Humana Inc

The medical care ratio of health insurance companies is calculated as the ratio of the total money spent in health care claims to premiums earned.

Cigna’s medical care ratio concerned with the company’s Medicare prescription drug enrollments increased from 82.3% in 2013 to 86.3% in 2014.

On July 3, 2015, Aetna announced the acquisition of its peer, Humana (HUM), for a consideration of $37 billion.

In the US, the private health insurance industry has been expanding its footprint in international markets. International markets are less penetrated and competitive.

UnitedHealth Group is acquiring Catamaran for a consideration of $12.8 billion. Increasing debt may reduce future net earnings and could affect the company’s valuation.

UnitedHealth Group (UNH) operates Optum. It provides health services like health technology, health and well-being, and pharmacy services.

Anthem’s valuation remains subdued mainly because it has fewer government-sponsored enrollments and higher financial leverage.

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

During the fourth quarter of 2014, Eminence Capital lowered its stake in Humana (HUM). The company accounted for 1.33% of the fund’s 4Q14 portfolio.

Humana’s total enrollment is mainly enrollments in the MA program, a substitute for the original Medicare program, via private insurance companies.

JPMNX is an alternative mutual fund that seeks to mimic the “market neutral” hedge fund strategy in achieving its investment objectives.

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.

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.

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

Aetna’s valuations were lower than its peers in 4Q14. With Aetna investing in growth initiatives, the valuations are expected to rise in 2015.

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.

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.

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 […]

Eminence Capital exited a position in Pandora Media Inc. (P) that accounted for 2.58% of the fund’s 3Q portfolio.

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?

The rise in Aetna’s EPS is mainly attributed to the increase in the company’s government-sponsored MA (Medicare Advantage) and Medicaid enrollments in 1Q15.

The private health insurance industry (XLV) in the US is gradually shifting from a group insurance model to a retail insurance model.

All of JPMNX’s top holdings except CJPXX were trading below their 20-day and 100-day moving averages as of January 29, 2016.

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

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

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

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.

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.

On April 12, 2018, UnitedHealth Group (UNH) closed at $224.75.

To ensure high-profit margins through 2017, Centene plans to enter new markets across its Medicaid, long-term care, and correctional health businesses.

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.

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.

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%.

Centene has developed a specialty services portfolio that reduces the company’s over-reliance on Medicaid and other state-sponsored businesses.

In the fourth quarter of 2014, Humana reported revenue of $12.3 billion, up 21% year-over-year. Of this total, $8.65 billion came from the MA program.

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

Centene (CNC) posted its 1Q15 earnings on April 28, 2015. The company beat the Wall Street diluted EPS estimates of $0.49 with a posted EPS of $0.52.

The Optum segment offers pharmacy, quality management, and health technology services. Operating earnings grew by 14% year-over-year to $742 million.

While the media caters to Millennial preferences, there’s one economic sector that’s shifting to a more seasoned crowd: healthcare stocks.

According to a report by Cain Brothers, the private health insurance industry should see a rise in merger and acquisition activity (or M&A) in 2015.

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

In its first-quarter earnings press release, Humana (HUM) guided for Group & Specialty segment earnings of $300 million–$350 million.

In the first quarter of 2019, Humana enrolled ~30,000 members in its dual-eligible special needs plans.

In its first-quarter earnings press release, Centene (CNC) reiterated its 2019 HBR (health benefits ratio) guidance of 86.5%–87.0%.

In its first-quarter earnings press release, Humana narrowed its 2019 non-GAAP EPS guidance due to the better-than-expected performance of its Retail segment.

In its first-quarter earnings press release, Centene (CNC) revised its 2019 revenue guidance upward to $72.8 billion–$73.6 billion.

Analysts’ consensus recommendations for both Centene and Humana are “buys.”

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.

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

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

PFE stock rose ~7.3% in 3Q17 and has risen ~11.3% YTD (year-to-date) as of October 16.

Volanesorsen Ionis Pharmaceuticals’s (IONS) volanesorsen is a drug designed to reduce apolipoprotein C-III production and triglycerides in patients with dyslipidemia. Akcea Therapeutics, a wholly owned subsidiary of Ionis, is engaged in pre-commercialization activities for volanesorsen, and will take care of the drug’s commercialization once it is approved by the FDA and the European Commission. The […]

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) 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) 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

The North America segment reported a growth of 22% to $1.6 billion during 4Q16 from $1.3 billion during 4Q15.

Revenues for Jakafi rose more than 42.0% to $852.8 million in 2016, from $601.0 million in 2015.

Novartis (NVS) reported flat revenues at constant exchange rates during 4Q16 as well as in fiscal 2016. This was driven by growth in Sandoz revenues.

Due to the strong performance of Opdivo, the oncology segment has emerged as the largest revenue contributor for Bristol-Myers Squibb (BMY) in 3Q16.

The effects of repealing Obamacare Donald Trump is definitely not in favor of the Affordable Care Act, known as Obamacare. As he wants to repeal the act completely and replace it with another policy, the hospital sector fell on November 9, the day after the election. Trump believes that providing healthcare facilities to illegal immigrants costs […]

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

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

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.

Centene has reported net revenue of $5,821 million in 3Q15, an increase of 5.7% compared to $5,506 million in 2Q15. Operating revenue increased 5.8% in 3Q15.

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.

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.

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.

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.

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.

Humana’s (HUM) revenues from commercial enrollments increased by 28.4%, from $2.2 billion in 1Q14 to $2.8 billion in 1Q15.

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.

Should the markets be happy about a later-than-expected rate hike? Or should they be worried that the FOMC’s optimism may spell the end of their golden run?

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.

The total Medicare Advantage beneficiaries in the US rose by 1.3 million, from 16.1 million in 1Q14 to 17.4 million in 1Q15.

UnitedHealth Group (UNH) posted its 1Q15 earnings on April 16, 2015. Following the release, UnitedHealth Group’s share price increased by 3.6%.

Anthem’s mergers and acquisitions strategy mainly targets the company’s government-sponsored business.

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 (ANTM) has value-based payment contracts with 33,000 primary care physicians, which implicates over 3 million members.

Anthem’s medical care ratio declined from 87.8% in 2013 to 83.1% in 2014, as a result of its favorable enrollment mix.

Aside from the standard healthcare policies, players—like Centene—in the private health insurance industry (IYH) also offer specialty insurance.

The Cigna business model is more concentrated toward commercial enrollments but is diversified across various delivery platforms.

Centene operates local health plans. Its Managed Care segment offers health insurance services to individuals through government-subsidized programs.

Health insurance companies (IYH) provide specialty insurance services through managed care offerings such as health maintenance organizations.

In 2014, Centene entered into a contract with Arkansas to participate in a hybrid Medicaid program. The program is expected to expire in December 2015.

Cigna’s (CI) Global Supplemental Benefits segment accounts for about 9% of the company’s total revenues.

International expansion is a hallmark of Cigna’s business. Cigna has inked deals in Turkey, Belgium, Brazil, Japan, Taiwan, Thailand, et cetera.

Manufacturer discounts and rebates are a major source of pharmacy benefit management business revenue.

Aetna’s recoverables and payables from the premium stabilization program amounted to $338 and $230 million, respectively.

Anthem’s government-sponsored enrollments include Medicaid, Medicare, and Federal Employee Program plan members.

Anthem’s membership is mainly concentrated in the local group, total national, and Medicaid population. The local group accounts for about 40.4% of members.

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 (CI) faces a unique combination of business risks as well as industry-specific risks. Business diversification is key to mitigating such risks.

Anthem provides health benefits and services to about 69 million people through its affiliated companies. It came 38th in the 2014 Fortune 500 rankings.

Customer segments The players in the private health insurance industry (IYH) aim for a favorable enrollment mix to reduce taxes and other liabilities while at the same time generating sustainable profits. Accordingly, managed care organizations such as Humana (HUM), Aetna (AET), Anthem, Cigna (CI), and WellCare Health Plans (WCG) are increasingly focusing on government-sponsored and international enrollments to balance […]

Most of Cigna’s revenue comes from insurance for employer-sponsored as well as Medicare and Medicaid beneficiaries.