美国医疗保健服务：我们战略决策会议炉边谈话及近期公司新闻解读

We hosted our Strategic Decision Conference last week, and summarize the company firesidechats in this note.Top read through- 1) Utilization trends seem to be stable with ELV reaffirming and AGLnoting medical cost trend remains in-line, this was further supported by HUM reaffirming fullyear. 2) Medicaid rate increases in-line for 2H25 according to ELV, consistent with guidancerises in 1Q calls with CNC and MOH. 3) VBC is a higher priority among strategics thaninvestors, with ELV focusing commentary on the importance of VBC, both AGL and Cityblocknoting strong MCO demand, and UNH highlighting its strategic importance. This contrastswith investor skepticism on the sector.ELV -Gail Boudreaux, CEO of ELV had a fireside chat with us. ELV is one of the largestdiversified MCOs with a growing services business. 1) ELV reaffirmed both EPS and MLRguidance; 2) MA utilization is in-line including in Part D. They are seeing some pressurein individual driven by customer attrition and risk pool impact. Medicaid utilization isdecelerating but at slightly slower rate than they had expected; 3) Medicaid rates for 7/1 areemerging in line with expectations.AGL:Steve Sell, CEO and Jeff Schwaneke, CFO, had a fireside chat with us. AGL is a leadingindependent VBC company.(1) Utilization comments suggest stable utilization trends in MA.AGL reiterated their guide of 5.3% for cost trends in ’25; Q1 25 came in at 5.5%, partlydue to flu. (2) MCO interest in contracting with VBC is strong. 3) AGL continued to focus onturnaround activities with an additional MCO agreeing to exclude Part D for 2026.Cityblock -Dr Toyin Ajayi, CEO and founder of Cityblock, had a fireside chat with us. Leadingprivately held specialty VBC company focused on duals/ complex Medicaid populations.(1)Cityblock has focused on their VBC for duals, complex Medicaid populations. They areproviding services to 100k patients in 7 states for 14 health plans & partners. This representsover $1b in revenues. 2) Cityblock has evolved to an asset light model integrating careoutreach and management, social determinants of health, and care management / delivery.3) Demand continues to expand for servicing this population for MCOs.www.bernsteinresearch.com BERNSTEIN TICKER TABLETickerRatingELVOAGLOSPXO - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage SuspendedSource: Bloomberg, Bernstein estimates and analysis.INVESTMENT IMPLICATIONSWe rate ELV Outperform with a target price of $585 and AGL Outperform with a target price of $7.50U.S. HEALTHCARE SERVICES DETAILSCITYBLOCK SUMMARY OF FIRESIDE CHATPresenter: Dr. Toyin Ajayi (CEO)CityBlock background.Dr. Toyin Ajayi is the CEO and co-founder of CityBlock Health. She has been focused on providing carefor low income marginalized populations and over the 15+ years of her career, she has been building clinical models focused onimproving outcomes for this segment of the population. She believes the road to improving outcomes for this population takestwo paths. There needs to be a care model that doesn't require people to come to the provider when they're in distress in orderto receive healthcare. It needs a care model that's proactive, community-based, goes out to find people, and is really focusedon engagement. And the second required component is a business model that works differently than the current FFS system.CityBlock takes risk on its population and thus is heavily incentivized to improving outcome. The company is about seven years oldand was launched in New York in 2017 out of incubation with Sidewalk Labs, an Alphabet company.CityBlock focuses on duals which is a more complex segment of the population. CityBlock is north of a billion dollars in revenue,and has been growing that at 20% annually. ~60% of their population has chronic diseases, and more than half of them have amental health need. More than half of them also have an acute social need. It's clinical and non-clinical staff powered significantlyby technology, and ensuring that they are getting in front of those members before they get sick. CityBlock pitch to insurers isthat they give them their data. CityBlock will analyze three years of your historical claims, and help identify highest risk membersand provide proactive care.They contract at a trended forward expectation of what the medical spend in the population is going to be, and their op profit isbased on generated medical savings after OpEx. Ms. Ajayi believes the model is working with CityBlock margins improving in thecurrent difficult industry market.CityBlock go to market approach.CityBlock partners with MCOs take on risk for Medicaid and dually eligible members throughMedicare Advantage or through Medicaid. CityBlock asks them essentially in this early partnership scoping process to share theirdata, which allows them to identify a cohort of members who are amenable to their model. It's high-risk segment of the population.They can have physical complexity, mental health comple