CNC - Valens Credit Report - 2023 03 20
Credit markets are overstating CNC's credit risk with a YTW of 6.023% and a CDS of 168bps relative to an Intrinsic YTW of 4.913% and an Intrinsic CDS of 66bps. Furthermore, Moody's is overstating CNC's fundamental credit risk with its Ba1 credit rating two notches below Valens' IG4 (Baa2) credit rating.Incentives Dictate Behavior™ analysis highlights mostly negative signals for credit holders. However, most management members have low change-in-control compensation relative to their average compensation, indicating they are unlikely to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
Earnings Call Forensics™ of the firm's Q4 2022 earnings call (02/07/2023) highlights that management generated an excitement marker when saying they launched eligibility likelihood modeling across their Medicaid footprint. In addition, they are confident they can achieve Medicare Advantage results that support members' needs and that they have strong value-based care relationships. Furthermore, they are confident the firm was selected for 10 key contracts in California and that it will work with the state to improve its health care delivery system. Moreover, they are confident they have a strong plan to support growth into different states and that they expect $6-$9 million of Medicaid growth in 2024.
Centene is an insurance holding company. The company's Managed Care segment provides health plan coverage to individuals through government subsidized programs. The company also provides a variety of individual, small group, and large group commercial healthcare products, both to employers and directly to members in the Managed Care segment. The company's Specialty Services segment consists of the company's specialty companies prviding healthcare services and products to state programs, correctional facilities, healthcare organizations, employer groups and other commercial organizations, as well as to its own subsidiaries. The Specialty Service segment also includes the Government Contracts business.
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