瑞信美股医疗保健行业管理式医疗2019年Q1预览市场会重新关注基本面吗201941525页

DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.15April2019Americas/UnitedStatesEquityResearchManagedC[e-mail]@[e-mail],[e-mail]nFundamentals?1Q19Preview■UNHtoKickOffMCOs’Q1EarningsonApril16th.UNHwillbethefirstMCOtoreport1Q19earnings(April16th),settingthetoneforthegroup.1Q19earningsshouldgenerallybenefitfromstablemedicalcosttrends,theY/Ybenefitofarelativelyweakerfluseason(fluimpactedtheMLRby35-50bps,onaverage,in1Q18),theHealthInsurerFee(HIF)moratorium,andstrongenrollmentgrowthprimarilyinMedicareAdvantage.However,thereareseveralitemswhichmightbefavorableorunfavorabletoearningsdependinguponthecompany.Forexample,givenitspositiveseasonalearningscontributioninQ1,HIXwillbeY/YfavorabletoearningsforCNC(giventhegrowthinenrollment).However,theexpectationforanormalizationofmarginsinthecontinuingindividualbusinesscouldbeaY/YheadwindforCNC,andtoamuchlesserextentANTM,andCI.Further,sharebuybackshouldcontributetoEPSforUNH,HUM,andANTM.CIalsoreturnedtosharebuybacks(postESRXdealinlate2018).■PutsandTakesbyIndividualMCOs.WeseepotentialearningsupsideforMCOsinourcoverage.Whiletherehasbeensomeconfusionaround1Q19expectationsforANTM,wedonotbelievethequarterlycadencereflectedinconsensusisanydifferentthanwhatANTMhasbeenimplying.Infact,webelieveANTM’scommentsand2019guidanceisconservative,andresultsarelikelytobeahead(ashasbeenthecaseforthelast10years,withanaveragebeatof15%).ThecurrentEPSexpectationsforCI,CNC,HUM,&UNHalsolargelyreflectmanagement’scommentaryaround1Qearnings.ExcludingtheimpactoftheHIFmoratorium(unfavorableimpactonMLR)partiallyoffsetbythelowerfluactivity(favorableimpactonMLR),webelieveourMLRexpectationsforANTMandCIleaveenoughroomforsomeupsideforthetwocompanies.Wesee1Q19MLRsforCNC,HUM,andUNHlargelytrackingourexpectations.WealsonotethatthecurrentMLRexpectationforCIfor1Q19isnotlikelycomparabletothecompany’sintegratedmedicalsegmentMLRoutlook.■ExpectationsAreModest.Lookingspecificallyattheindividualquarters,thelikelymagnitudeofearningsbeatsforMCOsishighestin1Qandtapersoffastheyearprogresses.However,ourQ1investorsentimentsurveysuggestsinvestorexpectationsaremodestforMCOs,with48%ofinstitutionalinvestorsexpectingQ1results,onaverage,tocomeinaheadofconsensusand47%expectingin-lineresults.Infact,expectationsforfavorableresultsarebelowwheretheywereheadingintotheQ4reportingseason(58%expectedresultstoexceed).■StrongQ1ResultsWouldUnderscoreOurBeliefthatFundamentalsRemainStrong,DespiteOn-goingMacroNoise.MCOs(includingANTM)havebeenunderpressureYTDonconcernsrelatedtoBernieSanders’MedicareforAllproposal,withsomeinvestorsrecentlyflaggingthattheinclusionof“pay-fors”providesmorecredibilitytothepushforchange.WecontinuetoseeMedicareforAllasunlikelytogoanywhere.15April2019ManagedCare2Separately,withrespecttothemovetopoint-of-sale(POS)rebates,CMS’memoontheriskcorridorprogramessentiallyrelievesthebottomlineconcernsinMedicarePartDbusinessfor2020and2021.However,concernsaroundthepushforPOSrebatesinthecommercialbusinesscontinue.Wenotesomeoftheinsurers(suchasUNH)alreadyofferPOSrebatesasanoptionforemployersbuttheadoptionamongemployersremainslow.■ValuationsareOffbyAlmost400bpsfromPeakonNoFundamentalReason.ThevaluationsforfiveMCOsinourcoverage(basedon2020EPSestimates)havedeclinedby380bpssinceNovember30th,2018from15.3xto11.5x.ValuationforCignahasdeclinedby440bps,forCNCby410bps,forHUMby370bps,forUNHby360bps,andforANTMby330bpsoverthesameperiod.Ontheflipside,valuationsforS&P500haveexpanded140bpsoverthesameperiod.15April2019ManagedCare3TableofContentsExecutiveSummary4UtilizationandMLRTrendExpectationsfor1Q19...................................................6Company-by-CompanyExpectationsfor1Q19Earnings9Anthem.....................................................................................................................9Cigna........................................................................................................................9Centene..................................................................................................................10Humana..................................................................................................................11UnitedHealthGroup...............................................................................................11PricePerformance&Valuation13IndustryOperatingStatistics16CommercialEnrollment......................................................................................