Wall Street Transcript Interview with Thomas Carroll of Stifel, Nicolaus & Company: Medicaid Solution Providers Offer Upside in the Health Care IT Sector

Wall Street Transcript

67 WALL STREET, New York - October 25, 2012 - The Wall Street Transcript has just published its Health Care IT Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Electronic Health Record Adoption - HIT Consolidation Activity - Platform Interoperability and Data Analytics - Analytics for Evidence-Based Care Protocols - Electronic Health Records Implementation - HITECH Act Incentives - Affordable Care Act

Companies include: Unitedhealth Group, Inc. (UNH), WellPoint Inc. (WLP), AMERIGROUP Corp. (AGP), Centene Corp. (CNC), Molina Healthcare Inc. (MOH), WellCare Health Plans, Inc. (WCG), Humana Inc. (HUM), CIGNA Corp. (CI), Aetna Inc. (AET), Coventry Health Care Inc. (CVH), Healthways Inc. (HWAY)

In the following excerpt from the Health Care IT Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Where are you focusing your attention within the managed care space these days?

Mr. Carroll: I think it's interesting to think about what the larger commercial players, such as UnitedHealth (UNH) and WellPoint (WLP), of the world are going to do as we move into a more reformed world, with the Affordable Care Act and health insurance exchanges. What does that mean for them going forward?

Conversely, I think it's interesting to look at some of the specialty companies, especially the Medicaid players. Amerigroup (AGP), Centene (CNC), Molina (MOH) and WellCare (WCG) deal almost purely with state Medicaid programs and Medicare.

TWST: How would you broadly characterize the industry over the past 12 months or so? There's been a lot of change.

Mr. Carroll: From an investor standpoint, it's been relatively calm. Visibility of earnings has been pretty good. Last year, we saw decent earnings growth and a low utilization environment, which kept overall cost trends down. This year, we've seen more mixed results, related mostly to a commercially competitive environment. We saw a good amount of rational price competition.

In the first half, we saw a handful of companies, including United, post better-than-expected earnings. But others, such as WellPoint and Humana (HUM), have had some trouble this year and have lowered their earnings expectations. I think the stocks are really cheap, but investors made some money here last year and then went to the sidelines. They are now re-evaluating the space, given the Supreme Court ruling and the upcoming elections. After the elections, I think they will formulate a new thesis, if you will.

TWST: This piece comes out shortly before the election. What is the potential impact of the election on this space?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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