ITMS
5 years ago
Humana $HUM Pulls Back, But More Upside Is Coming
In 2019, all of the leading managed health care stocks have been very volatile. Political pressure from both sides of the aisle have been the catalyst for the excessive whipsaw in this industry group. Stocks such as Humana Inc (NYSE:HUM), Cigna Corp (NYSE:CI), UnitedHealth Group Inc (NYSE:UNH) and others have been very susceptible to political news on a daily basis. Last week, the sector rallied sharply higher after the White House abandoned its plan to eliminate rebates from government drug plans. Unfortunately, these stocks are pulling back today after Presidential candidate Joe Biden proposes a public option for health insurance for anyone who wants it and will give power to Medicare to negotiate drug prices.
Last week, the managed health care stocks all broke out on a technical basis. Humana Inc (NYSE:HUM) is one stock that should have more upside despite today's pullback. Today, HUM stock is falling by $4.48 to $286.77 a share. Traders and investors should now watch and see if this stock can consolidate on the charts as last week's break-out pattern suggests a move back up to the $310.00 level. This major resistance level is where the stock sold off in late February 2019. I will be be keeping this leading heath care stock on my radar for a bullish pattern development.
Nick Santiago
InTheMoneyStocks
KingDMC
9 years ago
DOJ Girds for Strict Review of Any Health-Insurer Mergers
Source: Dow Jones News
By Brent Kendall And Anna Wilde Mathews
The Justice Department is gearing up for an exacting look at any proposed mergers among the nation's top health-insurance companies, amid questions inside and outside the department about whether industry consolidation could suppress competition.
The five biggest health insurers have been circling one another for potential deals. Anthem Inc. has made public a $47.5 billion bid for Cigna Corp., which Cigna has so far rejected. Aetna Inc., meanwhile, has made a takeover proposal for Humana Inc.
If the insurers succeed in striking such deals, it would leave the industry topped by three big companies, each with annual revenue of more than $100 billion. UnitedHealth Group Inc., currently the largest health insurer, also recently made a takeover approach to Aetna.
Many of the mergers under discussion have the potential to raise antitrust concerns, a senior Justice Department official said, adding that health insurers considering such deals should do a careful antitrust risk-assessment of the transactions.
Antitrust enforcers have had initial discussions about how they would approach any insurance tie-ups, and they are preparing for the possibility they could face multiple deals simultaneously, this official said.
If there were a wave of mergers at once, the department would look at the deals collectively, rather than each one in isolation. Enforcers would try to determine what effect the deals could have on the marketplace, and pursue questions about whether they would benefit consumers, the official said.
The big insurers declined to comment on the antitrust scrutiny that any potential deals in the industry might face.
In a recent call with industry analysts, Anthem Chief Executive Joseph Swedish said a combination of his company with Cigna would have "the scale to drive greater efficiency and affordability for our customers," and would be able to "accelerate improvements in the total cost of care."
A spokeswoman for America's Health Insurance Plans, the industry trade group, said health-plan combinations don't increase premiums, and that insurers' "focus is on making sure consumers have affordable coverage."
The prospect of consolidation poses high stakes for the Obama administration, whose signature domestic policy legacy is the 2010 health-care law. Some aspects of the health law were designed to increase insurance-industry competition, including marketplaces for health coverage and the creation of new nonprofit cooperative health plans around the country.
But the law also includes provisions that may have helped inspire consolidation, at least indirectly. For instance, it requires insurers to spend a certain percentage of premiums on health care, which adds to the pressure to trim administrative costs, a benefit insurers are likely to seek from merging.
A Wall Street Journal analysis from earlier this month found some combinations of the top health insurers could damp competition in certain markets around the country.
The law also contains policies encouraging health-care providers to move to forms of payment that involve tracking the care of groups of patients, aiming to save money and improve care. Providers say they need size and resources to transform health care, one of the driving sentiments behind recent consolidation by hospital groups and other health-care providers.
Just as the Justice Department is eyeing the health-insurance side of the equation, the Federal Trade Commission, which also has antitrust enforcement powers, has raised concerns about consolidation on the hospital side, challenging several mergers.
In fact, insurers are bulking up partly to face off against the larger hospital systems in negotiations about rates and payment models.
"All of this consolidation is about bargaining power," said Glenn Melnick, a professor at the University of Southern California who specializes in health-care finance. He co-wrote a study published in the journal Health Affairs that suggested increased health-insurer consolidation could benefit consumers by pushing down hospital rates, "as long as health-plan markets remain competitive."
Some research has linked having fewer health insurers to higher insurance rates.
"There's no good evidence out there that scale is associated with lower premiums or improvements in plan quality," said Leemore Dafny, a former FTC official who is a professor at Northwestern University's Kellogg School of Management. Ms. Dafny, who co-wrote a paper tying greater competition in the health-law marketplaces to lower rates, said it isn't clear insurers would pass on to consumers the benefits of any hospital discounts they achieve.
The Justice Department has challenged, or threatened to challenge, health-insurance mergers previously. In past deal reviews, it has focused both on how a merger would affect local or regional markets as well as markets for specific insurance products.
In 2012, the department found antitrust problems with Humana's acquisition of Arcadian Management Services Inc. The companies resolved the government's objections by agreeing to divest Medicare Advantage plans--the private-health-insurance version of the government program--in 51 counties and parishes.
That same year, the department expressed concerns about WellPoint Inc.'s acquisition of Amerigroup Corp. The parties addressed those concerns by divesting Amerigroup's Virginia Medicaid managed-care business. WellPoint is now called Anthem.
In 2010, Blue Cross Blue Shield of Michigan abandoned its planned acquisition of an in-state rival when the Justice Department threatened to file an antitrust lawsuit to block the deal.
As in past government merger reviews, the input of third parties who would be affected by any insurance mergers, such as employers and health-care providers, will be important, the Justice Department official said.
Groups representing large national employers, which rely on the biggest insurers to administer their coverage, have expressed concerns publicly about a potential loss of options.
The official said the department will look closely at whether there are merger-specific cost savings produced by an insurance deal that would stimulate competition and benefit consumers, and whether any such benefits outweigh any potential risks posed by a megamerger.
Duke University law professor Barak Richman said it makes sense, with such massive deals possible, for the Justice Department to look at the combinations holistically.
"Does this create some kind of greater concentration of power in aggregate?" he said. "Are we thinking carefully about all the markets where they don't currently compete but could in future?"
A broad Justice Department examination would add to pressures on health insurers. The system of Blue Cross and Blue Shield plans is facing private antitrust lawsuits in federal court alleging that they function as an illegal cartel. The Blue Cross Blue Shield Association has said its actions are legal and benefit consumers.
Write to Brent Kendall at brent.kendall@wsj.com and Anna Wilde Mathews at anna.mathews@wsj.com
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KingDMC
9 years ago
Humana has farthest to fall if frozen out from deals
JUN 22, 2015 | BY BROOKE SUTHERLAND
(Bloomberg) -- Humana Inc. shareholders have the most to lose if the health insurer gets spit out of the tide of consolidation sweeping the industry.
Speculated as the likeliest target among the top five U.S. managed-care providers, Humana could be left to fend for itself--or forced to take a lower offer than it might like--if potential suitors merge with each other instead.
Anthem Inc. had weighed a bid for Humana, but on Saturday announced a $47 billion proposal for Cigna Corp. While Cigna rejected the $184- a-share cash and stock offer, Anthem reiterated it on Monday.
Further complicating the deal drama, both Anthem and Cigna continue to be in discussions to acquire Humana, according to people familiar with the matter, who asked not to be identified because the information is private.
If Anthem and Cigna agree to a deal, Humana could be left with only one suitor: Aetna Inc. In that scenario, Humana doesn’t have much leverage to push for a higher valuation and a transaction could happen below the current share price, according to Christine Arnold of Cowen Group Inc.
“If Aetna is interested in Humana, these events sure strengthen their hand at the negotiating table,” said Brian Wright, a New York-based analyst at Sterne Agee CRT.
A takeover at a low price may be better than nothing. That could be the result if the biggest health insurer of the bunch, UnitedHealth Group Inc., decides to get in the mix and target Aetna for itself.
Downside risk
After climbing to a record amid growing takeover speculation, Humana stands to fall as much as 40 percent to $120 a share without a deal, said Chris Rigg of Susquehanna International Group. The company has missed analysts’ earnings estimates for three straight quarters and probably will reduce its guidance for 2015, the New York-based analyst said.
“Absent the M&A speculation, it would be significantly below $200,” Rigg said.
Humana fell 6.1 percent to $189.94 a share on Monday in New York. UnitedHealth declined 0.1 percent, while Aetna, Anthem and Cigna all gained.
UnitedHealth, with a market value of $114 billion, could go after Aetna to thwart an Aetna-Humana deal. That’s because if Aetna merged with Humana, the combined company would be too big for UnitedHealth to buy without raising antitrust alarms. A UnitedHealth-Humana deal isn’t an option because of the two companies’ significant overlap in Medicare Advantage, the private-company policies offered for the government-sponsored program for the elderly.
Still possible
Humana shareholders shouldn’t give up all hope just yet. Arnold of Cowen says an Aetna-Humana combination is still more probable than Aetna-UnitedHealth.
Bank of America analyst Kevin Fischbeck also puts a lower probability on UnitedHealth making an acquisition, mostly because it doesn’t need one as the biggest and fastest-growing health insurer.
For Humana, “I still think the most likely scenario is that they will get taken out by Aetna,” Rigg of Susquehanna said. He estimated a takeover valuation in the $200 range, but cautioned a bid could be for more like $180 if due diligence shows that Humana’s earnings are likely to fall.
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