Core Viewpoint - A report from Hunterbrook Media claims that major U.S. health care companies, including CVS Health Corp., UnitedHealth Group, and Cigna Group, are allegedly using shell companies to conceal billions of dollars that should be utilized to reduce drug prices for patients [1]. Group 1: Allegations of Financial Manipulation - The report suggests that pharmacy benefit managers (PBMs) are supposed to negotiate discounts with drugmakers and pass those savings to customers, but large insurers have allegedly created secret subsidiaries known as Group Purchasing Organizations (GPOs) to circumvent this obligation [3]. - Instead of taking a cut of the rebates, parent companies have their GPOs collect substantial "fees" from drugmakers, while PBMs claim to pass through 100% of the rebates received, effectively hiding billions in fees from public disclosure [4]. Group 2: Investigation Findings - Hunterbrook's investigation revealed that GPO offices in locations such as Ireland, Switzerland, and Minnesota, despite generating tens of billions of dollars, were largely empty, indicating a lack of legitimate business activity [5]. - The report emphasizes that these GPOs, which are claimed to help lower costs, are actually mechanisms for the insurers to protect their profits by siphoning off drug discounts intended for patients [6].

Core Insights - Cigna Group exceeded Wall Street profit expectations for the third quarter, primarily due to the robust performance of its health services unit, Evernorth, which includes its pharmacy benefit management business [1] Summary by Category Financial Performance - Cigna Group reported third-quarter profits that surpassed Wall Street estimates [1] Business Units - The strength of the Evernorth health services unit was a significant driver of the company's financial success, particularly its pharmacy benefit management segment [1]

By Sneha S K and Sriparna Roy (Reuters) -Elevance Health on Tuesday beat Wall Street estimates for third-quarter profit as the health insurer managed to keep medical costs in check, sending its shares 3% higher in premarket trading. Several insurers such as Elevance, UnitedHealth and Centene have warned of elevated costs across government-backed plans following increased demand for healthcare across the United States over the last two years. Despite a dynamic healthcare environment, Elevance's results w ...

Core Thesis - The Cigna Group is viewed as a compelling investment opportunity due to its strong fundamentals and tactical "buy-the-dip" setup following a nearly 12% decline in share price from June highs [2][6]. Financial Performance - Cigna's share price was $293.76 as of September 18th, with trailing and forward P/E ratios of 16.26 and 9.13 respectively [1]. - The company is experiencing mid-single-digit revenue and EPS growth, with a net margin of approximately 4.5%, which exceeds the managed-care average [2]. - Cigna maintains robust free cash flow supported by modest leverage, indicating financial stability [2]. Valuation and Market Position - The stock is valued at around 15 times forward EPS, slightly below peers despite higher return on equity (ROE) and superior cash conversion, suggesting it is fundamentally attractive [3]. - The stock trades below major moving averages, indicating a bearish bias, but momentum indicators suggest potential near-term relief [4]. Technical Analysis - Key support levels are identified around $285–280, with protective stops near $270, while resistance is mapped at $305–312 [4]. - A sustained recovery above the 100- and 200-day simple moving averages (SMAs) could lead to a medium-term price range of $320–340 [4]. Investment Strategy - A disciplined trade plan involves scaling into weakness, targeting a relief bounce followed by longer-term upside based on stable fundamentals [5]. - Cigna is positioned as a buy-on-weakness opportunity, with valuation, cash flow strength, and upcoming earnings acting as pivotal drivers for a potential rerating [5].