outpatient and Pharmacy Costs May Drive Up UnitedHealth Group’s Medical Costs in 2016
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.
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%.
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.
UnitedHealth Group’s 1Q16 Earnings Are Out: Here’s What the Conference Said
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.
Could the Lexmark Deal Get Competitive?
The consortium’s offer of $40.50 was a 30% premium to Lexmark’s price on October 21, 2015. The deal is the culmination of a six-month process.
What’s the Rationale for the Lexmark Transaction?
A consortium bought Lexmark for $3.6 billion. In many ways, this transaction is about getting Lexmark easier access to fast-growing Asian economies.
What Are the Conditions of the Hatteras-Annaly Merger?
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.
Why You Should Exercise Caution When Investing in Healthcare
The rally seen in the healthcare sector over the last five years has largely been driven by biotechnology stocks.
The Fidelity Magellan Fund: An Average Year until March 18
From a purely NAV (net asset value) return standpoint, the Fidelity Magellan Fund stood fifth in the one-year period ended March 18, 2016, among its peer group.
Why Did Starwood Accept a Better Offer from Marriott?
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%.
An Interloper Enters the Starwood-Marriott Deal
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.
Could The Fresh Market Deal Become Competitive?
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.
Apollo-The Fresh Market Transaction: What Are the Conditions?
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.
What’s the Rationale for The Fresh Market Transaction?
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.
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.
Will Arbs Impact the Samsonite-Tumi Deal?
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.
Could the Samsonite-Tumi Merger Get Competitive?
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.
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.
Big Deal: Samsonite Buys Tumi in a $1.8 Billion Deal
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.
DaVita’s Stock Reacts to the Merger with The Everett Clinic
DaVita HealthCare Partners (DVA) was one of the biggest winners for the week ending March 4 with a return of 6.1%.
ITC-Fortis Spread: What to Expect from Arbitrageurs
The ITC (ITC)-Fortis transaction is a utility deal and arbitrageurs tend to avoid them. State regulatory approvals are generally inscrutable.
What’s the Risk-Reward Ratio for the ITC-Fortis Deal?
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?
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.