Template Friday,8th December 2016 UnitedHealth Group - Outperform (UNH US)

Defensive stock set for long term growth

Friday, 21st December 2018 Closing Price: $242.44

UnitedHealth Group UnitedHealth Group Incorporated owns and manages organized health systems in the Key Metrics FY18E FY19E FY20E United States and internationally. The Company provides employers products and Revenue ($’Mn) 225820 243621 264721 resources to plan and administer employee benefit programs. UnitedHealth also serves the health needs of older Americans, provides specialized care services, and provides EPS ($) 12.81 14.62 16.50 health care information and research to providers and payers. Price/ Earnings 18.93x 16.58x 14.69x Summary investment case Div Yield 1.39% 1.51% 1.70% UnitedHealth group (UNH) is a leader within US managed care and the broader health insurance space. UNH has proven its ability to outperform and given the fundamentals Share Price Return 1 Mth 3 Mth YTD behind the business we expect this trend to continue well into the future.

UNH US -6.65% -8.80% 11.4% It is a leader across its diversified underlying markets both in size and service offered. It

Source: Bloomberg, is supported by secular trends within the US and international healthcare space. As populations age and cost of care increases for both public and private bodies the need for higher quality care at lower cost continues to increase.

Its underlying Optum business is the key differentiator from its peers. Optum is expected to continue to grow by double digits for the foreseeable future as demand/ Top 5 Shareholders Ownership necessity for its products and services increases. Capital Group Cos Inc/ The 7.68% We have conviction in managements ability to continue to deliver on its long term goals Vanguard Group Inc/The 7.21% notably its guided 13% - 16% year on year EPS growth. We expect it to continue to Blackrock 7.01% adapt with the needs of the healthcare system. Despite these growth projections it trades at an attractive 12m forward P/E of 16.6x. Its sheer scale, transparent cash flow, FMR LLC 6.57% balance sheet strength and consistency of its defensive revenue stream ensure it State Street Corp 4.61% should outperform in this late cycle environment in the US.

Source: Bloomberg Headwinds • Sector wide derating driven by legislation changes. UNH 1 Year Share Price • Changes to the Affordable Care Act (however positive on Health Insurers Tax). • Competitive commercial insurance sector. • Slower than expected growth in Medicare and Medicaid . • The return of HIF (health insurers tax), increasing premiums, earnings variability and negatively affecting Net Promotor Score (NPS). • Desire for value from state bodies (however UNH offers among the most competitive rates).

Tailwinds • Growth of Medicare Advantage and Medicaid. • Broader shift to value based care notably commercial market shift to risk based Source: Bloomberg • International expansion.

David Fahy, CFA • All Optum segments continuing to perform. OptumHealth will be a key driver of Investment Analyst growth over the next decade. [email protected] • Current and future technology product offerings, notably Individual Health Record (IHR) coming on stream this year. • High cash flow generation and distribution to shareholders. • Further M&A activity adding value. • Secular trends within the health space. • Late stage of the business cycle favouring healthcare.

CANTOR FITZGERALD IRELAND LT D 1

UnitedHealth Group Friday, 21st December 2018

Managed Care and US healthcare Managed Care Organisations (MCO’s) are health Broadly put managed care is the process of reducing the cost of healthcare while insurance providers that contract with specific health maintaining the highest possible quality of care. It describes a large variety of care providers with the aim of reducing costs of techniques used to reduce costs of health benefits across the spectrum from state services to patients sponsored healthcare, retirement healthcare, company healthcare schemes to

individual healthcare. Simply, Managed Care Organisations (MCOs) are health insurance providers that contract with specific health care providers with the aim of reducing the cost of services to patients (members). The MCO (health insurer) and the provider of the healthcare (hospital, surgeon, GP, nurse, physio etc.) enter into a contract where the healthcare provider agrees to offer services at a reduced price in return for certainty of business, with MCO’s directing their respective members to the contracted providers in their network. Health insurance coverage outside of the network

varies depending on members plans. In essence MCO’s act as the “middle man”

between the customer (payor) and provider. The concept behind managed care is to increase efficiency and the quality of healthcare provided at lower costs through its contracted network of healthcare facilities and professionals. UnitedHealth Group (UNH) noted at its Capital Markets Day that MedExpress, its own chain of 270+ urgent care centres, “can perform roughly 90% of care provided in emergency rooms at 90 % lower costs”

Less than 20% of hospitals in the US are state/local To understand managed care you must first understand the US healthcare system. government owned Healthcare in the US is predominately private, with less than 20% of hospitals state/ local government owned, while 59% are non government not for profit and 21% for profit. Universal health insurance does not exist within the US. There are two main forms of public health insurance (important for managed care) Medicare and Medicaid.

Medicare is health insurance for people over 65 years Medicare is health insurance for people over 65 years of age and people with

disabilities . There are four types Medicare Part A (generally hospital insurance/ nursing

facilities/ inpatient insurance), Medicare Part B (broader medical insurance including outpatient and preventive services), Medicare Part D (includes most of the aforementioned, some fee for service and prescription drug coverage) and Medicare C/ Medicare Advantage (MA) bundles all the aforementioned. Medicare can be a public, private or a combination of both. UNH highlighted that 20% - 30% savings for individuals through UNH MA vs traditional Medicare.

Medicaid is public insurance for individuals and Medicaid is public insurance (including subsidies up to 400% of the Federal Poverty families with low income or disabilities Line) for individuals and families with low income or disabilities. The expansion of Medicaid was the cornerstone of the Affordable Care Act (Obamacare). The intention under the ACA was to broaden health insurance to the entire population, with all individuals at 138% of the federal poverty line to gain Medicaid for free. However a supreme court ruling made complying optional per state, leaving policy on Medicare varying from state to state. Some states therefore have failed to expand Medicaid. Medicaid has made headlines again recently after a federal judge in Texas deemed the ACA as unconstitutional. This will again be brought through to the supreme court (as in 2012). While we expect this to add to volatility it is unlikely to alter the ACA.

Medicare and Medicaid are significant portions of the revenue for managed care providers with states opting for MCOs ahead of traditional health insurance as MCOs save time and costs for state bodies. Three quarters of Medicaid participants are on managed care plans, while 41% of Medicare Advantage participants are on plans provided by UNH and Humana (peer MCO). Managed care is fast becoming the predominate form of health insurance Managed care is fast becoming the predominate form of health insurance within the public and private sector alike. The top five Managed Care organisations represent over 30% of spending the US insurance population. The top 5 publically listed managed care companies within the US have a combined market cap of $370bn.

CANTOR FITZGERALD IRELAND LT D 2

UnitedHealth Group Friday, 21st December 2018

Key Trends within managed care Movement to value based healthcare There are a number of important trends taking place within the US healthcare space which support managed care. Firstly, one of the fundamental changes within the health insurance sector is the movement away from fee for service (unbundled payment done

separately) based to value based reimbursement (broadly based on quality of care and

outcome). Value based care is built around outpatient care, pre-emptive care and the quality of care. Here payment and incentives to healthcare providers are linked to the quality of service received as opposed to the scale of services as in traditional fee for service. This shift is supporting the case for managed care (Accountable Care Organizations (value based)) providers ahead of traditional healthcare providers. According to UNH it’s top-performing ACOs have reduced acute hospital admissions per 1,000 by 17 percent, reduced emergency visits per 1,000 by 14 percent, and

increased cancer screenings by 8 percent. ACOs serving its employer-sponsored plan

participants perform better than non-ACOs on nearly 90 percent of the quality metrics tracked, while reducing costs by up to 12 percent.

Source: Company data

Technology within healthcare is accelerating Secondly, the importance of technology within healthcare is accelerating. This includes utilizing advanced technology for both inpatient and outpatient care such as interactive personalised systems, artificial intelligence to identify risks, pre-empt conditions and treatments. Thirdly, aging demographics is one of the most significant challenges facing developed world. In the US, 10,000 more people turn 65 everyday, a trend which will continue to accelerate for the next 7 years. The total population over 65 are expected to rise from 16% in 2017 to 20% in 2027. Fourthly US states are increasingly looking toward managed care as means of managing Medicaid (e.g North Carolina) and Medicare expenditures. Finally the return of the health insurer fee (more detail later) will have a negative affect on health insurers and managed care providers alike, increasing volatility in earnings and having a negative effect on NPS (more detail later).

Source: Company data

CANTOR FITZGERALD IRELAND LT D 3

UnitedHealth Group Friday, 21st December 2018

UnitedHealth Group UnitedHealth group is the largest health insurer in the UnitedHealth group is the largest health insurer in the US with $225bn projected US revenue growth this year. Its market cap has grown by 600% over the last 10 years. It is

split into two complimentary segments. UntiedHealthcare (UHC) and Optum. UHC (60%

of revenues) is the insurance arm of the business. Optum (40% of revenues) is the information technology and health services portion of the business. UHC is Optums largest customer representing 60% of revenues, however this is declining with more third party customers coming on board. UHC leverages Optums three platforms to drive down costs and improve its offering through its technology and healthcare services. Long term management have identified 5 pillars for sustainable growth, Pharmacy and related services, Care delivery, Consumer Centric Benefits, Technology enhanced

services and International. Continued development of its three core competencies,

health information, advanced technology and clinical expertise should ensure it can add value both to its customers and its shareholders

EPS to consistently grow at between 13%-16% UnitedHealth Group longer term financial outlook annually in the long term • EPS to consistently grow at between 13%-16% annually.

• Two thirds through organic growth. • One third through M&A. • Annual revenue growth of 6% -9%.

• Maintain a “strong” mid single digit operating margin. • Maintain ROE within the upper teens. • Capital to be deployed through M&A, buybacks (100m shares/ c. $25bn recently

announced) and dividend (moving toward full market rate then increasing at

earnings growth rate) . • UHC business to continue to grow supported by all segments. • Optum to continue to post double digit growth with margins above 20%.

UnitedHealth Group business segments

Revenue figures as at the 31/12/2017

CANTOR FITZGERALD IRELAND LT D 4

UnitedHealth Group Friday, 21st December 2018

UnitedHealthcare is the traditional managed care UnitedHealthcare overview (60% of revenue) insurance arm of the business • Insurance arm of the business.

• 52m members continued expansion across the 4 diversified segments of the business. • Growth is both organic and through active M&A.

This is the traditional managed care segment of the business. The mission for the

UnitedHealthcare (UHC) brand is to “help people live healthier lives and help make the

health system work better for everyone”. UHC currently serves 52m people globally

(mainly within the US). Membership numbers have grown both organically (8m new customers organically since 2010) and inorganically. It expects to add 2.2m customers in 2018, predominately through Medicare Advantage and the Banmedica acquisition in South America. UHC has continued to post double digit top line growth driven by growing membership, positive mix and M&A. Focus has been and will continue to be on the orientation to value based services as opposed to volumes. Value based

arrangements have grown from 30% in FY13 to an expected 60% in FY18. With one

trillion dollars annually worth of healthcare spending on people not in managed care in the US and a $4tn market ex-US, UNH sees continued growth both domestically and internationally. Earnings from operations are expected to grow by 10% in 2019. There are four underlying segments within the UHC brand, Retirement and Medicare, Employed and Individual, Community and State and Global.

UnitedHealthcare segments

5% Retirement and Medicare

24% Employer and Individual 41%

Community and State

Global

30%

Medicare market is expected to grow by 11.5% Retirement and Medicare This is the largest segment (by revenue) within UHC with 12.5m customers. As the next year name suggests this is public and private health insurance for retirees. This segment is made up of Medicare Advantage plans, Medicare Part D plans, Medicare supplement and retiree services. This segment is set to benefit from aging demographics within its markets. The Medicare market is projected to reach 72m customers by 2025, from 63m today, with gross spending expected to rise from $800bn in 2019 to $1.2tn by 2025. UHC holds a leading position within the space with 20% of seniors in the nation served through its Medicare plans. Importantly it has a leading 25% market share in the fastest growing segment Medicare Advantage. Medicare Advantage (40% of segment) is expected to see continued growth in demand from both public and commercial sector alike. The Medicare Advantage sector is expected to grow by 11.5% (government projection) in 2019 with UHC itself guiding for 10% revenue growth. UHC sees a long term industry growth rate of 7% - 8% annually (which it should outperform). While membership has grown by 50% in the last three years alone, there has also been a shift to higher quality plans with 80% of Medicare Advantage customers in four star plans or above, supporting revenue growth. Operating margins are forecast to remain within the 3%-5% range in the long term.

CANTOR FITZGERALD IRELAND LT D 5

UnitedHealth Group Friday, 21st December 2018

Commercial market share expected to reach 15% next Employer and Individual year This is the second largest segment (by revenue) with 27m people served in some form, through more than 250,000 employer customers. UHC offers a wide range of consumer orientated health benefit plans and services nationwide for large national employers,

public sector employers, mid sized employers, small businesses and individuals. In the

US there are approximately 175m people ($1tn) paying for insurance individually or through their employers. The trend toward total employee healthcare within the US has seen a preference toward managed care for health insurance, aiding in 1.3m organic member growth in fully insured in the last 3 years. Supported by the Optum platform, UHC works toward improving the total cost of care value proposition. While the broader market has fallen by 1%-2% annually since 2015, UNH book of business has been growing with market share expected to reach 15% 2019, up from 12% in 2015.

Revenue is forecast to grow by 4% in this segment in 2019. This segment is among the

most cyclical and most competitive for which UHC operates.

UHC holds key positioning in a number of key states UnitedHealthcare Community and State (Medicaid segment) UHC is one of the largest providers of healthcare products and services to state bodies that care for the economically disadvantaged, medically underserved and those without employer funded health care coverage. At present it operates within 30 states servicing

6.6m people. While three quarters of people served by Medicaid use managed care it

only represents 50% of spending. UHC has continued to post strong growth within the

segment with a CAGR of over 15% over the past 4 years. Management expects $650bn to be spent in the space next year, with a number of states shifting toward managed care as a cost effective option. Importantly UHC holds the number one position in a number of key states who are expanding Medicaid . Management remains confident in its ability to outperform the market going forward, with 4% revenue growth projected next year.

UHC sees a $4tn international opportunity UnitedHealthcare Global This is the smallest segment within UHC representing approximately 5% of revenues and 7m members, having had little/no presence before 2012. It serves businesses (local and multinational), governments and individuals. It’s international business is primarily based in South America with its largest presence in Brazil, Chile, Colombia and Peru. There is also a small presence in Portugal. With UHC representing less than 1% of the $4tn of healthcare spending outside of the US, this is a significant growth opportunity. UHC sees strategic acquisitions as a method of getting a stronghold in international markets. In 2017 UNH acquired Chile’s BanMedica for $2.8bn, adding 2m members. Growth in this segment has been strong with 24% and 10% revenue growth expected in 2018 and 2019 respectively.

Optum Overview The key differentiator technology and health • The key differentiator technology and health services business services business • Secular growth story • Long term high margin double digit profit growth. This is UNH’s information and technology enabled health services business and is its key differentiator. It’s capabilities include data analytics, pharmacy care services, population health management, healthcare delivery and healthcare operations. Optum both increases UNH’s competitiveness while being able to function as a standalone entity. Optum has grown to represent 40% of revenues of the overall business from 10% just three years ago. Its clients are across the healthcare system including 125m consumers, care providers (Optum worked with 67,000 pharmacies, 4/5 US hospitals and 100,000 physicians), health plans (3/4 health plans in the US), employers and governments. The easiest way to understand Optum is to look at each of its underlying components OptumRx, OptumInsight and OptumHealth. Optum will continue to post double digit growth (12 % operating growth expected in 2019) at a higher level of profitability than the UnitedHealthcare brand. Optum sees a $1.4tn market opportunity that should continue to grow at mid single digits annually.

CANTOR FITZGERALD IRELAND LT D 6

UnitedHealth Group Friday, 21st December 2018

Optum segments

9%

22% OptumInsight

OptumRx

OptumHealth

69%

Source: Company data

OptumInsight Optums utilizes data analytics to reduce administrative OptumInsight provides analytics, research consulting, technology and managed costs, improve clinical performance and transform services solutions to hospital, doctors, health plans, government agencies, life science operations companies and other industry partners. It utilizes data analytics to reduce administrative

costs, improve clinical performance and transform operations. It takes advantage of the

abundance of data records (230m) to improve patient outcomes and improve

efficiencies in the business. OptumInsight will be at the forefront of AI development healthcare. As demand grows this segment is expected (as it has historically) to continue to post double digit profit growth (22% earnings growth expected in 2018) for the foreseeable future with a $19bn revenue backlog for 2019. This is the most profitable segment within UNH with an operating margin of 24% (Q3/18). Management sees a long term operating margin of between 16% -20% and predicts revenue to grow

at double digits for the next several years.

Source: Company data

OptumRx has a 98% retention and serves 65m people OptumRx OptumRx is the largest segment within the Optum brand. This is UNH’s Pharmacy Benefit Management (PBM) business. PBMs again act as a “middle man” between the pharmacies and customers to ensure optimal delivery at lowest possible prices. They contract with pharmacies to add value by negotiating discounts, processing claims and delivering (including home delivery) products to customers. OptumRx is one of the largest PBMs in the US (CVS, Humana and Express Scripts are the largest competitors). Its customers include third party heath plans, governments agencies and UnitedHealthcare (insurance segment). Additionally OptumRx is again differentiated from its competitors by its ability to utilise other components of the UnitedHealth Group business. Leveraging OptumIQ (see technology section) it engages clients digitally helping clients through more complex treatment plans. Its technological platform allows

CANTOR FITZGERALD IRELAND LT D 7

UnitedHealth Group Friday, 21st December 2018

clients to simply click to speak to advisors and refill orders. It is now utilizing artificial intelligence to accurately predict and intervene with people in need. OptumRx has a 98% retention and serves 65m people. Management expects revenue to grow at long run average of between 5% - 8% with 3% -5% operating margin. It purchased Genoa

Healthcare for $2.5bn (1.25x sales) in September 2018 to enhancing its behavioural

pharmaceuticals reach.

Source:: Company data

OptumHealth This business is expected to grow to at least $100bn This segment will be the outperforming segment over the next 5 - 10 years. annual revenues by 2025, implying a CAGR of 23% OptumHealth provides care delivery, care management, consumer engagement and over the next 8 years health financial services. It has a range of functions including owning primary and

speciality care units, medical express units and surgical care units. This includes 210 ambulatory surgery centres, 250 urgent care clinics and 30,000 doctors. OptumHealth provides care management through its digital Rally system (where it interact with clients on health management, needs and payments), house calls (1.4m last year) and financial healthcare tools (OptumBank). UNH avails of OptumHealth services, again lowering costs through efficient care management and vertical integration (owning care facilities) . Management is looking to have this business grow to at least $100bn annual revenues by 2025, implying a CAGR of 23% over the next 8 years with a sustainable operating margin of between 8%-10% in the long run. M&A will continue within this segment. Last year it purchased DaVita medical group for $4.9bn (0.9x sales).

Source:: Company data

CANTOR FITZGERALD IRELAND LT D 8

UnitedHealth Group Friday, 21th December 2018

Continued technology advancements UnitedHealth Group technological platforms and advancements Driven by Optum ( /Optum insight) UNH has built a leading array of technical platforms. • Rally - Consumer digital platform used to navigate and manage health benefits,

well being and healthcare needs.

• Individual Health Record (IHR) - Provides all medical history details as well functioning as pre-emptive healthcare tool (available 2019 to all 50m members) • OptumIQ - Data driven analytics platform that utilizes 240m worth of customer

records to improve healthcare management. This is infused across all Optum

products.

• MyScript - Provides real -time patient-specific prescription drug coverage details and cost transparency • OptumBank - Offers health savings and financial healthcare education

information

Other factors to consider Cost trends • The medical cost ratio (MLR/MCR) - A key insurance ratio which measures medical costs as a percentage of premiums. This is expected to increase in 2019 by 100bps to range between 82% - 83% reflecting an 140bps unfavourable

impact from the Health Insurer Fee (mentioned below), partly offset by a

favourable 40bps benefit from mix. • Expects commercial medical cost to grow by 6% +/- 50bps next year, consistent with market trends. The cost increase is driven by both utilization (2%) and unit cost (4%) Net Promoter Score (NPS)

This is the quality metric consistently referenced by management. It used to measure customer satisfaction and loyalty. UNH has proven to among the have the highest NPS in sector.

Health Insurer Fee The health insurer tax was reintroduced in in 2015 , the fee was suspended for 2017, before being reintroduced in 2018. The tax creates some in-year and year-over-year earnings variability as it comes on and off. Insurers including UNH generally pass through this cost through premiums negatively effecting NPS.

Capital deployment UnitedHealth Group deploys its consistent sizeable cash flow through M&A, buybacks and dividends. It has recently announced a 100m shares (c.$25bn at todays market value) and a 20% dividend increase.

CANTOR FITZGERALD IRELAND LT D 9

UnitedHealth Group Friday, 21st December 2018

Peer Analysis • Has the highest level of quality/profitability.

• Has displayed consistent growth, which is guided to be maintained. Earnings growth projections have been consistently upgraded. • It is and has been relatively more expensive than peers. However, given the fundamentals this premium is justified

Quality/Profitability Highest level of quality /profitability UNH is the largest player within the managed care space (S&P level 4 GICS managed care) with a market cap of $2.5bn, more than three times its nearest competitor. From a quality and profitability perspective it outscores the majority of its peers. It has the highest Return on Equity (ROE) and Return on Invested Capital (ROIC). It is the only one of its peers with a positive net debt due to it’s more active capital deployment policy (M&A, buybacks and dividend). However, this level of debt (1x EBITDA) represents a more efficient capital structure than its peers. It has among the highest level of

profitability, driven by its Optum segment.

Peer group quality/profitability characteristics

Operating 5 Year ROE Net Profit EBITDA Return on Equity Net Debt/EBITDA ROIC (average Adjusted) Margin Margin

Peer Average 15.07 16.15 14.37 -1.28 3.60 6.04 UNITEDHEALTH GROUP INC 20.68 26.36 18.48 1.03 5.25 8.73 ANTHEM INC 12.49 16.56 11.42 -0.67 4.27 7.38 WELLCARE HEALTH PLANS INC 14.00 13.69 12.00 -3.81 2.20 4.51 HUMANA INC 19.40 13.87 13.26 -2.30 4.55 6.57 CENTENE CORP 8.77 10.28 16.66 -0.62 1.71 3.02

UNH it is still projected to produce an average of 18% yoy growth for the next three years Growth Despite the scale of UNH it is still projected to produce an average of 18% yoy growth for the next three years, outperforming its longer term expectations of between 13% and 16%. Its growth over the coming years is expected to come from all aspects of the business with Optum set to outperform. Importantly, as shown below, unlike its

competitors UNH has shown its ability to post consistent earnings growth with minimal

variability, both delivering and outperforming managements guidance.

Peer group growth characteristics

Best EBITDA Best Sales EPS Growth Best EPS Growth Earnings Revisions Growth Growth

3 Year historical 3 Year Average 3 Year Average 3 Year Average average Growth Growth Growth 1M 3M 6M

Peer Average 22% 12% 12% 19% UNITEDHEALTH GROUP INC 19.33 12.02 9.60 18.03 0.44 1.46 2.22 ANTHEM INC 9.73 11.85 5.74 18.77 0.02 2.75 4.00 WELLCARE HEALTH PLANS INC 59.79 23.51 18.30 23.66 0.22 2.61 13.08 HUMANA INC 14.29 4.05 8.11 18.83 0.33 1.85 3.56 CENTENE CORP 25.04 18.36 16.32 24.19 0.27 0.34 1.82

CANTOR FITZGERALD IRELAND LT D 10

UnitedHealth Group Friday, 21st December 2018

5 years EPS growth trend

1.8

1.6

1.4

UNITEDHEALTH GROUP INC ANTHEM INC 1.2 CIGNA CORP AETNA INC 1 WELLCARE HEALTH PLANS INC HUMANA INC

0.8 CENTENE CORP

0.6

0.4 2013 EPS 2014 EPS 2015 EPS 2016 EPS 2017 EPS

Value UNH historically trades at a premium 7% to the managed care sector.. It is trading at this premium at As evident below UNH historically trades at a premium 7% (currently 7%) to the present. managed care sector. At present it is trading in line with its 5 year average. In our opinion this premium is more than justified given its diversified exposure, scale, growth expectations, quality, consistency and Optum (which will soon become the largest segment of the business). Given its defensive/growth characteristics it should continue to trade at a premium to both the sector and the broader market. Notably it has the

highest dividend yield .

Peer group valuation characteristics

12m Forward 12m Forward 12m Forward 12m Forward Market Cap P/E EV/EBITDA Price Sales Dividend Yield

Peer Average 74310 15.51 8.70 0.61 0.68 UNITEDHEALTH GROUP INC 233236 16.63 11.77 0.96 1.51 ANTHEM INC 65206 14.35 8.75 0.67 1.18 WELLCARE HEALTH PLANS INC 11205 16.72 7.52 0.44 0.00 HUMANA INC 38150 16.00 8.05 0.62 0.72 CENTENE CORP 23750 13.85 7.39 0.34 0.00

5 year 12m forward valuation relative to S&P managed care index

CANTOR FITZGERALD IRELAND LT D 11

Friday, 21st December 2018

Regulatory Information Issuer Descriptions: (Source: Bloomberg) UnitedHealth Group: Incorporated owns and manages organized health systems in the United States and internationally

Historical Record of recommendation UnitedHealth Group: We have had an outperform rating on UnitedHealth Group since 09/07/2018 None of the above recommendations have been disclosed to the relevant issuer prior to dissemination of this Research. Date of distribution The first date of distribution is the same date as this report unless otherwise specified. All regulatory disclosures pertaining to valuation methodologies and historical records of the above recommendations can be found on the Cantor Fitzgerald Ireland website here: http://www.cantorfitzgerald.ie/research_disclosures.php This material is approved for distribution in Ireland by Cantor Fitzgerald Ireland Ltd. It is intended for Irish retails clients only and is not intended for distribution to, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. Cantor Fitzgerald Ireland Ltd (“CFIL”) is regulated by the Central Bank of Ireland. Cantor Fitzgerald Ireland Ltd is a member firm of the Irish Stock Exchange and the London Stock Exchange. Where CFIL wishes to make this and other Cantor Fitzgerald research available to Retail clients, such information is provided without liability and in accordance with our terms and conditions that are available on the CFIL website. No report is intended to and does not constitute a personal recommendations or investment advice nor does it provide the sole basis for any evaluation of the securities that may be the subject matter of the report. Specifically, the information contained in this report should not be taken as an offer or solicitation of investment advice, or to encourage the purchased or sale of any particular security. Not all recommendations are necessarily suitable for all investors and CFIL recommend that specific advice should always be sought prior to investment, based on the particular circumstances of the investor either from your CFIL investment adviser or another investment adviser.

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