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Stephen Baxter

Senior Equity Research Analyst at Wells Fargo

Stephen Baxter is a Senior Equity Research Analyst at Wells Fargo, specializing in coverage of major managed care and health insurance companies including UnitedHealth Group, Centene, Molina Healthcare, Humana, and Elevance Health. As an analyst, he has issued over 500 ratings since 2019 with a focus on the general healthcare sector, but his investment calls have produced a success rate around 37% and an average return per rating of -6.2%, ranking him among the lower percentile of Wall Street analysts by performance metrics. Baxter began his equities research career prior to 2019 and currently serves as a key sector specialist at Wells Fargo, having also been featured as a guest speaker at industry events and university investment clubs. He maintains professional standing as a senior analyst but publicly available details about securities licenses or specific FINRA registrations are not listed.

Stephen Baxter's questions to Elevance Health (ELV) leadership

Stephen Baxter's questions to Elevance Health (ELV) leadership • Q3 2025

Question

Stephen Baxter inquired about the several hundred million dollars of investment spending flagged for 2026, asking about its materiality, whether it is transitory, and its influence on the ability to grow earnings in 2027.

Answer

Mark Kaye (CFO and EVP, Elevance Health) quantified discrete investments for 2026 at approximately $1 of EPS, focusing on technology adoption (AI in clinical workflows, automation), Carelon investments (scaling client onboarding, pharmacy capabilities), and operational/quality initiatives (STAR ratings, member engagement). Gail Boudreaux (President and CEO, Elevance Health) emphasized AI as a strategic enabler, detailing its use for members (Sydney's personalized match), customer service (first contact resolution), and providers (Health OS reducing prior authorizations and denials). She stated these are front-loaded investments expected to create leverage and support long-term growth.

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Stephen Baxter's questions to Elevance Health (ELV) leadership • Q3 2025

Question

Stephen Baxter inquired about the materiality and transitory nature of the 'several hundred million dollars' in investment spending flagged for 2026, particularly its influence on 2027 earnings growth.

Answer

Mark Kaye, CFO, quantified the investment as approximately $1 of EPS, focusing on technology adoption (AI, automation), Carelon expansion (client onboarding, pharmacy capabilities), and operational/quality initiatives (STAR ratings, member engagement). Gail Boudreaux, President and CEO, elaborated on strategic AI investments across member services, provider platforms (HealthOS), and internal operations, emphasizing their front-loaded nature to drive long-term leverage and affordability.

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Stephen Baxter's questions to Elevance Health (ELV) leadership • Q4 2024

Question

Stephen Baxter of Wells Fargo followed up on Medicaid, questioning why it was cited as a driver for a higher year-over-year MLR in 2025, which seemed to contrast with previous expectations for stability. He asked for the specific full-year Medicaid MLR change embedded in the guidance.

Answer

CFO Mark Kaye clarified that while Q4 Medicaid cost trends stabilized, they remain at elevated levels. He anticipates these higher trends, particularly in behavioral health and inpatient care, will persist into the first half of 2025. Since current state rates have not yet fully caught up to these costs, the company is maintaining a prudent outlook, expecting a margin rebound in the second half of the year as incremental rate adjustments are implemented.

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Stephen Baxter's questions to UNITEDHEALTH GROUP (UNH) leadership

Stephen Baxter's questions to UNITEDHEALTH GROUP (UNH) leadership • Q2 2025

Question

Asked for clarification on the new 5% long-term target margin for the value-based care business, inquiring what the old target was and what the key drivers are to get back to that 5% level beyond 2026.

Answer

Patrick Conway explained that the main driver for margin recovery is the maturation of patient cohorts. New cohorts (years 1-2) have negative margins, while mature cohorts (year 5+) operate at 8%+ margins. As the portfolio mix shifts towards more mature cohorts, the overall margin will rise to the 5% range. John Rex added that the new target is more circumspect about the time and investment required to bring practices to full performance, reflecting a long-term growth and investment strategy.

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Stephen Baxter's questions to MCKESSON (MCK) leadership

Stephen Baxter's questions to MCKESSON (MCK) leadership • Q4 2025

Question

Stephen Baxter of Wells Fargo asked for clarification on the drivers behind the significant year-over-year decline in SG&A expenses and the slower gross profit growth observed in the quarter.

Answer

CFO Britt Vitalone explained that the primary driver for the SG&A decline was the divestiture of the Canadian Rexall and Well.ca retail businesses. He attributed the slower gross profit growth to a combination of business mix and the impact of those same divestitures, while highlighting the company's overall success in generating operating leverage.

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Stephen Baxter's questions to CVS HEALTH (CVS) leadership

Stephen Baxter's questions to CVS HEALTH (CVS) leadership • Q4 2024

Question

Stephen Baxter asked for an update on where Medicare Advantage margins finished for the full year 2024, what margin level is assumed in the 2025 guidance, and the expected progression of MA margin recovery beyond 2025.

Answer

CFO Tom Cowhey stated that 2024 Medicare Advantage margins ended in the negative 4.5% to 5% range. He confirmed that while margins are expected to improve in 2025, the business will remain loss-making in the current outlook. Executive Steve Nelson added his commitment to returning the business to target margins over a multiyear period, citing early progress in forecasting, pricing discipline, and operational execution.

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Stephen Baxter's questions to MOLINA HEALTHCARE (MOH) leadership

Stephen Baxter's questions to MOLINA HEALTHCARE (MOH) leadership • Q3 2024

Question

Stephen Baxter from Wells Fargo asked if the negative pressure from Medicaid acuity shifts has now stabilized or if it's expected to continue into Q4. He also sought to understand what is enabling states to provide large rate updates so quickly given the dynamic claims environment.

Answer

CFO Mark Keim explained that some redetermination pressure carried into Q3 due to weighted average math and a couple of states extending their processes, but he does not view these as sustaining dynamics, projecting a more normalized trend for Q4. President and CEO Joe Zubretsky stated that the state rate-setting process itself hasn't changed; it always accounts for acuity shifts. The current shift is simply more dramatic and high-profile, prompting states to react accordingly within their established models.

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