瑞信美股医疗保健行业管理式医疗政策风暴正在减弱201971227页

DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.12July2019Americas/UnitedStatesEquityResearchManagedC[e-mail]@[e-mail],[e-mail]!PolicyStormIsAbating;MCOTrainIsLeavingStationAgain;2Q19Preview■WeExpectaSolidQuarterforMCOs,ConsistentwithExpectations.UNHwillbethefirstmanagedcarecompanytoreportQ2earningsonJuly18th,settingthetoneforthegroup.Basedonintra-quarterMCOcommentaryandourhospitalsurveys,webelievemedicalcosttrendsinQ2haveremainedstablesequentiallyandinlinewithexpectations.OurOutperform-ratednamesareANTM,UNH,CIandHUM.■PutsandTakesforIndividualMCOs:OperationalUpsideLikelyatANTM,UNH,andCI.ExcludingadjustmentsrelatedtotheACAriskadjusterprogram(discussedbelow),expectationsformostMCOsarelargelyinlinewithmanagement’squarterlycommentary.ANTM,CI,CNC,andHUMhaveprovidedsomecommentaryrelatedtoQ2relativetotheirfull-yearearningsoutlooks.Operationally,weseepotentialearningsupsideforANTM,CI,andUNHin2Q,primarilydrivenbybetterthanexpectedMLRtrendsaswellastheconservative2Qoutlookthesecompaniesofferedwiththeir1Q19earningsreports.Havingsaidthis,the2Q19consensusforCIisskewedbysomehigh-endoutliers,whichdrivesa$0.10EPSvariancebetweenCSeandconsensus.Humana(MA),CVS.(MA),WCG(PDP)andCentene(HIX)havepostedunusuallystrongenrollmentgrowthin2019.2Qshouldprovideincrementalclarityastohowclaimsonthesenewlivesaretrending.Variancerelativetoexpectationswillbedrivenbywhethercosttrendsonthesenewliveshasbeenbetter/worsethanprojected.■ACARiskAdjusterTrue-upShouldBeFavorableforCNC&CIinQ2.ForCignaandCentene,theCMSdatareleasedinlateJuneindicatesthatmoneyowedtotherisk-adjustmentprogrambythesecompaniesislessthanwhattheyhaveaccrued.Thisdifferencetranslatestoanestimated2QEPSbenefit(beforeanyoffsets)of$0.09forCIand$0.10forCNC.WhiletheotherMCOshavenotdisclosedtheirrisk-adjustmentaccruals,ANTM,UNH,andCVS/AETareslatedtoreceive$445mln,$72mlnand$30mlnundertheprogram,respectively,andHUMandWCGareinanetpayablepositionofroughly$13mlnand$7mln,respectively.■2Q19vs.1Q19:DCPolicy/RegulatoryBackdropMarkedlyBetter.Since1Qearnings,thenoisearoundMedicare-for-Allhaseased.TheMedicaredrugrebateproposalhasbeendropped.Finally,theconsensusviewnowincorporatesinourviewthereturnoftheHIFin2020.Withthisimprovedmacrobackdrop,webelievethefavorablefundamentalsformostMCOswillonceagaindrivestockpriceperformance.Giventhefavorablefundamentalsweforesee,weexpectMCOstogenerallybeattheoverallmarketoverthenextsixmonths.12July2019ManagedCare2TableofContentsExecutiveSummary3UtilizationandMLRTrendExpectationsfor2Q19...................................................5Risk-AdjustmentProgramUpdate............................................................................5Company-by-CompanyExpectationsfor2Q19Earnings7Anthem.....................................................................................................................7Cigna........................................................................................................................8Centene....................................................................................................................8CVS.Health.............................................................................................................9Humana..................................................................................................................10UnitedHealthGroup...............................................................................................11WellCareHealthPlans...........................................................................................12PricePerformanceandValuation13IndustryOperatingStatistics16CommercialEnrollment..........................................................................................16CommercialFullyInsured(“Risk-based”)Enrollment17CommercialSelf-Insured(“Non-Risk/ASObased”)Enrollment17ManagedMedicaidEnrollment...............................................................................18MedicareAdvantageEnrollment............................................................................19PDPEnrollmentTrends.........................................................................................20MLR/UtilizationTrends...........................................................................................21ConsolidatedMLRTrends21InvestmentIncomeTrends.....................................................................................23AdjustedPre-TaxMarginTrends...............