Seeking Alpha: With Medicaid And ACA Squared Away, Anthem Needs To Work On Medicare

One of the giants of the health insurance space, Anthem (NYSE:ANTM) does a lot of things well. The company has leveraged its experience in small group underwriting to become the most profitable public exchange player and its acquisition of Amerigroup established a leading position in Medicaid. Although Anthem remains a good commercial insurer, its weak performance in Medicare Advantage (or MA) is a notable weakness and likely a priority target for management over the next few years.

The ACA hasn't really hurt Anthem, nor other large players like UnitedHealth (NYSE:UNH), Aetna (NYSE:AET), and Humana (NYSE:HUM) and I see little remaining risk there unless political and legal maneuverings threaten to utterly overturn the system. The biggest question I see for Anthem then is how they go about improving their MA positioning - will this be a slow, mostly organic, multiyear process, or will the company look to scoop up Humana? I don't see a lot of undervaluation in these shares today unless it can grow behind a mid-single digit rate, but I think it is a reasonably solid core holding with upside to an improved MA position down the road.

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With Medicaid And ACA Squared Away, Anthem Needs To Work On Medicare

Seeking Alpha: Good Execution Continuing To Boost UnitedHealth

UnitedHealth (NYSE:UNH) is the biggest player in managed care and, in my opinion, the best-run. Management has not only established a long history of "under-promise, over-deliver", but has built up a strong technology infrastructure that allows the company to price risk better, coordinate care more efficiently, and drive consumer behavior. Optum remains a real growth opportunity, as does international expansion.

The entire managed care space had a pretty good 2014, with stocks like Anthem (NYSE:ANTM) up more than 60%, Humana (NYSE:HUM) up nearly 60%, and Health Net (NYSE:HNT) up 65%. Only in that context is UnitedHealth's 50% appreciation over the past year something that might rankle investors. Health care, and by extension managed care, is likely to remain a controversial political topic in the years to come and UnitedHealth isn't particularly cheap right now, but I wouldn't be in a big rush to sell.

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Good Execution Continuing To Boost UnitedHealth

The Motley Fool: Obamacare and Medicare Advantage - How WellPoint Could Outperform

Large managed care provider WellPoint (NYSE: WLP  ) is proof positive that when you stop shooting yourself in the foot you will often have an easier time of walking. WellPoint's operational turnaround is still a work in progress, but there has definitely been progress and the Street has taken note – pushing the shares up almost 36% over the past year and making it one of the better-performing companies in the sector. With management now running a strong Medicaid business and turning its attention to Medicare Advantage while projecting profits from its public exchange business, things are looking up for the company.

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Obamacare and Medicare Advantage: How WellPoint Could Outperform

The Motley Fool: Time to Buy a Stumbling UnitedHealth Group, Inc?

Good companies may stumble, but they seldom ever fall flat on their face and so it seems with UnitedHealth (NYSE: UNH  ) . There were some concerns about the company coming out of the first quarter, but while the stock is not leading the group it is also not lagging by much. Price competition and enrollments always merit watching, but the Optum platform and the company's expansion into Brazil continue to offer some boosts to growth.

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Time to Buy a Stumbling UnitedHealth Group, Inc?

The Motley Fool: Humana Inc.: The Way To Play Medicare Advantage

If you want to play the graying of America, Humana (NYSE: HUM  ) is a name to consider. This managed care provider may be as close as you can find to a pure play on Medicare Advantage, as this program is more than two-thirds of the company's earnings base. At the same time, Humana has joined Aetna (NYSE: AET  ) and WellPoint (NYSE: WLP  ) as the most aggressive participants in the new public exchanges.

Humana apparently isn't afraid to take on risk, as Medicare Advantage rates have become a great deal more uncertain and nobody really knows how the new Obamacare-mandated exchanges are going to work out. Humana looks about as undervalued as Aetna or Cigna (NYSE: CI  ) and could be priced to generate some solid long-term returns, but investors have to be comfortable with the risks and uncertainties that go with such a large commitment to the Medicare Advantage program.

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Humana Inc.: The Way To Play Medicare Advantage

The Motley Fool: CIGNA Corporation's Diversification Should Deliver Above-Average Growth

Cigna (NYSE: CI  ) is an odd duck in the managed care world. Managed care is certainly about managing costs, but it is also about pricing risk; Cigna's approach appears to be avoiding risk when possible, as the company has the smallest risk-based premium business of the major managed care companies. Not unlike UnitedHealth (NYSE: UNH  ) , Cigna is looking to a diversified array of businesses, including international expansion, to help fuel growth. Also, very much unlike Aetna (NYSE: AET  ) , WellPoint (NYSE: WLP  ) , and Humana (NYSE: HUM  ) , Cigna has chosen to be quite cautious with its initial forays into the Obamacare exchanges.

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CIGNA Corporation's Diversification Should Deliver Above-Average Growth

The Motley Fool: Aetna Inc. Has Bold Ambitions In A Changing Health Insurance World

Not to belabor the point, but the Affordable Care Act (perhaps better known as "ObamaCare") is going to change the health insurance market in some pretty significant ways – even though the actual percentage of uninsured Americans isn't/wasn't as large as many people guess. In any event, Aetna (NYSE: AET  ) is approaching this new environment rather boldly. Not only has Aetna put other insurers like UnitedHealth (NYSE: UNH  ) to shame with its participation in health care exchanges, but the company has openly targeted double-digit top and bottom-line growth on a long-term basis.

I do believe Aetna's reach exceeds its grasp. The good news is that the Street isn't fully buying the story either, and actually seems to be undervaluing even a more modest outlook. I expect plenty of noise and turbulence over the next year or two as the sector adapts to the new operating environment, but Aetna looks intriguing right now.

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http://www.fool.com/investing/general/2014/01/08/aetna-inc-has-bold-ambitions-in-a-changing-health.aspx

The Motley Fool: WellPoint - Can New Leadership And A Big Acquisition Turn This Laggard Around?

The uncertainties created by the Affordable Care Act (the ACA or "Obamacare") have affected all of the players in the space, leading to a drive toward consolidation and scale through acquisitions for Aetna Inc.  (NYSE: AET  ) , Cigna Corporation (NYSE: CI  ) , and WellPoint, (NYSE: WLP  ) . But not all of WellPoint's problems can be blamed on the ACA. WellPoint struggled operationally under the tenure of now-former CEO Angela Braly and finds itself in need of self-repair at a time when others like UnitedHealth Group (NYSE: UNH  ) can use their cash flow to fund acquisitions outside of the U.S. regulated managed care space.

While WellPoint has been the laggard of the "big four" over the past two and five years, it is not as though the company's performance has been disastrous. UnitedHealth is up about 45% over the last two years and Aetna is up about 55%, while WellPoint's shares have risen about 35%. WellPoint still has meaningful scope to tighten up its operations and drive synergies from its large acquisition of Amerigroup, and while the ACA has added a lot of unknowns to the model, the company's conservatism in these early days is likely to mitigate that risk. I don't see quite the same potential in WellPoint shares as I do from UnitedHealth, but there's still enough here to be worth some consideration.

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http://www.fool.com/investing/general/2013/12/26/wellpoint-can-new-leadership-and-a-big-acquisition.aspx

The Motley Fool: UnitedHealth Ready for the Storm -- and Long-Term Success

There's little doubt that the next couple of years will be "interesting" for UnitedHealth (NYSE: UNH  ) . This giant health insurance, benefits, and health technology company has built its way to the top of the heap through strong management, ongoing M&A, and substantial reinvestment in the business, but the arrival of the Patient Protection and Affordable Care Act (commonly referred to as "Obamacare") is going to significantly change the way health insurance markets operate for UnitedHealth and large peers like WellPoint (NYSE: WLP  ) , Aetna (NYSE: AET  ) , and Cigna (NYSE: CI  ) . While most of the panic has worn off, investors may yet have a worthwhile long-term opportunity in this health care giant.

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UnitedHealth Ready for the Storm -- and Long-Term Success

Investopedia: WellPoint Cheaper Than UnitedHealth, But The Risks Are Higher

The managed care world is still quite unsettled as the industry prepares for the post-Affordable Care Act world. While a government-mandated floor on medical expenses will put a greater premium on the operating leverage of the largest players, nobody quite knows for certain what participation in state exchanges will mean for enrollment, premiums, and profits.

That's the world that companies like UnitedHealth (NYSE:UNH), WellPoint (NYSE:WLP), Aetna (NYSE:AET), and Cigna (NYSE:CI) all face. But there's more on the table for WellPoint, as years of questionable execution have led to underperformance in terms of both financials and stock market performance. With a new CEO, a strong base in individual and small group plans, and a low bar, can WellPoint deliver on what looks like an otherwise unfairly large discount to its peers?

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http://www.investopedia.com/stock-analysis/060313/wellpoint-cheaper-unitedhealth-risks-are-higher-wlp-unh-ci-aet.aspx

Investopedia: Uncertainties Keep UnitedHealth In Value Territory

Leave aside the political debates about the Affordable Care Act (aka “ObamaCare”), and it's still very clear that a huge change is coming for the U.S. health insurance market. As the largest player in that market, that means huge change is coming for UnitedHealth (NYSE:UNH) as well. While the company's incredible operating scale, PBM and healthcare IT operations, and overseas expansion do mitigate some of the risk, the sizable uncertainties regarding how these changes will impact real profits have kept these shares in value territory.

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http://www.investopedia.com/stock-analysis/053013/uncertainties-keep-unitedhealth-value-territory-unh-wlp-aet-hum.aspx

Seeking Alpha: Controversial Questcor Still Looks Like A Buy

Questcor (QCOR) investors have had quite the ride over the past year. In addition to positive clinical data, the company has seen encouraging success in expanding its business in nephrology and rheumatology, but investors will not soon forget the nearly two-thirds dive that the stock took on word that Aetna (AET) was essentially dropping coverage on the company's only product.

There's no doubt that Questcor is a risky stock. All of the company's revenue comes from a single product that is off-patent (but very hard to manufacture) and the company has no pipeline to speak of. Even so, the shares appear undervalued with relatively little downside at present.

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Controversial Questcor Still Looks Like A Buy

Investopedia: The Week Ahead In Healthcare

Healthcare investors should enjoy the respite in the healthcare sector over the next few weeks. Once the calendar turns to September, major conferences start again, early earnings warnings will begin to pop up and analysts and investors in general will start to pay a great deal more attention to the companies and stocks. Likewise, while the FDA's calendar is relatively empty this month, activity ought to be picking up shortly.

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http://stocks.investopedia.com/stock-analysis/2012/The-Week-Ahead-In-Healthcare-August-20-AET-CVH-MDT-TEVA0821.aspx

Seeking Alpha: Coventry Makes Sense For Aetna

If at first you don't succeed in M&A, keep bidding until you do. That might be the mantra that Aetna (AET) followed, letting other players in the health insurance space pay more for other assets, but ultimately getting a pretty solid company of its own in Coventry Health (CVH). While there are certainly some risks in buying a health insurance company about two months away from the U.S. presidential election, the long-term logic of the deal seems likely to hold.

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Coventry Makes Sense For Aetna

Seeking Alpha: More Non-Core Investments Almost Certain For WellPoint

Although the sell-side community seemed surprised by WellPoint's (WLP) decision to acquire 1-800 Contacts, it seems likely to me that there are going to be quite a few more deals like this in the future. Health insurance companies (or managed care organizations, if you prefer) are realizing what banks realized long ago - there's just not enough growth in the core market to meet Wall Street's bottomless appetite.

Consequently, growing those businesses that lie outside of regulatory authority is one of the few options left, and it's one that I expect WellPoint and Unitedhealth (UNH) will pursue as aggressively as shareholder sentiment will tolerate.

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More Non-Core Investments Almost Certain For WellPoint

Investopedia: Will UnitedHealth's Cost Trends Cooperate?

Health insurance stocks like UnitedHealth (NYSE:UNH) are a good bet to stay volatile as the Supreme Court considers its opinion on sweeping changes to the healthcare insurance industry. While this ruling will clearly impact the future trajectory of enrollment and medical costs, it seems relatively safe to assume that UnitedHealth will adapt with the circumstances and remain a leader in this large industry.

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http://stocks.investopedia.com/stock-analysis/2012/Will-United-Healths-Cost-Trends-Cooperate-UNH-WLP-AET-JNJ0424.aspx

Seeking Alpha: UnitedHealth Posts Positive Earnings; Looks Like A Good Contrarian Bet

Just as deregulation tends to boost industry-wide returns and valuation multiples, the imposition of regulations tends to spook investors and compress multiples. Certainly life has changed quite a bit for health insurance companies in the last four years, but Wall Street may yet be expecting a worst-case scenario that is unlikely to materialize. Although UnitedHealth (UNH) is facing more government influence and interference in its operations, UnitedHealth's scale and operational performance should allow it to still win in the end.

A Good Close To The Year
UnitedHealth is so big now that it doesn't actually turn on a dime. Nevertheless, there were definitely some encouraging developments this quarter.

Reported consolidated revenue rose about 8% (and more than 2% sequentially) as sluggish growth (up less than 2%) in the core managed care business was augmented by 54% growth in OptumHealth and 19% growth in OptumRx. Reported revenue growth at OptumInsight seemed non-existent, but this was due to the disposal of the clinical trials basis; on a like-for-like basis, revenue actually grew 18%.

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UnitedHealth Posts Positive Earnings; Looks Like A Good Contrarian Bet

Investopedia: Uncertainty Still Means Discount For WellPoint

Maybe apart from taxes on carried interest, there's nothing Wall Street hates more than uncertainty. Unfortunately, there's abounding uncertainty in the world of health insurance these days as nobody is quite sure how the Supreme Court will rule in the challenges to the Obama administration's health insurance laws, nor whether or not there will be even more pressure on premiums in the years to come. While the long-term picture on WellPoint (NYSE:WLP) may lack digital precision, there's enough apparent value here for investors to take a serious look. 

Going Through a Slow Spell  
With the economy and employment in the dumps, it is no great surprise that revenue growth has been sluggish of late at this large national insurer. Enrollment has been limited by the poor job market, while premiums have been constrained by both regulatory push-backs and competitive actions from other rival insurers like UnitedHealth (NYSE:UNH) and Aetna (NYSE:AET).

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http://stocks.investopedia.com/stock-analysis/2011/Uncertainty-Still-Means-Discount-For-WellPoint-WLP-UNH-AET-LNCR-SKH-MDT-JNJ-CI-HS-HUM1130.aspx

Investopedia: No Rattle At HUM

Managed care, that bizarre euphemism for health insurance, has twisted up investors for a while now. Although there are ever-present worries about the future profitability of this industry, none of the plans on the table would seem to be all that big of a risk. So while Humana (NYSE:HUM) has joined many of its brothers in a healthy rally over the past year, Wall Street still does not seem to be giving full credit to this stock.

Solid Third Quarter Results 

Humana reported that overall revenue rose about 11% this quarter, with operating revenue up a like amount. Growth was underpinned by premium growth of nearly 9% and membership growth above 6%. Profitability was likewise encouraging. The company's medical loss ratio, that is, what it pays out in claims, improved by roughly a full point to 80.7%, and the company's earning before interest, taxes, depreciation and amortization (EBITDA) rose 13%. Operating income was up a similar amount, growing 12% from the year-ago level. (To know more about EBITDA, read: EBITDA: Challenging The Calculation.)

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http://stocks.investopedia.com/stock-analysis/2011/No-Rattle-At-Humana-HUM-AET-WLP-UNH-APG-MOH-CNC-LNCR1101.aspx

Investopedia: Fear And Uncertainty Still Keeping A Lid On WellPoint

It seems as though investors have made their peace with health insurance reform to some extent, as WellPoint (NYSE:WLP) shares have more than doubled off of their bottom in late 2008/early 2009. That said, major health insurance names like WellPoint, Unitedhealth (NYSE:UNH), Aetna (NYSE:AET) and Coventry (NYSE:CVH) still seem to be trading below their inherent earning power as investors try to digest the impact of upcoming regulation on their medical costs and membership expansion potential. 

A Surprisingly Strong First Quarter 

WellPoint's first quarter once again highlights the difference between absolute and relative performance. On an absolute basis, it would seem that revenue contraction of over 1% would be something of a disappointment. In this case, though, analysts were expecting a bigger decline and WLP's top line and profit performance were surprisingly strong.

While WellPoint did see a small increase in administrative fees, premium revenue dropped more than 1% (and that's more than 85% of the revenue base). Membership did grow over 1%, though, with strong performance in national and senior categories. (For more, see 5 Health Insurance Considerations.)

Looking at the profit picture, WellPoint saw operating profits rise almost 5% despite a small uptick in the medical loss ratio (up to 82.1). Especially noteworthy was the better than 5% year-on-year decline in general and administrative expenses, and it is impressive to consider that the company is still finding that amount of cost savings in the system. 

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http://stocks.investopedia.com/stock-analysis/2011/Fear-And-Uncertainty-Still-Keeping-A-Lid-On-WellPoint-WLP-UNH-AET-CVH-CNC-MGLN-KV.A0429.aspx