Diamond Hill Capital Management, LLC / Mid Cap Strategy on Centene Corporation
Thesis
Diamond Hill initiated Centene because it believes managed-care margins have a realistic path to recovery. The core mechanism is reimbursement rates catching up with underlying medical cost trends across the insured population. The fund expects that normalization to play out over the next few years rather than immediately. The position therefore reflects a recovery thesis in which current margin pressure gives way to improving economics as pricing resets.
“we believe managed care margins now have a realistic path to recovery over the next few years”