Diamond Hill Capital Management, LLC - Small-Mid Cap Strategy on Humana
Thesis
Humana is the second-largest Medicare Advantage insurer in the U.S. The company delivered strong first-quarter results and benefited from better-than-expected Medicare rate increases. Diamond Hill believes the higher rates should help close the gap between pricing and medical cost trends.
“better-than-expected Medicare rate increases in early April”
Key risks
- Medicare pricing may fail to keep pace with medical cost trends