Claim rejected
Rolling up the competition in healthcare
Good morning, wellness warriors. This is your Stock Market Rundown for December 5th, 2023. Thanks for joining me. Let’s dig in:
TODAY’S TOP STORY: BIG HEALTH, BIGGER MERGER
The US healthcare industry: a riddle, wrapped in a mystery, inside an enigma. It’s an impossibly complex system where there’s big money to be made, and constant pressure to cut corners.
For major players, the key to unlocking profits is consolidation. Now, two of the biggest are ready to get bigger: Cigna is in merger talks with Humana. The tie-up of the two health insurance companies would create a managed-care behemoth with a market cap of $140 billion.
Why now? Insurers are coping with spiraling medical costs as patients return for procedures they delayed during the pandemic. That shoulder surgery or knee replacement can’t be put off forever.
The deep-in-debt US government definitely isn’t coughing up any more dough, so cutting costs via rolling up competitors is the play. But this would-be marriage could get jilted at the altar: US regulators have previously blocked mergers between mega-players in health insurance.
Cigna in particular should be worried, because they’re on the government’s shit list. They were fined millions for fraud, and got caught instantly rejecting claims without even reading them by using algorithms instead of doctors. Most of us want our healthcare handled by a human, not an Excel spreadsheet.
If Cigna wants to improve their PR, they should look how Humana gives back: it’s the longtime sponsor of the National Senior Games. So if grandpa throws his back out trying to break the high jump record, he won't have to worry about his chiropractic coverage.
SO WHAT ELSE IS GOING ON?
While GM complains of big losses from the recent auto workers strikes, shareholders can turn their frown upside down. GM management just jacked up the dividend and announced a multi-billion-dollar share buyback program. Hope the UAW pension fund owns some GM shares.Â
Foot Locker beat estimates thanks to an uptick in sneaker demand. They’re selling more shoes to everybody, from fashionable GenZ hypebeasts in gray New Balances, to midwestern dads washing the car in gray New Balances.
Your mojito could be at risk: Cuban rum makers like Havana Club are facing a local sugar harvest at record lows from the state-run sugar monopoly, due to an economic crisis on the island. Hope these farmers pull through, because Christmas just isn’t the same without rum in our egg nog.
Hormel Foods, makers of grocery store faves like Skippy peanut butter and Herdez Salsa, missed profit estimates as customers cut spending on convenience meals. Folks, if Dinty Moore Beef Stew is breaking the budget, we’re really in trouble.
That's it for today, compadres; see you bright and early tomorrow morning. Yours in capitalism, The Axe
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Hit me up at theaxe@stockmarketrundown.co