When United Healthcare (UNH) reported earnings this morning that were in line with expectations but also showed rising costs, that might have surprised some on Wall Street, but not Hedgeye Healthcare Sector Head Tom Tobin. UNH has been one of Tobin’s top short ideas. The story hasn’t played out yet, but it is beginning to, and there were several negative signals in today’s earnings release, so stay tuned.
Tobin’s research led him to expect rising costs for UNH, which in turn would put pressure on the company’s margins. That’s essentially what today’s earnings report showed and he expects it to get worse from here.
Here’s a link to a story we posted last week, which detailed Tobin’s thesis.