Core Insights - Molina Healthcare shares experienced a decline of approximately 20% in premarket trading following the company's announcement of a reduced annual profit forecast for the third time this year, attributed to rising medical costs [1] Company Summary - Molina Healthcare has revised its annual profit forecast downward for the third time in 2023, indicating ongoing challenges in managing medical expenses [1] - The significant drop in share price reflects investor concerns regarding the company's financial outlook and operational efficiency in the face of increasing medical costs [1]

Financial Performance - Elevance Health, Inc. reported fiscal Q3 2025 operating revenue of $50.1 billion, reflecting a 12.0% increase year-over-year [1] - The diluted EPS for the quarter was $5.32, with adjusted diluted EPS reaching $6.03 [1] - Operating cash flow for fiscal Q3 2025 was $4.2 billion year-to-date, which is 0.8 times GAAP net income, a decrease of $0.9 billion year-over-year [3] Guidance and Shareholder Returns - The company reaffirmed its fiscal year 2025 benefit expense ratio guidance at around 90.0% and adjusted diluted EPS guidance of approximately $30.00 [2] - Elevance Health returned $3.3 billion of capital to shareholders year-to-date [2] Business Segments - Elevance Health operates through several segments: Health Benefits, CarelonRx, Carelon Services, and Corporate and Other [4] - The Health Benefits segment provides a variety of health plans and services, while CarelonRx manages pharmacy services [4] - Carelon Services integrates behavioral, physical, pharmacy, and social services to offer various healthcare-related services [4]

Core Insights - The favorable antitrust ruling for Alphabet's Google has allowed the company to maintain its core search business, positively impacting its stock performance and contributing 3.1% to the fund this quarter [3] - UnitedHealth's stock rebounded after a significant decline earlier in the year, adding 0.9% to the fund, driven by optimistic comments from the new CEO and investment interest from Berkshire Hathaway [4] - Progressive was the largest detractor in the quarter, reducing performance by 0.5% due to concerns over lower interest rates affecting investment income [5] Performance Summary - The Bretton Fund achieved a return of 8.21% for the third quarter, outperforming the S&P 500 Index, which returned 8.12% [7] - Over the past year, the fund's return was 8.92%, while the S&P 500 Index returned 17.60% [7] - The fund's inception date was September 30, 2010, and it has delivered a 12.89% return since inception [7] Portfolio Composition - As of September 30, 2025, Alphabet Inc. constituted 11.51% of the fund's net assets, making it the largest holding [11] - Other significant holdings included AutoZone Inc. at 7.11% and The Progressive Corporation at 6.84% [11] - The fund also held positions in major companies like American Express, JPMorgan Chase, and UnitedHealth, each contributing to the overall portfolio diversity [11] Investment Actions - The fund sold its position in Union Pacific Corp after nearly 15 years, achieving a 13% annualized internal rate of return [14] - The decision to sell was influenced by concerns over a pending acquisition that could dilute shareholder value and distract management from core operations [15]

Molina Healthcare on Wednesday cut its annual profit forecast anticipating higher medical care costs to weigh on its results for the rest of the year. ...

Core Insights - Oscar Health Inc. (NYSE:OSCR) has seen significant stock performance, increasing by 7.88% to $21.77 following the launch of a new menopause health plan and AI tools [1][3] Product Launch - Oscar Health has partnered with Elektra Health to introduce HelloMeno, an insurance product designed for 2.3 million women over 45, focusing on perimenopause and menopause management [2] - The new product is priced at $900 annually and includes free consultations, behavioral visits, laboratory tests, and medications [3] AI Integration - Oscar Health has introduced an AI agent named Oswell, which provides on-demand support to doctors and members [4] - Oswell can access medical records and plan benefit documents to assist members with understanding medications, explaining test results, checking drug interactions, and more [4]

Core Thesis - UnitedHealth Group Incorporated (UNH) is viewed positively despite recent challenges, with a potential for recovery as operational normalization and regulatory clarity emerge [4]. Company Overview - UNH has a market capitalization of $312 billion and a P/E ratio of 15, positioning it as a leading diversified healthcare conglomerate that provides health insurance, pharmacy care, and care delivery through its Optum division [2]. - The stock was trading at $353.72 as of October 2nd, with trailing and forward P/E ratios of 15.31 and 20.08 respectively [1]. Recent Performance - UNH's stock has faced significant pressure, down 32% year-to-date and 45% from its 2024 all-time high, due to rising medical costs, lower profitability, and scrutiny from a DOJ investigation [2][3]. - The company is actively addressing these challenges, including implementing pricing adjustments to stabilize the medical loss ratio [3]. Strategic Response - UNH is cooperating fully with the DOJ investigation, indicating a limited financial impact from this scrutiny [3]. - The company's diversified business model and scale in care delivery through Optum provide resilience and long-term growth potential [3]. Investment Opportunity - The combination of a depressed stock price, strong underlying fundamentals, and active management response creates an attractive risk/reward profile for investors [4]. - UNH is seen as a compelling opportunity for those willing to look beyond near-term volatility, with the market potentially underestimating its capacity to stabilize margins and resume profitable growth [4].

Core Insights - U.S. employers and workers are facing significant increases in health insurance costs, with average family premiums projected to reach $26,993 in 2025 and further increases anticipated in 2026 [1][2] - The rising costs are attributed to factors such as prescription drugs, chronic diseases, and increased utilization of healthcare services [2][4] - Employers are likely to shift costs to employees, leading to tighter coverage for expensive medications and a growing policy debate over healthcare pricing [1][7] Group 1: Premium Trends - Average family premiums rose approximately 6% in 2025, totaling around $26,993, with employees contributing about $6,850 [2] - The five-year increase in premiums has reached approximately 26%, with preliminary indicators suggesting further increases in 2026 without effective cost containment measures [2][3] - Employers are preparing for potential hikes nearing 9% in 2026 if no new limits are introduced, which would strain benefits budgets and household finances [3] Group 2: Cost Drivers - Key factors driving the increase in costs include higher hospital prices, persistent inflation in provider labor, and increased service utilization as deferred care from the pandemic resumes [4] - A significant portion of spending is linked to high-cost drugs, particularly GLP-1s, which may face coverage restrictions as budgets tighten [4][7] - Consolidation among health systems has enhanced their negotiating power, while increased access to virtual care has led to higher utilization rates, especially in behavioral health [5] Group 3: Employer Strategies - Employers have employed various strategies, such as narrow networks and direct contracting, but these have yielded only incremental improvements due to employee resistance to significant changes [6] - The current fragmented healthcare system, combined with concentrated provider power, limits the effectiveness of traditional cost-saving measures [6] - With limited new strategies available, employers may resort to higher deductibles and cost-sharing as a response to rising premiums [6][7]

Core Insights - CarePlus has announced its Medicare Advantage plan offerings for the year 2026, indicating a strategic move to enhance its product portfolio in the healthcare sector [1] Group 1 - The announcement reflects CarePlus's commitment to expanding its services and catering to the needs of Medicare beneficiaries [1] - The new plan offerings are expected to provide enhanced benefits and options for members, aligning with industry trends towards more comprehensive healthcare solutions [1] - This initiative may position CarePlus favorably in a competitive market, as it seeks to attract more enrollees through improved plan features [1]

Core Insights - UnitedHealth Group Incorporated (UNH) and Humana Inc. (HUM) are leading players in the health insurance sector, particularly in Medicare Advantage (MA) and pharmacy benefit management, which are crucial as the U.S. population ages [1][2] - Investors are closely monitoring both companies due to demographic trends, utilization shifts, and policy reforms affecting the industry [2][3] UnitedHealth Overview - UnitedHealth has a market capitalization of $330.1 billion and operates through UnitedHealthcare and Optum, providing a diversified business model that offers stability [4] - In the latest quarter, UnitedHealth reported revenues of $111.6 billion, a 12.9% increase year-over-year, driven by domestic commercial membership growth and Optum Rx performance [5] - The company's medical care ratio increased to 89.4%, up from 85.1% a year earlier, indicating rising medical costs impacting margins [5][6] - Optum generated $67.2 billion in revenues, up 6.9% year-over-year, but faces near-term challenges in its Optum Health unit [6] - UnitedHealth's long-term debt-to-capital ratio is 43.7%, slightly higher than Humana's 40.8%, indicating higher leverage [7] Humana Overview - Humana, with a market cap of $34.2 billion, specializes in Medicare Advantage and has shown signs of stabilization, with its benefit ratio improving to 88.7% in the first half of 2025 [8] - The company reported adjusted revenues of $32.4 billion, a 10.2% increase year-over-year, supported by state-based contracts and CenterWell performance [9] - Humana's focus on value-based care and operational efficiency is yielding positive results, with expanding CenterWell primary care centers enhancing profitability [11][12] Comparative Analysis - UnitedHealth's diversification provides stability, but it faces margin pressures from rising medical costs, while Humana's improved benefit ratio and growth in CenterWell indicate stronger cost control [10] - Humana trades at a forward P/E of 20.81X, below UnitedHealth's 21.29X, suggesting a relative discount despite a stronger projected rebound in 2025 [15] - Year-to-date, Humana's shares have gained 16.4%, contrasting with UnitedHealth's 27.8% decline, indicating improving investor confidence in Humana's turnaround efforts [17][18] Conclusion - UnitedHealth remains the most diversified player in the industry, but faces challenges from regulatory scrutiny and margin pressures [19] - Humana is regaining momentum through disciplined cost control and a focused strategy on Medicare Advantage, positioning it favorably for future growth [20][21]

The health care sector has taken an enormous pounding in the last few months, which few active investors missed. Medical expense ratios skyrocketed across the board, leading to much lower earnings, despite solid revenue growth in most companies. EPSHi! I'm a passionate investor who has been researching publically traded companies for over 6 years. My primary focus is on identifying great businesses at reasonable prices and holding them for the long term but I also dive into trend following strategies from t ...