Diamond Hill Capital Management, LLC - Mid Cap Strategy on Centene Corporation
Thesis
Diamond Hill initiated a position in Centene because it believes managed-care margins now have a realistic path to recovery over the next few years. The recovery thesis depends on reimbursement rates catching up with underlying cost trends across the insured population. The position also reflects the manager's broader belief that health care offers attractive valuations and favorable long-term demand drivers despite several years of relative underperformance.
“we believe managed care margins now have a realistic path to recovery over the next few years”
Key risks
- Reimbursement rates may not catch up with underlying medical cost trends as expected.