How Does Aetna Compare to Its Peers in Medical Care Ratio?
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 Ticks Upward
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.
The Aetna-Humana Deal: Must-Know Risks to Consider
On July 3, 2015, Aetna announced the acquisition of its peer, Humana (HUM), for a consideration of $37 billion.
Enrollments decreased in UnitedHealth’s international business
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 Valuation Continues Uptrend on 1Q15 Earnings
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’s Optum segment: Earnings rose in 2014
UnitedHealth Group (UNH) operates Optum. It provides health services like health technology, health and well-being, and pharmacy services.
Anthem Valuation Under Pressure
Anthem’s valuation remains subdued mainly because it has fewer government-sponsored enrollments and higher financial leverage.
How Does UNH’s Valuation Look in October?
UnitedHealth Group is a leading managed healthcare firm in the United States.
Eminence Capital Reduces Position in Humana
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 core business: The Medicare Advantage program
Humana’s total enrollment is mainly enrollments in the MA program, a substitute for the original Medicare program, via private insurance companies.
Running down JPMNX: Structural Analysis of an Alternative Mutual Fund
JPMNX is an alternative mutual fund that seeks to mimic the “market neutral” hedge fund strategy in achieving its investment objectives.
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.
Government-Sponsored Programs Expected to Drive Aetna’s Revenue
Government-sponsored programs such as Medicare and Medicaid are expected to be key drivers of Aetna’s (AET) revenue growth in 4Q15.
Aetna’s Valuation Compared to Its Peers
Aetna’s valuations were lower than its peers in 4Q14. With Aetna investing in growth initiatives, the valuations are expected to rise in 2015.
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.
The Huge Spread on the Cigna–Anthem Merger
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.
What Is the Risk-to-Reward Ratio of the Humana–Aetna Deal?
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 […]
Ricky Sandler’s Eminence Capital sells its stake in Pandora Media
Eminence Capital exited a position in Pandora Media Inc. (P) that accounted for 2.58% of the fund’s 3Q portfolio.
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?
Aetna’s 1Q15 Revenue: Driven by Government-Sponsored Enrollments
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.
Key drivers of Humana’s retail health plans in 4Q 2014
The private health insurance industry (XLV) in the US is gradually shifting from a group insurance model to a retail insurance model.
Moving Average Trends and Analyst Estimates of JPMNX’s Top Holdings
All of JPMNX’s top holdings except CJPXX were trading below their 20-day and 100-day moving averages as of January 29, 2016.
How Is UNH’s Optum Business Positioned in the Industry?
UnitedHealth Group is, by revenue, the largest healthcare company in the world.
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.
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.
Could Competing Bids Disrupt Aetna’s Purchase of Humana?
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.
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.
What Does the ITC-Fortis Merger Mean for Investors?
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.
Analyzing UNH Stock’s Recent Performance
On April 12, 2018, UnitedHealth Group (UNH) closed at $224.75.
Managing the Revenue Expectations for Centene’s New Market Entry Strategy
To ensure high-profit margins through 2017, Centene plans to enter new markets across its Medicaid, long-term care, and correctional health businesses.
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.
Reduced Expenses Lead to Aetna’s Higher 1Q15 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.
Customer Growth Drove CI’s Global Supplemental Benefits Business
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’s Specialty Services Strategy Portfolio: Backbone or Achilles Heel?
Centene has developed a specialty services portfolio that reduces the company’s over-reliance on Medicaid and other state-sponsored businesses.
Corvex Exits Stake in Humana
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.
What Drove UnitedHealth Group’s Medicare & Retirement Business in 1Q16?
UnitedHealthcare’s Medicare & Retirement business reported revenues worth $14.1 billion in 1Q16, which represents a YoY increase of approximately 10%.
Key Takeaways from Centene’s 1Q15 Earnings Release
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.
UnitedHealth Group’s Optum Posts Healthy 1Q15 Operating Earnings
The Optum segment offers pharmacy, quality management, and health technology services. Operating earnings grew by 14% year-over-year to $742 million.
‘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.
Acquisitions and divestitures shape private health insurance
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.
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.
What Does Humana Expect of Its Group & Specialty Segment in 2019?
In its first-quarter earnings press release, Humana (HUM) guided for Group & Specialty segment earnings of $300 million–$350 million.
What Does Humana Expect of Its Medicare Business in 2019?
In the first quarter of 2019, Humana enrolled ~30,000 members in its dual-eligible special needs plans.
Comparing Expense Trends for CNC and HUM in 2019
In its first-quarter earnings press release, Centene (CNC) reiterated its 2019 HBR (health benefits ratio) guidance of 86.5%–87.0%.
Comparing EPS Growth Trends for CNC and HUM in 2019
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.
Comparing CNC’s and HUM’s Revenue Growth Trends in 2019
In its first-quarter earnings press release, Centene (CNC) revised its 2019 revenue guidance upward to $72.8 billion–$73.6 billion.
What Analysts Are Recommending for CNC and HUM in May
Analysts’ consensus recommendations for both Centene and Humana are “buys.”
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.
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.
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.
Inside Pfizer’s Performance in 3Q17
PFE stock rose ~7.3% in 3Q17 and has risen ~11.3% YTD (year-to-date) as of October 16.
Akcea Therapeutics’ Volanesorsen: 1Q17 Performance
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 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.
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%.
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%.
Analysts’ Recommendations for WellCare Health Plans in May 2017
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
How Mylan’s North America Segment Performed
The North America segment reported a growth of 22% to $1.6 billion during 4Q16 from $1.3 billion during 4Q15.
Performance of Incyte’s Jakafi in the United States
Revenues for Jakafi rose more than 42.0% to $852.8 million in 2016, from $601.0 million in 2015.
Novartis’s Recent Developments
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.
How Did Bristol-Myers Squibb’s Oncology Segment Perform in 3Q16?
Due to the strong performance of Opdivo, the oncology segment has emerged as the largest revenue contributor for Bristol-Myers Squibb (BMY) in 3Q16.
How Could Trump’s Presidency Affect Hospitals and Insurance?
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 […]
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.
Anthem Expects to Generate Substantial Savings from Pharmaceutical Pricing in 2016
Anthem plans to negotiate pharmaceutical pricing with Express Scripts in an effort to improve affordability, secure more members, and enroll new customers.
UnitedHealth Declares Dividend, Stock Rises
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’s Revenue and Income Rose in 3Q15
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.
UnitedHealth Group’s 3Q15 Medical Care Ratio Rose
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.
What Are UnitedHealth Group’s Growth Opportunities?
To strengthen their presence in international markets, health insurance companies have been involved in mergers and acquisitions with local insurance companies in these markets.
UnitedHealthcare Added 1.7 Million Enrollments in 3Q15
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.
Humana Stock Rose 4.34% August 25–31
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.
Synergies in Centene’s Acquisition of Health Net
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 Announces Its Acquisition of Health Net
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.
Rationale for the Cigna-Anthem Transaction
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 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.
Cigna’s Shares Up by 16.4% Since Its Previous Earnings Release
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 Markets Be Happy or Worried about April FOMC Statement?
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?
Key Takeaways from Aetna’s 1Q15 Earnings Release
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.
Medicare Advantage Enrollments Drive Humana’s 1Q15 Revenue Growth
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.
Key Takeaways from UnitedHealth Group 1Q15 Earnings
UnitedHealth Group (UNH) posted its 1Q15 earnings on April 16, 2015. Following the release, UnitedHealth Group’s share price increased by 3.6%.
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 Shifts to a Value-Based Payment Model
Anthem (ANTM) has value-based payment contracts with 33,000 primary care physicians, which implicates over 3 million members.
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.
Specialty Services: How Does Centene Manage Them?
Aside from the standard healthcare policies, players—like Centene—in the private health insurance industry (IYH) also offer specialty insurance.
Cigna Controls Risk-Based Capital Requirements
The Cigna business model is more concentrated toward commercial enrollments but is diversified across various delivery platforms.
What Are Centene’s Key Business Segments?
Centene operates local health plans. Its Managed Care segment offers health insurance services to individuals through government-subsidized programs.
Cigna Increases Dental Specialty Health Insurance Premiums
Health insurance companies (IYH) provide specialty insurance services through managed care offerings such as health maintenance organizations.
Centene: Insurance Exchange Opportunity and Hybrid Plans
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: Global Supplemental Benefits Earn 9% of Revenues
Cigna’s (CI) Global Supplemental Benefits segment accounts for about 9% of the company’s total revenues.
Cigna: International Expansion Key to Growth Strategy
International expansion is a hallmark of Cigna’s business. Cigna has inked deals in Turkey, Belgium, Brazil, Japan, Taiwan, Thailand, et cetera.
Anthem’s Suite of Pharmacy Services
Manufacturer discounts and rebates are a major source of pharmacy benefit management business revenue.
How Has Aetna Implemented the Premium Stabilization Program?
Aetna’s recoverables and payables from the premium stabilization program amounted to $338 and $230 million, respectively.
Anthem: Managing Government-Sponsored Health Insurance
Anthem’s government-sponsored enrollments include Medicaid, Medicare, and Federal Employee Program plan members.
Anthem’s Membership Mainly Local Employers
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.
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 Main Business Risks
Cigna (CI) faces a unique combination of business risks as well as industry-specific risks. Business diversification is key to mitigating such risks.
Anthem: One of America’s Largest Health Insurance Providers
Anthem provides health benefits and services to about 69 million people through its affiliated companies. It came 38th in the 2014 Fortune 500 rankings.
Cigna’s Customer Segments a Healthy Mix
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 […]
Cigna: Medicare and Medicaid Beneficiaries Top Earners
Most of Cigna’s revenue comes from insurance for employer-sponsored as well as Medicare and Medicaid beneficiaries.