ANTM (Update)

Anthem Inc

Healthcare, Event Driven/Special Sit


Presented:06/13/2016
Price:$130.52
Cap:$34.91B
Current Price:$483.87
Cap:$112.20B

Presented

Date06/13/2016
Price$130.52
Market Cap$34.91B
Ent Value$52.98B
P/E Ratio14.73x
Book Value$89.59
Div Yield0%
Shares O/S267.50M
Ave Daily Vol1,644,130
Short Int3.44%

Current

Price$483.87
Market Cap$112.20B
Anthem, Inc. provides life, hospital and medical insurance plans. It offers a broad spectrum of network-based managed care health benefit plans to the large and small employer, individual, Medicaid and Medicare markets. The company operates through three segments: Commercial and Specialty Business, Government Business and Other. The Commercial and Specialty Business segment includes local group, national accounts, and individual and specialty businesses. The Government Business segment includes medi care and medic aid businesses, national government services and services provided to the federal government in connection with federal employee program. The Other segment includes other businesses that do not meet the quantitative thresholds for an operating segment as defined by financial accounting standards board guidance, as well as corporate expenses not allocated to the other reportable segments. The company was founded on November 30, 2004 and is headquartered in Indianapolis, IN.

Please note, this is an update to Long - Anthem Inc which was presented on 2/3/2016 at $126.83.

Publicly traded companies mentioned herein: Aetna Inc (AET), Anthem Inc (ANTM), Cigna Corp (CI), CVS Health (CVS), Express Scripts Holdings (ESRX), Humana Inc (HUM), UnitedHealth Group Inc (UNH)

Highlights

The presenter thinks shares of Anthem (ANTM) continue to represent an attractive value at ~$130. The arb spread on the Cigna deal is >30%, which leaves a meaningful amount of room for upside on the deal closing. As a standalone, ANTM continues to trade at ~10x 2017 estimates, and the “contentious” battle with Express Scripts over the pricing in the PBM contract is worth $1.50 per share (if factored in, standalone ANTM is trading at 9x in a “no deal” scenario). Overall, he still believes the multiple could, and should, re-rate to 14x - 15x within the investment horizon, making for meaningful upside in either scenario (“the deal is >20% accretive to all the numbers”, he added).

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Idea Discussion

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