CNC - Valens Credit Report - 2023 12 12
Credit markets are overstating CNC's credit risk with a YTW of 5.738% and a CDS of 152bps, relative to an Intrinsic YTW of 4.858% and an Intrinsic CDS of 69bps. Furthermore, Moody's is overstating CNC's fundamental credit risk with its Ba1 credit rating three notches below Valens' IG4+ (Baa1) credit rating.Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As positives, most management members are material owners of CNC equity relative to their annual compensation, indicating they may be well-aligned with shareholders in terms of long-term value creation. Moreover, 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 Q3 2023 earnings call (10/24/2023) highlights that management is confident they are prepared for North Carolina's Medicaid expansion that will go live in December, and that PBM migration is important to their 2024 financial targets. In addition, they are confident there are a few remaining assets they will continue to evaluate and reposition, and that they are rebuilding their operational capacity and infrastructure to support sustainable programmatic improvement.
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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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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