ANTM - A better firewall in a changing industry
Please join us on:
May 22 at 2PM ET when we will review our long thesis on ANTM
Healthcare Subscribers: CLICK HERE for event details (includes video link, materials link and dial-in).
Health Policy Subscribers: CLICK HERE for event details (includes video link, materials link and dial-in).
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The volatility of the last several weeks surrounding #M4A and a host of other bipartisan attacks on the Health Care Industry have opened up an opportunity to get long the other side of our rebate trade and short in UNH. Anthem has long suffered at the hands of the large PBMs, whether it was their partner (supposedly) ESRX, or a competitor like UNH. Aggregating drug spending and extracting rebates was a never a core competency that ANTM ever developed, until now. With changes in policy that governs rebates coming in 2020, Anthem should finally be on a level playing field. Our view is less rebates for others will lead to greater market premium parity and incremental enrollment share gain for ANTM.
Looking back, ANTM enrollment has tread water while UNH accelerated. In our view, ANTM is starting IngenioRx, their new in house PBM, at exactly the right time. Assuming premium differences narrow and ANTM can take Medicare Advantage +/- PDP enrollment, every point of share is worth ~$1.00 per share to ANTM EPS.
Key thesis points:
- High exposure to Medicare, Medicaid and Federal Employees Program offsets potential for accelerating utilization in Commercial
- Medicaid enrollment will accelerate as economy slows
- Medicare Advantage business less dependent on pharmaceutical rebates leading to greater price parity and increased potential for enrollment gains
- In-house IngenioRx PBM being developed in new regulatory environment with the added benefit of risk corridors smoothing the launch
- The catalysts will be the release of Medicare Advantage and PDP bid data this summer and enrollment data later this year
- Managed Care is a relative out performer in Quad3
We look forward to having you on the call.