Don’t Count Your Swag Before the Summit

Commemorative coins have been around for a long time.  According to Wikipedia, ancient Roman coins “often have references to military campaigns and the defeat of foreign powers. These reverse types often symbolically represent the subordination of recently conquered territories to Roman authority. Such coins are examples of ancient political propaganda.”  Interesting on a couple of levels – though presumably most of these coins were issued AFTER said conquering had occurred.  In any case, we’re reminded this week to put first things first.

Specifically, we got McKesson’s 4Q18 report where factors weighing on FY19 U.S. Pharma and Specialty op profit growth dominated conference call Q&A.  Ultimately, we expect segmentation of U.S. Pharma and Specialty WILL  make clear the strength and absolute op profit growth opportunity of MCK’s core business.  This core strength is a cornerstone of our positive thesis.  Yet in the spirit of not counting our swag before the summit, we spent time pondering the potential reasons for the headwinds.

Additionally, Washington  Medicaid  awards  were  announced last night, incrementally positive for Molina and perhaps Anthem.  Josh mentioned that for Molina, this was particularly important given 14%  of  total  company  premiums  coming  from  that  state and recent RFP losses in FL and NM still front of mind for investors.  We saw mild slippage for CNC and UNH, notable only because expectations are high for Centene in any RFP process. for more.