Wednesday, March 12, 2008

MailBag: Breaking Financial News

Most reader emails that we receive are in the form of requests for help with a problem or clarification of coverage. We're generally able to help, and often refer readers to local pro's who can lend more hands-on assistance.
Once in a while, though, we get intriguing industry-related bits, such as this one, received yesterday from a regular reader (and industry pro):
"Any word on a corollary with Wellpoint and Humana? Humana took a 30% hit when wellpoint announced adjusted earnings. Is there something I am not seeing? I can see an industry dip, but that is a huge number for Humana. I can’t connect the dots on this one."
I was unaware of these figures, but I knew whom to ask. One of the benefits of blogging has been to widen my circle of professional friends, and this afforded me an opportunity to call on one. Rick Byrne is a market analyst for HealthLeaders-InterStudy, an insurance industry information company. He's a regular reader and commenter here, and is someone whom I trust. So, I forwarded the email (anonymized, natch) to Rick, and asked for his take (if any).
He replied this morning. I of course asked for, and received, his permission to post this:
"I've got a bud at [large, well-known financial services firm] HQ who sends me his analysis that the big-paying customers get. It made its way around our office like wildfire yesterday. He noted that WellPoint adjusted its profit projections down for the year because it was coming up short in both enrollment and MLR in its Medicare Advantage products, particularly HMO and PFFS. [He] suggested that might drag down the other companies that are heavily weighted in MA, which does mean Humana and Coventry. Humana has abruptly cancelled an investor meeting scheduled for this week. We might also be looking at WellCare, Universal American and HealthSpring to see what their stocks are doing, although I imagine WellCare has already fallen based on its prior problems. I also noticed that Universal American adjusted its profit projections down last week, as did Aetna."
I thought that was pretty intriguing on its own, but there was another twist or two. A little while after the email quoted above, I got a follow-up:
Ze plot, she thickenz...
(Special Thanks to Rick Byrne, who has this advice for IB readers who live and/or work in Indianapolis and Louisville: "don't stand under any tall buildings. Those leaping WellPoint and Humana execs might land on you.")
(And HatTip to Matt H, for bringing this to our attention)
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