Takeaway: We will provide a comprehensive overview of our #ACATaper/#ACA2.0 and Healthcare Deflation themes with new datasets and analysis.

CALL INVITE | THE SIREN SONG OF A V-BOTTOM | HEALTHCARE THEMES (1/18/17 AT 1:00PM ET) - Insured Population Slowing


We hope you can join us for our 1Q17 Healthcare Themes Call on Wednesday, January 18th at 1:00 PM ET.  We will provide a comprehensive update of our #ACATaper and Healthcare #Deflation themes with new datasets and analysis.  We'll also share new work that more definitively links insured medical consumers by payor, medical consumption, and employment across the US Medical Economy, and as always updates on our current longs and shorts as well as new themes and stocks we are working on for 2017.


The U.S. Medical Economy remains extended even after a terrible 3Q16 earnings season which stock prices seem to have completely forgotten.  While the negative tone from 3Q16 has all but evaporated following the Presidential Election followed by the improved tone at the JP Morgan Healthcare Conference this week (indicating a less-worse 4Q16 earnings season), 2017 guidance remains a sector risk.   After the largest expansion in insured medical consumers in a generation between 2014 and 2016, growth in medical consumers revert to pre-ACA levels in 2017, alongside continued deterioration in affordability, payment reforms, company leverage at 15-year highs, and multiples still near 10 year highs, is a recipe for downside.  


Emily Evans, Director of Health Policy at Hedgeye, will be joining our presentation and sharing her views on major policy initiatives including block grants, Medicaid expansion and Repeal and Replace, among other topics that will significantly impact our fundamental views.  For example, the #ACA2.0 environment so far has added more Congressional scrutiny and oversight of Medicaid eligibility and enrollment determination.  We see this as a developing risk as many states have enrolled more people into Medicaid than live at or below 138% of the poverty level.  California, for example, has 12 million Medicaid enrollees, but only 9 million people at or below 138% of the federal poverty level.  We've identified 28 states that have similarly over-enrolled at the expense of federal outlays.



Please contact  for further information.  An invite with dial-in instructions will be sent to subscribers ahead of the conference call.


#ACATaper/#ACA2.0 Update and Review


Data updates since our October 2016 presentation

(continue to progress in line with our expectations for slowing demand)

  • Insured consumer growth leads medical consumption and US Medical Economy Employment
  • JOLTS, HC Employment, Insured medical consumers, Hospital Employment - everything is slowing with a lot of downside from here
  • Exchange Enrollment - no evidence that consumer fears of Repeal & Replace is driving fear-based enrollment
  • Exchange disenrollment and member churn remains high
  • Premium/Deductible Affordability - HDHP hitting new highs

#Demographic Headwinds (YES HEADWINDS!)

Incremental medical spending for the US Medical Economy

(the most profitable in the world, will be sourced almost exclusively from Medicare, one of the least profitable payors with mounting deflationary pressures.)

  • Impact of Aging Population
  • Per Capita Spend by Age Cohort
  • Utilization History

#Employment Decelerating 


Employment affects EVERYTHING!

  • Employment vs. Privately Insured
  • Hospital Bad Debt Expense
  • Real Private Fixed Investment
  • Biotech Fundraising Cycle

#CapEx Slowdown Seems Likely

  • Impact to Hospitals and companies that sell to them
  • Healthcare IT Headwind
  • Hospital PCE

#Repeal and Replace

(Emily Evans will provide her outlook on block grants and the Repeal and Replacement of the ACA

  • Repeal and Replace Process Timing and Implications
  • The Uncertainty Ahead
  • Block and Per Capita Grant Reform for Medicaid - new money flows likely negative for Hospitals
  • Increased Congressional oversight of Medicaid enrollment and eligibility

Healthcare As A Safe Haven Looks Like Consensus...

(likely to unwind if we are right on emerging fundamental and policy headwinds)

  • Style Factor and Surprise Analysis
  • Estimate Revisions
  • Relative and Absolute Valuation
  • Position Monitor - Longs and Shorts


Please call or e-mail with any questions.


Thomas Tobin
Managing Director



Emily Evans
Managing Director



Andrew Freedman, CFA



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