Core Viewpoint - Artisan Mid Cap Value Fund's performance in Q3 2025 was below the benchmark, with returns of approximately 0.97% compared to the Russell Midcap Value Index's 6.18% return, attributed to broader market conditions and specific sector challenges [1] Fund Performance - The Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX returned 0.98%, and Institutional Class fund APHQX returned 0.97% in Q3 2025 [1] - The overall equity markets rallied, driven by strong corporate earnings, rising AI capital expenditures, and expectations of economic support from US fiscal policy and lower interest rates [1] Company Focus: Align Technology, Inc. - Align Technology, Inc. (NASDAQ:ALGN) experienced a one-month return of -1.05% and a 52-week loss of 28.71%, with a market capitalization of $11.31 billion as of January 2, 2026 [2] - The company is recognized for its Invisalign clear aligners and iTero intraoral scanners, but faced underperformance in Q3 due to high expectations and disappointing quarterly results [3] Sector Analysis - The health care sector was a significant source of underperformance for the fund, with Align Technology being one of the major detractors alongside Centene and Baxter International [3] - The health care sector has struggled due to policy uncertainty, leading to reduced investor interest [3] Investment Strategy - The fund initiated a position in Align Technology at $150 per share, following a market sell-off due to tariff concerns, viewing it as a high-quality business with long-term potential [3] - Despite recent challenges, the company is seen as a market leader in clear aligners, with expectations that it can continue to capture market share in the orthodontics space [3]

Core Viewpoint - Centene's stock appears to be in a balanced state, with no significant potential for a major increase or decrease in the near term for investors planning to hold the stock [1] Summary by Relevant Categories Company Analysis - Centene's stock is currently priced at a level that suggests stability, indicating that it may not experience drastic fluctuations in the short term [1] Market Perspective - The analysis emphasizes a disciplined approach to evaluating companies, focusing on numerical data and underlying business performance rather than market narratives [1]

Group 1 - The core performance of data storage companies, including Western Digital, Micron Technology, and Seagate Technology, is highlighted, with annual gains exceeding 200% in the S&P 500 index for 2025 [2][3] - Major cloud service providers like Microsoft, Amazon, Google, and Meta are driving significant infrastructure investments, committing over $440 billion in the next 12 months to build AI infrastructure, leading to a surge in demand for high-capacity, low-cost storage solutions [3] - SanDisk, spun off from Western Digital, achieved an impressive annual gain of approximately 559% in 2025, marking a standout performance in the storage sector [3] Group 2 - The AI investment landscape is described as entering a "race for infrastructure," with market leadership shifting from chips and model platforms to supporting elements like data, storage, power, and cooling [3] - In contrast, traditional consumer and defensive sectors faced significant declines in 2025 due to economic uncertainties, inflation, and tariff concerns [3] - Consumer stocks experienced severe downturns, with Trade Desk's stock plummeting nearly 70%, and other brands like Chipotle Mexican Grill and Deckers Outdoor seeing declines of approximately 40% and 50%, respectively [4]

Core Insights - The AI investment theme has significantly expanded, with data storage companies emerging as major beneficiaries in 2025, highlighted by strong stock performances from Western Digital, Micron Technology, and Seagate Technology [4][5][11]. Group 1: Data Storage Companies Performance - Western Digital emerged as the biggest winner in the S&P 500 for 2025, with a stock price increase of 268%, driven by strong demand for high-capacity, low-cost storage from AI data centers [5]. - Seagate Technology also performed well, with a 219% increase in stock price, benefiting from a significant rise in demand for high-margin hard drive products [8]. - Micron Technology recorded a 227% stock price increase, capitalizing on the AI data surge, with its financial performance exceeding market expectations [11]. - SanDisk, newly included in the S&P 500, saw a remarkable 559% increase in stock price, reinforcing the notion that storage is a critical need for AI [14]. Group 2: Market Trends and Shifts - The year 2025 marked a shift in market leadership from computing chips and large model platforms to data storage, data center construction, cooling, and power sectors, indicating a transition in AI investment logic from "technological breakthroughs" to "infrastructure arms race" [17]. - The significant capital expenditure commitments from major cloud service providers, exceeding $440 billion for AI infrastructure over the next 12 months, have created unprecedented demand for storage device manufacturers [4]. Group 3: Traditional Sectors Under Pressure - Traditional sectors, particularly consumer stocks, faced significant challenges in 2025 due to economic uncertainty and tariff concerns, with notable declines in companies like Clorox and Lamb Weston Holdings [18]. - The retail sector also suffered, with Deckers Outdoor and Lululemon Athletica experiencing substantial stock price drops, ending long streaks of growth [18][20]. - The healthcare sector, despite expectations of benefiting from policy changes, underperformed, with Molina Healthcare and UnitedHealth Group seeing significant declines [20].

Industry Overview - The healthcare sector is entering 2025 with challenges, particularly for managed care stocks like HMOs, due to high medical utilization, tighter reimbursement assumptions, and uncertainty around government-sponsored plans [1][3] - However, the industry is showing signs of recovery, with improved cost trends, better rate visibility, and insurers regaining control over margins as they adapt post-pandemic [2][8] Recent Developments - Higher-than-expected medical utilization has been a significant issue for HMOs, leading to recalibrated pricing and guidance from insurers [3] - Regulatory uncertainties regarding Medicare Advantage reimbursement have kept valuation multiples low, causing investors to remain cautious [3] Company Performance - UnitedHealth Group (UNH), Elevance Health (ELV), and Centene Corporation (CNC) faced sell-offs due to worsening medical-cost trends, while CVS Health (CVS) saw gains after delivering strong results and raising guidance [4][7] - UNH benefits from scale and integration with Optum, allowing it to normalize margins after earlier pressures [7][14] - CVS has improved cost controls and is leveraging its retail and pharmacy operations to enhance efficiency, positioning itself for growth in 2026 [15][16] Future Outlook - The sector is expected to become more investable as pricing discipline returns, scale advantages are reasserted, and demographic trends support steady demand [9][10][11] - The Zacks Consensus Estimate for UNH's 2026 earnings is $17.60 per share, reflecting an 8% growth from 2025 [15] - CVS's 2026 earnings estimate is $7.14 per share, indicating a 7.5% increase from 2025 [16] - Centene's 2026 earnings estimate is $2.94 per share, showing a significant 46.6% surge from 2025 [19]

Core Insights - The U.S. health insurance industry is leveraging strategic mergers and acquisitions (M&A) and technological innovations to enhance market presence and competitiveness while facing rising medical expenses and regulatory challenges [1][3][4]. Industry Overview - The Zacks HMO industry includes entities that provide basic and supplemental health services, assuming risks and assigning premiums to health insurance policies [2]. Trends Impacting the Industry - Rising medical expenses are driven by increased healthcare utilization, chronic disease management, and escalating prescription drug costs, which are straining profit margins and the Health Benefit Ratio (HBR) [3]. - Regulatory challenges include potential reductions in federal Medicaid funding and adjustments to Medicare Advantage payment rates, creating uncertainty for health insurers [4]. - A nationwide shortage of healthcare professionals is impacting hospital operations and the quality of care, which is crucial for customer retention [5]. Strategic Focus - Health insurers are increasingly engaging in M&A to enhance capabilities and market reach, supported by favorable interest rate projections from the Federal Reserve [6]. Market Performance - The Zacks Medical-HMO industry has underperformed, declining 25.8% over the past year compared to the S&P 500's growth of 2.4% [10]. - The industry's current valuation is at a forward P/E ratio of 16.04X, lower than the S&P 500's 23.35X and the sector's 20.92X [13]. Company Highlights - **UnitedHealth Group**: Strong revenue growth driven by effective Medicare and Medicaid offerings, with a 2025 earnings estimate of $16.29 per share, reflecting an 11.9% growth from the previous year [15][16]. - **Humana**: Steady growth supported by rising premiums and an expanding membership base, with a 2025 earnings estimate of $17.08 per share, indicating a 5.4% rise from 2024 [19][20]. - **Centene**: Revenue growth fueled by strong performance in Medicare and Medicaid, with a 2025 earnings estimate of $2.00 per share, reflecting an 18.5% growth from 2024 [23][24].

Core Points - Health Net is responding to the State of Emergency declared by Gov. Newsom in Mono County due to the Pack Fire, prioritizing support for affected members and healthcare providers [1] Member Support - Members can secure emergency supplies of medications during the State of Emergency through two options [2] - Health Net offers 24/7 crisis support via Behavioral Health Services, including video medical appointments at no cost if primary care providers are unreachable [2][3] - Members can access local community resources by calling 2-1-1 or visiting 211.org for assistance [3] Healthcare Provider Support - Healthcare providers can contact Health Net for assistance during the emergency, with specific support measures in place for those in affected areas [3] - Health Net will suspend refill limitations for prescriptions at out-of-network pharmacies if original pharmacies are closed [4] - Additional support includes referrals to mental health counselors, social services, and legal guidance [4] Ongoing Actions and Updates - Health Net may implement further actions as the situation evolves, with updates available on their website [5] - The company has a long history of providing health plans and services, serving over three million members in California [6] - Health Net is a subsidiary of Centene Corporation, employing over 5,700 people in California [6]

Core Viewpoint - Centene Corporation reported a mixed performance in its latest earnings report, with adjusted earnings per share beating estimates but showing a decline compared to the previous year, while revenues increased significantly year over year [3][4]. Financial Performance - Centene's Q3 2025 adjusted earnings per share were 50 cents, surpassing the Zacks Consensus Estimate of a loss of 21 cents, but down from $1.62 per share in the prior year [3]. - Revenues increased by 18.2% year over year to $49.7 billion, exceeding the consensus mark by 4.4% [3]. - Premiums totaled $44.1 billion, up 22.2% year over year, driven by higher premiums and expanding membership in the Prescription Drug Plan (PDP) [6]. Revenue Breakdown - Medicaid revenues grew 9% year over year to $23.2 billion, while Medicare revenues surged 66% to $9.4 billion [5]. - Commercial revenues improved by 26% year over year to $11 billion [5]. - Service revenues decreased by 1.5% year over year to $772 million, although it beat estimates [7]. Membership and Costs - Total membership (excluding TRICARE) reached 28 million as of September 30, 2025, an 8% increase year over year [8]. - The health benefits ratio deteriorated to 92.7%, a decline of 350 basis points year over year [9]. - Operating expenses rose 37% year over year to $56.6 billion, driven by higher medical costs, which increased by 27% [9]. Cash Flow and Equity - Centene ended Q3 with cash and cash equivalents of $17.1 billion, up from $14.1 billion at the end of 2024 [11]. - Total stockholders' equity fell to $21 billion from $26.5 billion at the end of 2024 [12]. - The company generated $4.7 billion of net cash from operations in the first nine months of 2025, a significant increase from $741 million a year ago [12]. Share Repurchase - Centene repurchased common shares worth approximately $473 million in the first nine months of 2025 [13]. Market Sentiment and Outlook - There has been a downward trend in estimates, with the consensus estimate shifting down by 42.99% [14]. - Centene holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [16]. - The stock has a subpar Growth Score of D and a score of A on the value side, placing it in the top 20% for value investment strategy [15].

Core Insights - The Trump administration is considering extending tax credits for individuals purchasing coverage under the Affordable Care Act (ACA), which has led to a rise in health insurance company stocks [2][4] - Enhanced tax credits introduced by the Biden administration in 2021 have significantly increased ACA enrollment, surpassing 24 million Americans [3] - Wall Street analysts view a potential two-year extension of these tax credits as beneficial for health insurers and their customers, contrasting with expectations of no extension or a shorter one [4] Company Performance - Health insurance stocks have seen a positive trend, with companies like Oscar Health, Elevance Health, and Molina Healthcare reporting significant share price increases [7][8] - Oscar Health's shares rose over 8% to $18.16, marking a weekly increase of more than 26% [7] - Elevance Health's shares increased nearly 1% to $338.49, with a weekly gain of over $20, while Molina Healthcare shares rose more than 7% and UnitedHealth Group shares increased by 5% [8] Industry Context - The health insurance industry has faced challenges in 2023 due to rising medical claims, but recent developments regarding tax credits have created a favorable environment for managed care companies [6][5] - The ongoing open enrollment period presents an opportunity to protect millions of Americans from rising healthcare costs in 2026 [9]

Core Insights - Coordinated Care has provided over 18 million meals in Washington since 2020, addressing food insecurity as part of its commitment to increase access to healthy food [1][5] - The organization’s One Million Meals campaign has consistently exceeded annual goals, demonstrating effective community partnerships [2][5] - Coordinated Care Harvest Bucks program offers Medicaid members up to $100 annually for produce prescriptions, enhancing grocery budgets and promoting nutritional health [4][5] Company Initiatives - The One Million Meals campaign began during the COVID-19 pandemic and has shown significant success through collaboration with local partners [2][3] - Coordinated Care's volunteer efforts have included packing meals and supporting local food programs, reflecting a strong community engagement [7] - The organization aims to address whole-person health care needs by integrating food access with healthcare services [5][8] Community Impact - Food insecurity affects approximately 47.4 million people in the U.S., including 13.8 million children, highlighting the importance of Coordinated Care's initiatives [1] - The organization collaborates with various local food banks and health organizations to maximize its impact on community health [2][7] - Coordinated Care's efforts are part of a broader mission to transform community health by addressing nutrition and food access challenges [5][8]