Health Care Employment Continues to Outperform - The May job report was a lackluster 75,000 increase MoM. However, the health care sector reported a 15,000 of that gain with most of is attributable to the ambulatory sector. As we covered in the weekly studio recap (link below) hours worked across medical labs, diagnostic imaging, and hospitals all look like demand is picking up.
HQY Preview - If we assume a flat yield environment from here, which seems optimistic, success acquiring WAGE, HQY shares could be down between -8% at best, and -30% or more as valuation moves toward calendar 2020 and 2021. The current multiple does not either reflect the potential for recession, or the impact one would have up and down the P&L. We will be reviewing our HQY Best Idea Short on Wednesday, June 12 @ 2PM ET. Contact Sales@Hedgeye.com for access.
DVA Short More Compelling - On Thursday, CMS sent to the White House for review a rule regulating third party payments to insurers on behalf of dialysis patients. According to a recent lawsuit in Florida, DVA contributes approximately $120 million to a third party, the American Kidney Fund, which, in turn, pays commercial insurance premiums for dialysispatients who receive about $400 million in services from DVA. As a result, about 10% of DVA's treatments account for 110-115% of its profit. While not likely to eliminate the practice entirely, CMS is sure to insist that dialysis providers engage in greater disclosure and reporting of the practice so patients are aware of their Medicare eligibility.
Genetic Privacy Legislation is Heating Up on Capitol Hill - The Senate is wrestling with how to change federal patent law to limit certain noxious practices like patent thickets and "pay-for-delay." A draft bill included a provision that would have reversed a Supreme Court prohibition on patents for genetic material that is "naturally occuring." The bills sponsors responded with a pledge to revise the legislation so the SCOTUS decision is not disturbed. Also, on The Hill, legislation introduced to limit sales of genetic information by Direct-To-Consumer services like 23andMe to third parties without express consent is adding to the privacy debate that rages in the tech sector.
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