Update: Team Health Holdings

Aug. 7.14 | About: Team Health (TMH)


The company beat consensus on both the top and bottom lines.

This reaffirms our thoughts that the company is a big benefactor of healthcare reform.

We thought that the company could easily grow faster than expectations thanks to payment parity.

Team Health Holdings (NYSE:TMH) spiked after beating 2Q earnings after beating consensus by over 15%. Shares are now up nearly 12% over the last month. 2Q EPS came in at $0.61 (beating $0.53 consensus) and revenue was $675 million (beating $650 million consensus).

The company provided a second half 2014 outlook that included revenues growing for full year 2014 by 13% to 14%, up from the previous 11% to 12% guidance. Driving the y/y revenue growth in 2Q and going forward is a decline in uninsured patients and contribution from Medicaid parity.

Shares are up over 53% since our article in September. At the time, we noted that the company should be one of the biggest benefactors of healthcare reform. We also noted that:

...another big positive for TMH is payment parity, where a provision in health care reform will require Medicaid to increase its payment rate for primary care physicians up to Medicare rate for 2013 and 2014. This is a big positive for TMH, which gets over 2 million Medicaid visits per year, and nearly 30% of these visits qualify for the increased payment rate.

The company guided for 2Q a benefit from the Medicaid parity program to come in between $32 million and $34 million.

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