Author Topic: CVS - CVS Health Corporation  (Read 44764 times)

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #150 on: Today at 06:56:26 AM »
This is why nobody should ever let me run money for them  :-X
Healthcare 38.0% - BBH CVS DVA EW NVO // BRK.B - 20.6% // Media & Communication 12.1% - CHTR DIS

Drinkers & Smokers 13.1% - ABEV MO // Auto's & Oil 13.4% - CLB GPC VDE // Tech & Comms 1.9% - AAPL

%'s held @ MV 02/6/2019 minus $$$ 4 skool

i trumpet my ignorance

https://twitter.com/tunawish


KCLarkin

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Re: CVS - CVS Health Corporation
« Reply #151 on: Today at 08:13:15 AM »
The problem for CVS in the last quarter wasn’t with Aetna, it was with CVS core business (PBM and retail)

Both adjusted claims and prescription volumes grew nicely. Both are forecasted to grow next year. So they are selling more units but with worse margins. Whether they can stabilize margins is an open question. They are investing heavily in the health superstore concept, so I would expect continued margin erosion. They are also investing in the Anthem ramp-up.

I would be interested to see what sort of lift Anthem will give CVS in 2020.

The ongoing political pressure on drug pricing and rebates will continue to hurt CVS multiple and revenue.

The integration with Aetna is another x-factor. My guess is that there will be a very large write-down in the next 5 years, but can Aetna grow enough to offset the pricing pressure in pharmacy and PBM?

If they can somehow stabilize the business, this looks like a homerun. UNH trades for 20x. Surely CVS could get up to 12x? But the market obviously believes that the business won't stabilize.

Probably too close to call. Seems like a reasonable bet but the high debt makes this much riskier than it was before the merger.