MCOs - Updating Earnings Power Analysis Into Q2

研报英文原文证据摘录

MCOs - Updating Earnings Power Analysis Into Q2

Healthcare Facilities & Managed Care

Managed Care - Market Overweight

MANAGED CARE July 1, 2026

The Wolfe Byte

We update our analysis of MCO earnings power vs our current est, as dislocation vs

target earnings continues to be driven by pressure in Medicaid, HIX and Medicare. Justin Lake, CFA

Looking at the disparity by MCO we see HUM > MOH > CNC > ELV > UNH > CVS. jlake@wolferesearch.com

(646) 582-9280

View Justin’s Research

●Updated Earnings Power Across the MCO Space Going Into Q2 – We publish View Comp Table

our updated analysis of actual MCO earnings and margins both currently and Dillon Nissan

over time vs. target margins as group earnings power in 2026 continues to dnissan@wolferesearch.com(646) 582-9281

run significantly below typical expectations. Not surprisingly, the delta is most

notable among HUM, MOH, and CNC, with current EPS 351% / 341% / 177% Benbtenner@wolferesearch.comTenner

below target given Star rating headwind, significant pressures in Med Adv, and (646) 582-9289

the continued dislocation between Medicaid rates and acuity / utilization. That

said, with these 3 stocks up 55%/31%/56% YTD respectively it is clear that

the market is beginning to price in improvement. ELV, UNH, and CVS are also

materially under-earning at 61% / 46% / 33% upside to target EPS in 2026,

see heatmap on page 5. of this note for details. We look backwards to 2018

for actual results by business and forward to 2030 for our estimate trajectory

of change / improvement going forward vs. target margins for each co. We

remain most constructive on MA focused names CVS/HUM/UNH, while noting

that Exchange margins may have upside in 2026 and Medicaid is showing early

signs of stabilization / improvement – more below.