The first Democratic Primary Debates set the battle lines on healthcare reform and the second debates held on July 30-31 helped further clarify many of their stances. Yet again though, the structure of the debate (10 candidates/night sharing a 2-hour window) prevented any real in-depth discussion on the topic. The majority of candidates reiterated support for some type of public option with a role for private insurers while Sanders, Warren, de Blasio and Yang continued to champion elimination of private pay (see more on page 2). At the debate, Biden continued to criticize the potential costs associated with M4All - “If you noticed, there is no talk about the fact that the plan in 10 years will cost $3 trillion… My plan costs $750 billion.” - with other moderate HC reform candidates generally agreeing on the need to raise taxes on the middle class to implement M4All.
Search Coverage List, Models & Reports
Search Results1-10 out of 915
The company is now in the deal process of getting acquired by CNC with expected close in 1H20 (announcement on 3/27/19). Its stock has been trading at a thin deal spread of 3-5% for the past 2 months (see next page for chart) after several states have approved the acquisition. We step aside at this point as we expect deal to close but have little to add in terms of proprietary visibility on the regulatory approval process / deal timing. Our new PT is $282, which reflects 75% implied deal price of $292 and 25% standalone price of $251.
In August Individual Med Adv enrollment increased 7.7% y/y and Group Med Adv enrollment increased 7.5% y/y, producing total y/y Med Adv growth of 7.6% – 8.4% ex. MN market which declined y/y due to the ongoing cost plan conversion. 65.1% of total Med Adv enrollment of 22.7M lives were in our covered co’s vs 61.6% of 21.1M lives a year ago.
With this note we are updating our models for MCO / Drug Retail coverage post 2Q19 results. We are also updating our price targets across our coverage universe to reflect 1) revised earnings est laid out in this note and 2) current S&P multiple of 16.25x (previously used 16.0x). Please see links to all updated models and new PT build-up on page 2 for further details. We continue to rate the MCO group Market Perform with top picks remaining ANTM, HUM and UNH.
We are updating estimates and PTs for UHS, DVA, and THC to reflect our revised estimates / EBITDA bridges post Q2 results. See summary of changes and our commentary by company on pages 4-9. We maintain our Outperform ratings on HCA, UHS, DVA and Peer Perform for THC.
According to the Wichita Eagle, the Kansas Department of Health and Environment (KDHE) has rejected a corrective action plan AET submitted on August 7 in response to a non-compliance letter it received from the department last month. The letter sent on July 24 detailed 11 contract compliance concerns such as provider credentialing taking >90 days to complete, providers denied as non-contracted in error, and claim copy and encounter issues. The KDHE gave AET 10 days to submit a corrective action plan in writing and noted if AET fails to remedy these issues, it “may seek any and all remedies available under contract.” After rejecting AET’s first take at the corrective action plan, the state is now asking the insurer to re-submit a new plan and “plans to meet with AET leadership to negotiate a resolution that best serves Kancare members.” Based on its 1Q stat filing, AET serves ~90k Medicaid members in KS and would generate ~$865M in annual premiums assuming a $800 PMPM. At 2.5% net margins we est. this contract would be worth ~0.2% to CVS 2020 EPS. AET’s struggle in KS Medicaid program follows its losses in the re-procurement of LA contract last week and NC bid earlier this year. Lastly we note AET situation in KS exemplifies the increasingly stringent performance standards that states are requiring from its managed Medicaid providers.
Wolfe Research Senior Healthcare Analyst Justin Lake hosted a webcast to discuss HCA NDR takeaways, including additional thoughts post weaker-than-expected Q2 results, management's view on trajectory of business into 2H'19, positioning for future growth, and regulatory and DC environment.
We hosted meetings w/HCA CEO Sam Hazen and CFO Bill Rutherford earlier this week where conversations focused on the co.’s weaker than expected 2Q results. Recall, 2Q19 EBITDA of $2.29B was ~4.5% below consensus on weak comm’l mix / acuity and the stock has underperformed S&P 500 by 9.2% partly as a result of high expectations going into the quarter. During the meetings, mgmt. reiterated that Q2 does not represent a negative inflection point for the business and instead viewed the qtr as indicative of ST volatility around strong LT trends HCA has delivered over a multi-year period. That said mgmt. acknowledged ST visibility on payer mix / acuity is limited while also noting that intra-qtr trends were steady thru the period. Looking ahead we see positives into 3Q19 of (1) incremental cost cutting and (2) extra business day potentially offset by (1) tougher comm’l / surgery comps and relative lack of NT visibility highlighted above.
Today (08/07/19) the Louisiana Department of Health (LDH) released the scoresheet for the recent Medicaid RFP award which includes evaluation results of technical components and redacted proposal responses from bidders. The summary scoresheet of technical components – see Exhibit 1 on page 2 – shows CNC had the lowest total score at 621 vs. maximum of 1500 among bidders followed by AET at 669. AmeriHealth had the highest score of 868 followed by HUM 2nd at 819 with top score in the provider network component of 103 vs. peers’ average of 85, likely reflecting strong relationships w/ providers thru their large Medicare footprint. ANTM and UNH are in the middle of the pack with scores of 712/706 respectively. Overall the range of scores is quite wide and potentially indicative of a state which is requiring more from its managed Medicaid providers as indicated yesterday on our consultant webcast with former LA Medicaid medical director Roxane Townsend. Plans have 14 days to submit protests and we expect CNC and AET to protest these results.
- 1 of 92
- next →