Financial Data and Key Metrics Changes - The total revenue for Q2 2025 was $1.4 billion, down from $1.48 billion in Q2 2024, primarily due to lower risk adjustment contributions and unfavorable developments in Part D [29][30] - The medical margin for Q2 2025 was negative $53 million, compared to a positive $106 million in Q2 2024, driven by underperformance in the burden of illness program [30][32] - Adjusted EBITDA for Q2 2025 was negative $83 million, compared to negative $3 million in Q2 2024, reflecting the impact of lower risk adjustments and unfavorable prior period developments [32] Business Line Data and Key Metrics Changes - Medicare Advantage membership at the end of Q2 2025 was 498,000, down from 513,000 in Q2 2024, reflecting a measured approach to membership growth [28] - ACO REACH membership in Q2 2025 was 116,000, down from 132,000 in 2024, aligning with expectations [28] Market Data and Key Metrics Changes - The company reported a medical cost trend of 5.9% for Q2 2025, consistent with the previous year's trend of 6% [33] - The company has successfully reduced its exposure to Medicare Part D, with less than 30% of its membership carrying Part D risk in 2025 [34] Company Strategy and Development Direction - The company is focused on improving contract economics and bid visibility with payers, enhancing its data platform, and reducing variability in its business [35] - The leadership transition aims to strengthen execution and improve relationships critical to future success [11][12] - The company is committed to enhancing performance and positioning itself for sustainable value creation, particularly with the improved Medicare reimbursement model expected to take effect next year [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 is a transition year with challenges that were more acute than previously expected, leading to underperformance [9][10] - The company expects to see the results of strategic initiatives in 2026, with a focus on improving operational and financial performance [16][17] - Management expressed confidence in the long-term value of the company's model and its ability to deliver significant growth opportunities [10][15] Other Important Information - The company has withdrawn its previously issued full-year 2025 financial guidance due to ongoing market uncertainties [34] - The leadership team is recalibrating the organization's culture to emphasize urgency, accountability, and performance [12] Q&A Session Summary Question: Clarification on potential positive PYD in Q3 and growth rate into 2026 - Management indicated that there was a small amount of favorable development on quality programs, but the significant negative developments were related to risk adjustment and Part D costs [39][40] Question: Call trends and cost trends development - Management confirmed that Q1 cost trends were around 6%, and Q2 trends were consistent with Q1, but July data was less complete [44] Question: 2026 class commentary and glide path strategy - Management stated that growth for 2026 is under review and they will be highly selective on future growth due to current business performance [57] Question: 2026 bidding insights - Management noted that payers are looking for improved economics as they head into 2026, and negotiations are ongoing [59][62] Question: CEO search criteria - The company is looking for a CEO with multi-market management capability, experience with primary care physicians, and strong operational rigor [67] Question: Quality incentives and their impact - Management highlighted that payers are increasingly willing to include more quality incentives in contracts, which could lead to increased dollars available for performance [72][73]

Financial Data and Key Metrics Changes - The company reported total revenue for Q2 2025 of $1.4 billion, down from $1.48 billion in Q2 2024, primarily due to lower risk adjustment contributions and unfavorable developments in Part D costs [29][30] - Medical margin for Q2 2025 was negative $53 million, compared to positive $106 million in Q2 2024, driven by underperformance in the burden of illness program [30][33] - Adjusted EBITDA for Q2 2025 was negative $83 million, compared to negative $3 million in Q2 2024, reflecting the impact of lower risk adjustments and unfavorable prior period developments [33] Business Line Data and Key Metrics Changes - Medicare Advantage membership at the end of Q2 2025 was 498,000, down from 513,000 in Q2 2024, reflecting a measured approach to membership growth [28] - ACO REACH membership in Q2 2025 was 116,000, down from 132,000 in 2024, aligning with expectations [28] Market Data and Key Metrics Changes - The company has reduced its exposure to Medicare Part D, with less than 30% of its membership carrying Part D risk in 2025, and aims to further decrease this as it enters 2026 [35] - The company expects its same geography growth rate to align with the broader industry for 2025 [28] Company Strategy and Development Direction - The company is focused on improving contract economics and bid visibility with payers, enhancing its data platform, and reducing variability in its business [36] - The leadership transition aims to drive improved execution and strengthen relationships critical to future success [10][11] - The company is committed to enhancing performance and Agilent's position for sustainable value creation, particularly with the improved Medicare reimbursement model expected to take effect next year [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 is a transition year with industry complexities and headwinds that were more acute than previously expected, leading to underperformance [8][9] - The company is optimistic about realizing the benefits of strategic initiatives in 2026, despite current challenges [7][36] Other Important Information - The company has withdrawn its previously issued full-year 2025 financial guidance due to ongoing market uncertainty [35] - The leadership team is recalibrating the organization's culture to emphasize urgency, accountability, and performance [11] Q&A Session Summary Question: Clarification on potential positive PYD in Q3 and growth rate into 2026 - Management indicated that there was a small amount of favorable development on quality programs, but the most significant pieces of development were unfavorable, particularly related to risk adjustment [40][41][42] Question: Insights on call trends and cost trends - Cost trends for Q1 were around 6%, and Q2 trends were consistent with Q1, but July data was not yet complete [46][47] Question: Commentary on 2026 class and glide path strategy - Management confirmed that growth for 2026 is under review and will be highly selective based on current business performance [59] Question: Insights on bidding for 2026 - Management noted that payers are looking for improved economics as they head into 2026, and negotiations are ongoing [61][62] Question: CEO search criteria - The company is looking for a CEO with multi-market management capability, experience with primary care physicians, and operational rigor [68][69] Question: Quality incentives and their potential impact - Management expects an increase in quality incentive dollars from 2025 to 2026, as payers are more willing to put dollars at risk for higher performance [75][76]

Market Overview - U.S. stocks experienced a significant decline due to escalating trade tensions and disappointing labor data, leading to a broad sell-off on Wall Street [1][10] - The Dow Jones Industrial Average fell by 542.40 points (1.23%) to close at 43,588.58, while the S&P 500 decreased by 1.60% to 6,238.01, and the Nasdaq Composite dropped by 2.24% to 20,650.13 [3] Employment Data - Nonfarm payrolls increased by only 73,000 in July, significantly below consensus expectations, and June's job creation was revised down from 147,000 to just 14,000, indicating a deeper slowdown in the labor market [2] - These labor market developments have raised the likelihood of a Federal Reserve interest rate cut in September [2] Investment Opportunities - In the current market environment, value stocks are highlighted as attractive investment options due to their potential safety margin during periods of uncertainty [3][10] - Companies such as CVS Health Corporation (CVS), Integer Holdings Corporation (ITGR), Associated Banc-Corp (ASB), and F.N.B. Corporation (FNB) are noted for their low Price to Cash Flow (P/CF) ratios, indicating strong financial health [4][10] Valuation Metrics - The P/CF ratio is emphasized as a reliable valuation metric, as it reflects a company's cash flow generation relative to its market price, providing a clearer picture of financial health compared to earnings metrics [5][6] - Positive cash flow is crucial for a company's liquidity, enabling it to manage debt, reinvest, and undertake shareholder-friendly actions [7] Stock Selection Criteria - A comprehensive approach to identifying value stocks includes considering multiple metrics such as price-to-book ratio, price-to-earnings ratio, and price-to-sales ratio, alongside a favorable Zacks Rank and Value Score [8][11][12] - Specific parameters for selecting true-value stocks include a P/CF ratio less than or equal to the industry median, a minimum stock price of $5, and a Zacks Rank of 1 or 2 [9][13] Company Highlights - CVS Health has a Zacks Rank of 2, with projected sales growth of 3.9% and EPS growth of 14.6% for the current financial year, and shares have increased by 8.1% over the past year [14] - Integer Holdings also holds a Zacks Rank of 2, with expected sales growth of 7.8% and EPS growth of 20.2%, although shares have decreased by 3.4% in the past year [15] - Associated Banc-Corp, with a Zacks Rank of 2, anticipates sales growth of 11.5% and EPS growth of 8.4%, with shares rising by 19.2% in the past year [16] - F.N.B. Corporation, also ranked 2, expects sales growth of 6.2% and EPS growth of 2.2%, with shares increasing by 9.6% over the past year [17]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Select Medical (SEM) as a potentially undervalued stock based on various financial metrics [2][7]. Company Metrics - Select Medical (SEM) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is a high-quality value stock [3]. - SEM's PEG ratio is 0.71, which is lower than the industry's average PEG of 0.98, suggesting it may be undervalued [4]. - The P/B ratio for SEM is 0.93, significantly lower than the industry's average P/B of 1.68, indicating attractive valuation [5]. - SEM's P/CF ratio stands at 5.16, compared to the industry's average P/CF of 7.06, further supporting the notion of undervaluation [6]. - Over the past year, SEM's PEG has fluctuated between 0.38 and 2.22, with a median of 0.76, while its P/B has ranged from 0.89 to 3.03, with a median of 1.18 [4][5]. - The P/CF ratio for SEM has varied from 4.63 to 10.57, with a median of 5.52, reinforcing its potential as a value stock [6].

Core Insights - UnitedHealth Group Incorporated (UNH) is facing significant challenges due to adverse medical cost trends impacting its core business [1] - Rising cost pressures have led to a downgrade in the company's outlook [1] Company Summary - UnitedHealth is experiencing difficulties related to increasing medical costs, which are affecting its operational performance [1] - The company has been downgraded by analysts as a result of these rising cost pressures [1]

Core Insights - UnitedHealth Group Inc. is experiencing a significant stock decline, down 22% in a month and 63% from its all-time highs, yet some analysts see potential for recovery, likening it to a "Meta moment" [1][2] Financial Performance - UnitedHealth's stock has reached a five-year low of $234.60, with a relative strength index (RSI) of 24, indicating oversold conditions, which typically suggests panic rather than fundamental issues [2] - The company generates approximately $400 billion in annual revenue, making it the third-largest by revenue in the U.S., and has a market cap of $215 billion with $25.3 billion in free cash flow, suggesting it is undervalued compared to Meta's previous valuation [2][3] Valuation Comparison - UnitedHealth's current valuation is lower than Meta's at its 2022 low, despite UnitedHealth's significantly higher revenue and free cash flow [3][4] Regulatory Environment - The White House's proposed drug pricing reforms may provide UnitedHealth with a regulatory advantage, potentially unlocking additional free cash flow through Pharmacy Benefit Manager reforms and a 2026 premium reset [5] - Changes to the Medicaid system, including work requirements, are expected to impact healthcare significantly, with 92% of adult Medicaid recipients already employed [6] Growth Potential - Optum Insight, UnitedHealth's AI-driven subsidiary, generated $4.8 billion in revenue last quarter, surpassing Palantir Technologies' annual revenue, yet UnitedHealth's market valuation remains significantly lower [7] - The potential for UnitedHealth to be mispriced in the market is highlighted, as it may be building a foundational operating system for healthcare [7]

Group 1 - The article emphasizes a technical focus on fundamental value drivers of business economics to identify high probability long-term investment opportunities [1] - The company aims to buy securities at prices that are appropriate relative to their intrinsic worth, indicating a value investing strategy [1] - Research covers a wide range of financial markets, including investment securities and futures & options markets, catering to various market participants [1] Group 2 - The analyst discloses no current stock or derivative positions in the companies mentioned, ensuring an unbiased perspective [2] - The article reflects the author's personal opinions and is not influenced by compensation from any company mentioned [2] - Seeking Alpha clarifies that past performance does not guarantee future results, highlighting the importance of individual due diligence [3]

Market Overview - The broader indexes have experienced a cooling off after a strong performance in July, with concerns over trade wars and a weaker-than-expected Jobs Report contributing to a pullback [1] - The S&P 500 and Nasdaq have risen over +10% in the last three months, prompting investors to consider defensive positions [2] CVS Health - CVS Health is undergoing a transformation into an innovative pharmacy company, resulting in strong earnings and raised guidance, leading to a stock surge of over +30% this year [3] - CVS stock trades at 10X forward earnings and offers a 4.28% annual dividend yield, indicating strong value [3] - The stock holds a Zacks Rank 2 (Buy) and an overall "A" VGM Zacks Style Scores grade for Value, Growth, and Momentum [4] Johnson & Johnson - Johnson & Johnson is recognized for its reasonable 15.1X forward earnings multiple and a 3.16% annual dividend yield, making it an attractive investment [5] - The company has shown steady growth despite a slowdown, with a diversified business model covering various medical fields [6] - Johnson & Johnson stock is up +15% in 2025, outperforming the S&P 500 and Nasdaq [5] Tenet Healthcare - Tenet Healthcare is rated Zacks Rank 1 (Strong Buy) and is experiencing positive earnings estimate revisions, with expected annual earnings growth of 25% in fiscal 2025 [7][8] - The stock is up +25% year-to-date and trades at 10X forward earnings, indicating strong market performance [8] - FY26 EPS is projected to expand by another 4%, with estimates having increased by 14% in the last 60 days [9]

Core Viewpoint - The law office of Brodsky & Smith is investigating potential claims against the Board of Directors of Performant Healthcare for possible breaches of fiduciary duty related to the sale of the Company to Machinify at a price of $7.75 per share in cash [1][2]. Group 1 - The investigation focuses on whether the Board of Performant Healthcare failed to conduct a fair process in the sale, particularly regarding the fairness of the consideration provided to shareholders [2]. - The transaction involves Machinify acquiring all outstanding shares of Performant Healthcare for a total cash consideration of $7.75 per share [1]. Group 2 - Brodsky & Smith is a litigation law firm with a strong track record in representing shareholders in securities and class action lawsuits, having successfully recovered millions for clients [4].

Financial Data and Key Metrics Changes - BrightSpring's total revenue for Q2 2025 was $3,100,000,000, representing a 29% year-over-year growth, while adjusted EBITDA grew by 29% to $143,000,000 [9][30] - The EBITDA margin remained flat at 4.5% compared to the same quarter last year [9] - The company has increased its 2025 revenue and adjusted EBITDA guidance by $20,000,000, with adjusted EBITDA now expected to be between $590,000,000 and $605,000,000 [10][34] Business Line Data and Key Metrics Changes - Pharmacy Solutions revenue grew by 32% year-over-year to $2,800,000,000, with adjusted EBITDA also increasing by 32% [27][31] - Provider Services revenue was $358,000,000, reflecting an 11% growth year-over-year, with home health care revenue growing by 17% [30][16] - Specialty and Infusion business revenue grew by 39% year-over-year, driven by strong service levels and patient satisfaction [14][27] Market Data and Key Metrics Changes - The average daily census in home health care grew by 6% year-over-year, with home health and hospice census growth of 10% [17] - The company reported a 99% patient satisfaction score in rehab care and a 98% timely initiation of care in home health [12][17] - The company has a leading 98% dispense accuracy in home and community pharmacy services [12] Company Strategy and Development Direction - BrightSpring is focused on disciplined growth, leveraging its scale and best practices while investing in areas that enhance operational efficiencies [8][11] - The company aims to continue expanding its specialty pharmacy services, particularly in rare and complex disease therapies, with expectations of 16 to 18 additional launches over the next 12 to 18 months [14][78] - The divestiture of the Community Living business is expected to close in Q4 2025, which will allow the company to focus on its core operations [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth across all segments, particularly in infusion and home health services, driven by operational efficiencies and favorable market conditions [51][52] - The company anticipates that home health rates will improve in the future, despite current challenges [23][63] - Management highlighted the importance of maintaining high-quality care and patient satisfaction as key drivers of growth [11][19] Other Important Information - The company reported a net debt of approximately $2,500,000,000 with a leverage ratio of 3.6 times, aiming to reduce this to 2.0 to 2.5 times in the long term [32][57] - BrightSpring's operational cash flow is expected to exceed $300,000,000 in 2025, providing flexibility for future growth initiatives [32][56] Q&A Session Summary Question: Can you discuss the infusion performance in the quarter? - Management noted that the infusion business had its best quarter in a long time, with expectations for continued growth driven by new leadership and operational improvements [39][40] Question: What factors contributed to the increase in full-year guidance? - Management indicated that higher margins and continued momentum across the company, particularly in the provider segment, contributed to the raised guidance [50][51] Question: Can you provide insights on the growth in the home health business? - Management stated that the home health business is growing steadily, with expectations for improved rates in the future, despite current challenges [63][62] Question: How sustainable is the growth in specialty pharmacy? - Management expressed confidence in the sustainability of growth in specialty pharmacy, driven by strong service levels and ongoing investments [70][71] Question: What is the outlook for M&A activity? - Management indicated a focus on small tuck-in acquisitions while awaiting the outcomes of larger divestitures, maintaining a strong cash position for future opportunities [56][57]