Healthcare Services June Checkup: Evaluating Shifting Sentiment and Data Points Across Managed Care, Distributors and Facilities

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Healthcare Services June Checkup: Evaluating Shifting Sentiment and Data Points Across Managed Care, Distributors and Facilities

What Were Our 2026 Key Themes and What Changed In 1Q?

Key 2026 Outlook Themes and Preferences What Happened in Recent Months? Did It Change Our View?

During 1Q earnings, most MCOs emphasized that while

MCOs: MA Margin Improvement We still think MA margins improve in ‘26 and ‘27 the funding environment lagged trend that they planned to

prioritize margins over membership in 2027 AEP. We We thought MA margin improvement was key for ‘26/’27 Earnings commentary supported the thesis that despite

plans will be rational and disciplined on benefits. Trend with most MCOs below target margins. At the time, we insufficient rates, MCOs will prioritize margin improvement

appears to be progressing in-line with expectations based saw potential for ‘27 rate upside supporting LT earnings. in 2027 AEP.

on commentary and intra-quarter updates.

MCOs: Preference for Large Diversified MCOs We continue to think diversified MCOs can work Nothing during 1Q earnings indicated to us that the

improvement stories for both CVS and UNH were off- We highlighted UNH and CVS as two of our favorite ways We continue to think CVS/UNH have levers for +DD%

track. We thought UNH’s raise was positive and exceeded to play MCOs with the benefit of continued margin EPS growth with services growth coupled with MA margin

expectations. improvement and strong services businesses. improvement.

We still view ACA Exchanges/Medicaid with caution MCOs: Medicaid and ACA Exchanges Caution CNC and MOH beat their guidance targets with CNC

increasing guidance. Both framed better than expected We think investors reacted positively to the updates from