Takeaway: Position Monitor for June 17, 2019

Position Monitor | Rebate Rule, HRA vs ,  DXCM Field Notes, THC #algo update, video recap - postionmonitor0617

HQY | BEST IDEA SHORT | Last Wednesday we presented an update on our Best Ideas Short on HQY.   The primary thesis points center on custodial cash yields, spend down,HSA adoption penetration, and recession risks in same customer growth.  In addition to the core thesis, The Departments of Labor and Treasury announced an expansion of Health Reimbursement Accounts (HRA) which appears competitive to HDHP-HSA plans.  The company will host an Investor Meeting tomorrow and while we run the risk of positive commentary on guidance, custodial yields, or WAGE acquisition announcement, we remain comfortable with the thesis here. 

UNH | ANTM | Earlier than expected, the CMS sent to the White House for review and approval the final rule that would require manufacturer rebates to be shared with Medicare beneficiaries at the point of sale. We expect the rule to delay implemenation until mid-2020 instead of the proposed Jan. 1, 2020. UNH has aggressively used rebates to manage medical cost trend and keep Medicare Advantage plan premiums consistently low. ANTM on the other hand has not had the benefit of rebates and ceded market share in Medicare Advantage. The playing field will level under the new set of rules.

DXCM | Field work last week suggests the addressable market is smaller than many appreciate. Type 2 diabetics using intensive insulin therapy of 4 or more doses a day represent about 75% of the Type 1 diabetics and are disproprotionately insured by Medicare.  According to our contacts, DXCM does well with Type 1s and the private insurance population while Medicare beneficiaries prefer Libre.  
THC | Hedgeye's proprietary algorithm suggests that same store adjusted admissions are accelerating.  We said this last quarter, but without the flu comp, it seems more likely in 2Q19.
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Position Monitor | Rebate Rule, HRA vs ,  DXCM Field Notes, THC #algo update, video recap - LQA11 HSAapp
Position Monitor | Rebate Rule, HRA vs ,  DXCM Field Notes, THC #algo update, video recap - LQA11 DXCMT2T1
Position Monitor | Rebate Rule, HRA vs ,  DXCM Field Notes, THC #algo update, video recap - LQA11 THCalgo