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BlackRock Active Equities

Active Equity: combining human insights with innovative technologies

BlackRock's active equity platform includes 40 funds striving for both competitive performance and fees. We develop strategies to help your clients achieve their financial goals, whatever they may be.

BlackRock is raising the bar for active equity

BlackRock is a world leader in index ETFs, which raises the bar for our active equity managers. The firm has responded by revamping its active equity platform, with impressive results focused around three principles:
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Alpha generation
We focus on security selection, not static sector or factor tilts.
Performance
Consistent returns
Aladdin helps us manage risk with particular focus on upside / downside capture.
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We’ve reduced client fees by $39.6 million over the last five years.*

Active equity investment ideas

Not sure where to start? Get started with these investment ideas from BlackRock’s active equity platform to help your clients reach their goals.

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Invest in a large cap value strategy built for diverse markets

Chart MADVX

1Source: Morningstar as of 6/30/2022. Morningstar Category: US Fund Large Value. Rankings are based on total return excluding sales charges, independently calculated and not combined to create an overall ranking. Equity Dividend Fund was ranked. 1 Year 679/1,217; 3 Year 514/1,145; 5 Year 390/1,077; 10 Year 420/779; 15yr 102/575. Past performance is no guarantee of future results. Click here for standardized performance.

2Source: Morningstar. All data is from PM team inception (August 2014) and through 6/30/2022. Past performance is no guarantee of future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.

The BlackRock Equity Dividend Fund (MADVX) outperformed 82% of peers over the last 15 years. 1 The BlackRock Equity Dividend team invests in U.S. large cap value companies with a greater potential for dividend growth, and seeks lower volatility equity returns, trading at attractive prices.

Capture value rallies with mid-caps

Chart MARFX

3Source: Morningstar as of 6/30/2022. Since PM inception of 07/01/2017, the fund was ranked 49/367 funds in the Mid-Cap Value Morningstar Category. Rankings are based on total return excluding sales charges, independently calculated and not combined to create an overall ranking. BlackRock Mid-Cap Value was ranked 1 Year 82/405; 3 Year 31/391; 5 Year 14/361; 10 Year 46/268. Past performance is no guarantee of future results. Click here for standardized performance.

4Morningstar as of 6/30/2022. Since PM team inception (7/1/2017). Upside / Downside Capture shows whether a given fund has outperformed—gained more or lost less than—a broad market benchmark during periods of market strength or weakness and by how much. 5Source: BlackRock as of 6/30/22. The price-to-earnings (P/E) multiple represents a stock’s share price (as of the latest market close) relative to its earnings per share for the company’s most recent fiscal year. 6Source: BlackRock as of 6/30/22. Active Share is a percentage of holdings in a portfolio that differs from the benchmark index.

The BlackRock Mid-Cap Value Fund (MARFX) is an active U.S. mid-cap value portfolio that invests in quality companies with attractive valuations, helping you capture the upside of value market rotations. MARFX is ranked in the 17th percentile in the Morningstar Mid-Cap Value category since PM inception.3

Look beyond traditional fixed income and equities

Chart BMCIX

7Source: Morningstar, as of 6/30/2022. Bank Loan Category and High Yield Bond Category represent fixed income mutual funds and ETFs in the U.S. Fund Bank Loan and US Fund High Yield Bond Morningstar category, respectively. Largest fixed income seeking Morningstar categories by AUM- High Yield Bonds $244B, and Bank Loans $107B. SEC yield is a standard calculation of yield introduced by the SEC to provide a fairer comparison among funds. This yield reflects the interest earned after deducting the fund's expenses during the most recent 30- day period by the average investor in the fund. Negative 30-Day SEC yield results when accrued expenses of the past 30 days exceed the income collected during the past 30 days.

The BlackRock High Equity Income Fund (BMCIX) seeks higher income than traditional equities with similar risk to the broader equity markets by combining value-oriented, high-dividend paying U.S. stocks with an options-based income strategy. BMCIX can help you protect against rising inflation and rates.

Seek outperformance through ESG insights

Chart BIRIX

8Performance as of 6/30/22. Performance is not annualized for periods less than one year. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Refer to website www.blackrock.com to obtain performance data current to the most recent month end. Investment returns reflect total fund operating expenses, net of all fees, waivers and/or expense reimbursements. Source: Morningstar since fund inception 10/5/15. Morningstar Category: Large Blend for BlackRock Sustainable Advantage Large Cap Core Fund. Rankings are based on total return excluding sales charges, independently calculated and not combined to create an overall ranking. Sustainable Advantage Large Cap Core was ranked 1yr, 888/1,359; 3yr, 190/ 1,225; 5yr, 131/1,107. Source: MSCI as of 6/30/2022. The Sustainable Advantage Large Cap Core Fund was rates an MSCI ESG Quality Score of 9.2. The MSCI ESG Quality Score (0-10) for funds is calculated using the weighted average of the ESG scores of fund holdings. The Score also considers ESG Rating trend of holdings and the fund exposure to holdings in the laggard category. MSCI rates underlying holdings according to their exposure to industry specific ESG risks and their ability to manages those risks relative to peers. These issuer-level ESG ratings correspond to an issuer-level ESG score. The Score is a point in time score provided on a quarterly basis based on the fund’s most recent public holdings. For further details regarding MSCI’s methodology please refer to footnote 1 at the following site: https://www.blackrock.com/us/individual/products/279569/ . Source: Morningstar as of 6/30/22. BlackRock Sustainable Advantage Large Cap Core Fund ranked in the 18th percentile (the least expensive quartile) vs. Large Blend institutional share category peers by net expense ratio. The Large Blend category median net expense ratio is 0.80%. Expenses stated as of the fund's most recent prospectus: Institutional Shares Net/Total, Including Investment Related expenses are 0.49 %/0.74% and have contractual waivers with an end date of 06/30/23 terminable upon 90 days' notice.

9Source: BlackRock as of 6/30/2022. Fund Inception date: 5 October 2015. Past performance is no guarantee of future results. 2 35% of total BIRIX outperformance since inception is attributable to ESG alpha, or outperformance driven through ESG insights vs. standard alpha, or outperformance drive through non-ESG insights. Standardized performance as of 6/30/2022 for BIRIX: 1yr -13.07%, 5yr 11.39% and 12.16%. Performance data quoted represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than that shown. All returns assume reinvestment of all dividend and capital gain distributions. Refer to blackrock.com for current month-end performance.

The BlackRock Sustainable Advantage Large Cap Core Fund (BIRIX) generated better returns than the category average since inception, was rated a 9.2/10 for MSCI ESG Quality Score and is priced in the lowest fee quartile.8

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Source: Morningstar as of 3/31/2022. Rankings for all funds are for the Institutional share class. Performance for other share classes may vary. Rankings based on total return excluding sales charges, Mid-Cap Growth Equity: 1 Year 310/592; 3 Year 181/542; 5 Year 47/503; 10 Year 7/386. Large Cap Focus Growth: 1 Year 902/1,236; 3 Year 622/1,124; 5 Year 332/1,025; 10 Year 223/765. Equity Dividend: 1 Year 1,035/1,215; 3 Year 499/1,146; 5 Year 392/1,047; 10 Year 373/770. Mid -Cap Value: 1 Year 113/408; 3 Year 25/390; 5 Year 32/354; 10 Year 75/263. Health Sciences Opportunities: 1 Year 60/167; 3 Year 48/141; 5 Year 22/131; 10 Year 10/109. Technology Opportunities: 1 Year 182/256; 3 Year 54/216; 5 Year 11/186; 10 Year 13/155. E merging Markets: 1 Year 625/805; 3 Year 198/730; 5 Year 77/625; 10 Year 97/352. International Fund: 1 Year 742/767; 3 Year 44/705; 5 Year 77/610; 10 Year 90/407. A d vantage ESG U.S. Equity: 1 Year 735/1,368; 3 Year 184/1,232; 5 Year 153/1,116; 10 Year /818. Advantage Small Cap Core: 1 Year 566/632; 3 Year 257/600; 5 Year 147/541; 10 Year /358. High Equity Income: 1 Year 8/69; 3 Year 17/65; 5 Year 7/42; 10 Year 1/19. Independently calculated and not combined to create an overall ranking. The following funds are ranked as follows: Ratings based on risk-adjusted total return, determined monthly and subject to change. Equity Dividend Fund rated against 1,146 Large Value Funds; Advantage Small Cap Core rated against 600 Small Blend Funds; Mid-Cap Growth Equity Fund rated against 542 Mid-Cap Growth Funds; Large Cap Focus Growth rated against 1,124 Large Growth Funds; Health Sciences Opportunities Fund rated against 141 Health Funds; Technology Opportunities rated against 216 Technology Funds; Emerging Markets Fund rated against 730 Diversified Emerging Markets Funds. International Fund rated against 705 Foreign Large Blend Funds; High Equity Income rated against 65 Derivative Income Funds. Mid-Cap Value rated against 390 Mid-Cap Value Funds. Sustainable Advantage Large Cap Core rated against 1,232 Large Blend Funds. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics.

The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure (excluding any applicable sales charges) that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

As of 3/31/2022, the Equity Dividend Fund received a Morningstar Rating of 3 stars for the 3-year period, 3 stars for the 5-year period and 3 stars for the 10-year period, rated against 1,146, 1,047 and 770 Large Value Funds, respectively. The Mid-Cap Growth Equity Fund received a Morningstar Rating of 3 stars for the 3-year period, 5 stars for the 5-year period and 5 stars for the 10-year period, rated against 542, 503 and 386 Mid-Cap Growth Funds, respectively. The Large Cap Focus Growth Fund received a Morningstar Rating of 3 stars for the 3-year period, 3 stars for the 5-year period and 3 stars for the 10-year period, rated against 1,124, 1,025 and 765 Large Growth Funds, respectively. The Health Sciences Opportunities Fund received a Morningstar Rating of 3 stars for the 3-year period, 4 stars for the 5-year period and 5 stars for the 10-year period, rated against 141, 131 and 109 Health Funds, respectively. The Technology Opportunities Fund received a Morningstar Rating of 4 stars for the 3-year period, 5 stars for the 5-year period and 4 stars for the 10-year period, rated against 216, 186 and 155 Technology Funds, respectively. The Emerging Markets Fund received a Morningstar Rating of 4 stars for the 3-year period, 5 stars for the 5-year period and 4 stars for the 10-year period, rated against 730, 625 and 352 Diversified Emerging Mkts Funds, respectively. The High Equity Income Fund received a Morningstar Rating of 4 stars for the 3-year period, 4 stars for the 5-year period and 5 stars for the 10-year period, rated against 65, 42 and 19 Options-based Funds, respectively. The International Fund received a Morningstar Rating of 4 stars for the 3-year period, 4 stars for the 5-year period and 3 stars for the 10-year period, rated against 705, 610 and 407 Foreign Large Blend Funds, respectively. The Mid-Cap Value Fund received a Morningstar Rating of 5 stars for the 3-year period, 4 stars for the 5-year period and 4 stars for the 10-year period, rated against 390, 354 and 263 Mid-Cap Value Funds, respectively. The Sustainable Advantage Large Cap Core received a Morningstar Rating of 4 stars for the 3-year period, 4 stars for the 5-year period, rated against 1,232 and 1,116 US Large Blend Funds, respectively. The Advantage Small Cap Core Fund received a Morningstar Rating of 3 stars for the 3-year period and 3 stars for the 5-year period, rated against 600 and 541 US Small Blend Funds, respectively. Performance results represent past performance and are no guarantee of future results.

 

Performance data represents past performance and does not guarantee future results. Investment return and principal value will fluctuate with market conditions and may be lower or higher when you sell your shares. Current performance may differ from the performance shown. For most recent month-end performance and standardized performance, click on the fund names above.

Expert insights from our active equity team

Hear the latest from our BlackRock active portfolio managers and experts on what they’re seeing in the markets and advisor portfolios.

Expert to Expert

A BlackRock Fundamental Equities video series

Episode 4: Harnessing change in healthcare

Carrie King

Deputy CIO of Developed Markets,

BlackRock Fundamental Equities

Erin Xie

Head of Health Sciences,

BlackRock Fundamental Equities

David A. Ricks

Chair and CEO

Eli Lilly and Company

[00:10] CARRIE: Welcome to Expert to Expert, a BlackRock Fundamental Equities video series that pairs our investment pros with the business heads, politicians, policymakers and academics who are leaders in their fields and influencers in our global economy.

In our fourth episode, Erin Xie, head of the Health Sciences team at BlackRock Fundamental Equities, talks to David Ricks, CEO of the pharmaceutical company Eli Lilly, about the future of health care. The two experts discuss how the COVID-19 pandemic may evolve, what innovative areas of health care can thrive as we move on from COVID, the thorny question of regulation and whether attractive valuations in the sector mean that now is the time to buy.

Erin and David, over to you.

[01:03] ERIN: Good morning, David. It's really exciting to have you joining us today as part of our expert2expert series, where we will talk about some of the current dynamics and opportunities in health-care sector.

DAVID: Great to be here with you. Thanks.

ERIN: As we enter into the third year of the COVID pandemic, what do you say some of the biggest impacts of COVID-19 to the health-care industries are?

[01:30] DAVID: I would say a few things. First, I think we've learned a lot about the strengths and weaknesses of the health-care system. Of course, on the service-delivery side, testing on a number of areas-- it's sort of surprising to many of us that we're still having conversations about flexibility and capacity.

And I think we've learned that the service delivery and other components of the health-care system are pretty rigid. And expanding capacity to the needs, in a time like this, have been difficult. We've probably also learned, especially in Western society, the real challenge of relying on public-health measures to contain infectious disease have real limitations in time and in scope, because I think there's new data out showing they had very little impact, actually, in the end.

[02:20] What did have an impact and what has worked, I think, is the response of the pharmaceutical industry. And I'm proud of that. I think we're here two years in, which is a very short time scale for development and discovery of new medicines and vaccines. And we have many vaccines. We have many medicines. Although, the variant evolution continues. The viral drift occurs. Actually, many of these solutions retain their effectiveness.

[02:48] Last year, from a vaccine perspective, our industry, mostly US and European companies, shipped 9 and 1/2 billion doses of vaccine. This year, it'll be over 15 billion. So there will be enough vaccine for the planet. And I think that's an astounding ramp-up, and really driven by a huge collaboration and urgency by the sector I think we really showed what we can do.

[03:11] ERIN: That's great to hear. I would definitely echo some of the points that you raised about public health. I think, in many areas of health care, we're still at the-- actually, below the pre-pandemic level. And so hopefully, when the pandemic normalizes, I think there's actually some pent-up demand in health care, in many areas.

[03:34] And I would also echo that I think this pandemic really made the world recognize the innovation power of the health-care industry, with the historic vaccines and tests as well as-- such as monoclonal antibody treatment that literally has developed-- and made the world really recognize the importance of health-care industry to the whole world and the whole economy.

So with that, may I pick your brain on your thoughts on how you think the COVID-19 will evolve?

Insert slide: Playing catch-up after COVID

[04:07] DAVID:  In the public-health measures are more or less exhausted and run their course. Many states in the US, European countries, are either passing policies or legislating the end of the public-health emergency. I think whether we like it or not, whether the virus is still a challenge or not, people are just tired of the situation.

[04:27] Also, the virus is migrating in a way viruses do. They become more infectious and less virulent. And that's what we're seeing here. Again, it's hard to guess how many more rounds we'll have. But at some point, it'll be a seasonal coronavirus that we'll talk about for the rest of our lives, but in a way like we do other circulating seasonal viruses.

[04:48] And as you mentioned, there's been undertreatment of many chronic diseases during the pandemic. And we have new medicines for those. But also, there's a catch-up in education and treatment rates that needs to occur. And that's an important part of our year this year as well.

[05:05] ERIN: Yeah, that's actually a great point. I feel like because COVID is such a center of the whole world for the past few years, we tend to forget that COVID is really only one area of health care. Actually, the health care is a much broader space than just COVID. So speak of that. Can you talk about, outside of COVID, what areas of innovations that you see are most exciting, what areas of R&D that Lilly has been focusing on investing?

[05:41] DAVID: Of course, diabetes and metabolic disorders is a big one. And our history is very strong there. Oncology, we've been in and out of.  We made a pretty big acquisition with Loxo Oncology and many others-- smaller ones since-- to build out a competitive, targeted oncology business. We've built, organically, an immunology business.  And also, we've been working forever on neurodegeneration and neuroscience and have had some breakthroughs.

[05:58] ERIN: That's great. Yeah, actually, I would echo you, from our perspective, some of the very exciting innovation in biopharma is also consistent with what you've talked about, such as cancer, immunology, and genetic diseases, for example. And as you mentioned, the neurodegenerative diseases-- we really hope to see some advancement. I think the science is actually moving a lot faster than a few years ago. So hopefully we see that materialize in the drug development.

[06:30] I'd also say that elsewhere in health care, besides biopharma, there's also tremendous innovation that we're seeing. For example, in med tech area, the minimally invasive surgical areas having a lot of innovation. And I think technology is also increasingly permeating in health care. Health care is probably one of the areas that has really the-- in terms of adoption of technology, probably the slowest area in adopting.

Insert slide: The regulation question

[07:00] Now, maybe shifting a little bit, we think, in terms of the policy side, it seems like policy risk is a forever topic in investors' mind. Do you think, given the contribution that the health-care industry has made for the world to really help control and manage the COVID, does the political position in the health-care industry, and particularly pharmaceutical industry, really improved? And is there any policy risk that you're concerned about?

[07:36] DAVID: Yeah, thanks for the question, Erin. And I agree. There's a lot of exciting innovation around health care as well, even beyond pharma. But pharma has this unique situation with this drug-pricing overhang. A lot of generalists worry about a binary event there that could change the math.

I think it's an interesting situation, because I began to travel outside the US. And in some economies, like in Europe and Japan, where we have good markets and do well but are already under pretty rigid government-pricing schemes, we make a good business. But it's not as good as the US.

[08:13] The tone has really shifted there in governments. And part of that is, they've seen what the US did, which was superior to both their domestic industries and their own health-care responses, in terms of procurement and co-development of vaccines and therapies during COVID.

[08:31] And the tone, to me, has shifted in those foreign capitals, from government, about the strategic nature of the industry. I think that, coupled with a growing concern about supply chain of health-care goods and services to begin with, but also pharmaceuticals and maybe an over-reliance on one or two economies-- people want to invest, and they want our investment. And the tone has shifted. Whether that leads to new policies or not, I don't know. But perhaps it delays bad policies further.

[09:04] Of course, we still have a kind of broken reimbursement system in the United States, where a minority of patients pay a lot for their medicines. And on average, people are paying almost 20% of the total bill for medicines in the United States health-care system. They pay 3% of the service bill. So insurance and government benefits provide the rest.

[09:27] So people have an overexposure, out of pocket, to what we do, even though you can make a good argument that drugs are the most efficient part of the health-care system. We ask patients to over subsidize them. So we need to get that corrected. And until we do, I think we will have this tension.

[09:44] That said, maybe, eventually, the politics will catch up to where the people are, and people can realize that we need a balance here. We need to preserve innovation incentives. And the US had a great response to COVID, not because solely the specifics around COVID, but for decades in advance, we built up a massive industrial infrastructure around antibody, small-molecule manufacturing, RNA therapeutics that were meant for other purposes.

[10:13] And that investment thesis was redirected to COVID.

[10:17] ERIN: Pretty much every conversation with our investors, the policy risk always comes up. So in my mind, it's very difficult to see any transformative policy will really occur, given all the complex stakeholders involved, as well as this current political environment. But in a way, if we do have some policy reform, I think even if the pharma industry will pay for some of that so we'll experience some financial impact, it could be a big lift in the political overhang and could be helpful.

Insert slide: Pharma on sale.

ERIN: Given what we've seen in the equity market as of late, the developmental-stage biotech space has definitely experienced a lot of pressure, and the valuation has come down quite significantly. What do you see the opportunities for M&A if this is development?

[10:48] DAVID: There's a long list of biotechs that have tried to go it alone on global development and commercialization, and it's a pretty mixed story, whereas I think, for them, as well, creating that-- taking that spark and turning it into potential medicine that can go to the clinic has created a lot more value for early-phase investors. So I think we think that's the place where trades should happen.

[11:13] But it's difficult to generalize, because within that, there are some subsegments of biotech that are really not down very much at all. In particular, I'd point to nucleic-acid therapies, gene therapy, although there's been viral-vector problems lately, et cetera. It's still a very hot space. Delivery systems for gene and RNA therapies are very hot. Unfortunately for us, those are areas we're deeply interested in more acquisitions and partnerships. So the price point hasn't really changed our math dramatically.

[11:47] ERIN: Well, this was great. Well, thank you so much, Dave. I really enjoyed the conversation, and I really appreciate you joining us and sharing your insights.

DAVID: Thanks for having me, Erin. It's an exciting time in the industry, and it's always good to talk to you and thank you.

[11:59] CARRIE: David and Erin covered a lot of ground, and I think we can all agree that the health care sector is an exciting area to watch. Thank you for tuning into our latest Expert to Expert video, and we hope you can join us for future episodes.

DISCLOSURE: This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of January 28, 2022, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the viewer/reader.

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Investing involves risks, including possible loss of principal. Concentrating investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market. International investing involves additional risks including, but not limited to, those related to currency fluctuations, illiquidity and volatility. These risks may be heightened for investments in emerging markets.

This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.

Prepared by BlackRock Investments, LLC.  Member FINRA.

© 2022 BlackRock, Inc. BlackRock is a trademark of BlackRock, Inc. All other trademarks are the property of their respective owners.

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Harnessing change in healthcare

Dr. Erin Xie, Head of Health Sciences at BlackRock Fundamental Equities, and David Ricks, CEO of pharmaceutical company Eli Lilly, discuss the future of healthcare after COVID, the question of regulation, and whether dented valuations mean that now could be the time to buy.