Was looking at some healthcare stocks and it isn't making sense to me.
Pharma companies:
Gilead: 32.1% FCF margin
Bristol Myers: 26.7%
Regeneron: 26.3%
Pfizer: 15.5%
Health insurers:
UnitedHealth: 5.2%
Humana: 2%
CVS: 1.9%
Elevance: 1.6%
UnitedHealth is a $500B company barely generating any free cash relative to their revenue. Meanwhile the pharma companies are converting 20-30% of every dollar into actual cash.I get that insurers have different business models but the gap is bigger than id expect. Are insurers just fundamentally less profitable than we think or am I missing something about how their cash flow work?
The biggest health insurance company in the country generates less cash per dollar than a mid tier pharma company.