Eagle Capital Management, LLC on UnitedHealth Group Incorporated
Thesis
Eagle believes the managed-care cycle has bottomed after several years of cost and pricing pressure in Medicare Advantage and Medicaid. UnitedHealth has significant scale advantages and is undergoing a turnaround after management missteps, with Stephen Hemsley returning as CEO. Recent results are providing evidence that corrective actions are working, and Eagle expects margin recovery to drive 15-20% EPS growth over the next several years.
“Recent results provide growing evidence that the turnaround is well on track.”
Key risks
- Medicare Advantage and Medicaid cost and pricing pressures could persist.
- The turnaround depends on management successfully correcting prior execution problems.