Winning and Losing Companies Under the New Health Care Bill
On Sunday evening, the historic $938 billion dollar health care reform bill was passed by the U.S. House of Representatives. Now, health insurers will receive 32 million new taxpayer-subsidized customers by 2019 — covering 95 percent of all Americans.
In the simplest of words, the health care reform bill has become a Cash for Clunkers program for HMOs.
Let’s take a look at some of the bigger winners and losers …
Among the HMOs benefiting from the new bill:
Cigna (CI): $37.02 per share
Market Cap: $10.21 Billion
$67.19 in revenue per share
$5.18 in cash per share
Book Value: $19.75 per share
Aetna (AET): $34.62 per share
Market Cap: $15 Billion
$78.81 in revenue per share
$9.31 in cash per share
Book Value: $22.06 per share
UnitedHealth (UNH): $33.66 per share
Market Cap: $38.97 Billion
$74.60 in revenue per share
$9.53 in cash per share
Book Value: $20.58 per share
Among the private insurer losers:
WellPoint (WLP): $64.50 per share
Market Cap: $28.5 Billion
$128.56 in revenue per share
$48.54 in cash per share
Book Value: $55.27 per share
Humana (HUM): $48.91 per share
Market Cap: $8.30 Billion
$184.98 in revenue per share
$45.84 in cash per share
Book Value: $33.94 per share
WellPoint could be negatively impacted with individual plans it now dominates in many states. Humana has a major Medicare Advantage business and will be hit hard by the reimbursement cuts.
Meanwhile a few insiders were quick to cash in on their stocks prior to the bill being passed. In a filing at the SEC Wednesday, March 10th, 2010,
Healthspring (HS) Director Leon Benjamin Jr. sold 350,000 shares valued at $6.4 million and Universal Health Services (UHS) CEO Alan B. Miller sold 100,000 shares valued at $3.2 million and Director Marc Miller sold 75,000 shares at $2.4 million
Among the Drug & Biotech companies, Merck (MRK), Pfizer (PFE) and Amgen (AMGN) stand to see an increase in revenues. They will now have a pool of 32 million insured customers who can afford their pricier prescriptions. The pharmaceutical industry’s trade lobby was a major supporter of the health care reform bill, and any punches to the industry were eliminated early or never included. The bill also gives drug companies additional monopoly protection for protein-based biotech drugs, a potential bubble hot zone for the future.
You may just want to consider the key benefactors of the bill (i.e. stocks mentioned above) as potential investments to help subsidize the higher costs coming to you or your family wallet.
Disclosure: No positions in the companies mentioned.