Author Topic: CVS - CVS Health Corporation  (Read 40176 times)

kc3

  • Newbie
  • *
  • Posts: 14
CVS - CVS Health Corporation
« on: March 12, 2016, 10:58:29 PM »
I'm still very new to this and haven't had much time to go through the financials heavily however I've noticed that CVS has shown consistent growth over the past ten years as well as increased profit as well as operating expenses that really aren't bad. One thing that does concern me is the cost of revenues but I don't know enough about this. The price/book is at 2.94 and the P/E is 21 which together might be a little high but again I'm fairly new to reading financials. Is there any thoughts? I plan on reading through the latest 10-K and 10-Q and a few other reports when I have some time as well.
« Last Edit: March 12, 2016, 11:04:33 PM by kc3 »


rishig

  • Sr. Member
  • ****
  • Posts: 435
Re: CVS - CVS Health Corporation
« Reply #1 on: March 13, 2016, 10:09:35 AM »
I'm still very new to this and haven't had much time to go through the financials heavily however I've noticed that CVS has shown consistent growth over the past ten years as well as increased profit as well as operating expenses that really aren't bad. One thing that does concern me is the cost of revenues but I don't know enough about this. The price/book is at 2.94 and the P/E is 21 which together might be a little high but again I'm fairly new to reading financials. Is there any thoughts? I plan on reading through the latest 10-K and 10-Q and a few other reports when I have some time as well.

I owned CVS in the past (in 2011 when it was ~30) and sold it as it ran up. Here is my report from back in 2011. A lot has probably changed and I have not kept up, but you may find the report useful to get background on the industry: https://app.box.com/shared/y3aiym3q14

kc3

  • Newbie
  • *
  • Posts: 14
Re: CVS - CVS Health Corporation
« Reply #2 on: March 13, 2016, 02:28:34 PM »
Sweet, I appreciate that, thank you. I'm also looking into their competitors.

KCLarkin

  • Hero Member
  • *****
  • Posts: 1595
Re: CVS - CVS Health Corporation
« Reply #3 on: October 28, 2016, 05:57:54 PM »
CVS is down 20% since May. Does anyone have a good short thesis at this price?

kab60

  • Hero Member
  • *****
  • Posts: 789
Re: CVS - CVS Health Corporation
« Reply #4 on: October 29, 2016, 12:45:39 AM »
Nothing solid, but I think people are concerned that PBM's will be targeted politically. It seems there are some perverse incentives with both pharma, PBM's and insurance companies all being interested in rising list prices.

DooDiligence

  • Hero Member
  • *****
  • Posts: 1477
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Re: CVS - CVS Health Corporation
« Reply #5 on: October 29, 2016, 01:13:16 AM »
I own NVO (bought more yesterday on the drop) & BBH & XBI & was thinking about something to inverse correlate risk of falling drug prices.

CVS still seems a bit pricey & I just can't get comfortable with Express Scripts smarmy management or Athena's either.

Seems like anything in this space would be a leap of faith...
(Healthcare 42.9% - ABC BBH CVS DVA EW NVO) | (BRK.B - 14.8%) | (Media & Communication 12.6% - CHTR CMCSA DIS)

(Drinkers & Smokers 13.8% - ABEV MO) | (Auto's & Oil 10.3% - GPC VDE) | (Tech & Comms 5.5% - AAPL SFTBY)

(%'s held @ MV 9/04, excludes $)

[prepared 2 wait?]

https://twitter.com/tunawish

KCLarkin

  • Hero Member
  • *****
  • Posts: 1595
Re: CVS - CVS Health Corporation
« Reply #6 on: October 29, 2016, 11:30:25 AM »
Nothing solid, but I think people are concerned that PBM's will be targeted politically. It seems there are some perverse incentives with both pharma, PBM's and insurance companies all being interested in rising list prices.

Yes, I'm assuming that's the reason for this weakness. Plus, Clinton's election promises. Plus, general sell-off in health-care. Plus, smaller drug price increases.

But these are all perception, which I think is creating the opportunity.

Are there any fundamental issues I am missing?

--
I agree that the entire pharma/PBM/insurance industry is a cesspool. But I'm doubtful that the next president will get any meaningful reform given the sad state of the U.S. political process.


DooDiligence

  • Hero Member
  • *****
  • Posts: 1477
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Re: CVS - CVS Health Corporation
« Reply #7 on: October 29, 2016, 10:55:39 PM »
Nothing solid, but I think people are concerned that PBM's will be targeted politically. It seems there are some perverse incentives with both pharma, PBM's and insurance companies all being interested in rising list prices.

Yes, I'm assuming that's the reason for this weakness. Plus, Clinton's election promises. Plus, general sell-off in health-care. Plus, smaller drug price increases.

But these are all perception, which I think is creating the opportunity.

Are there any fundamental issues I am missing?

--
I agree that the entire pharma/PBM/insurance industry is a cesspool. But I'm doubtful that the next president will get any meaningful reform given the sad state of the U.S. political process.

I thought the PBM's/insurers were supposed to help reduce prices & improve outcomes?

There goes my theory about reducing the risk of lower margins in biopharma with a corrolary (whew; didn't wanna own one of those anyway...)
(Healthcare 42.9% - ABC BBH CVS DVA EW NVO) | (BRK.B - 14.8%) | (Media & Communication 12.6% - CHTR CMCSA DIS)

(Drinkers & Smokers 13.8% - ABEV MO) | (Auto's & Oil 10.3% - GPC VDE) | (Tech & Comms 5.5% - AAPL SFTBY)

(%'s held @ MV 9/04, excludes $)

[prepared 2 wait?]

https://twitter.com/tunawish

kab60

  • Hero Member
  • *****
  • Posts: 789
Re: CVS - CVS Health Corporation
« Reply #8 on: October 29, 2016, 11:24:13 PM »
Nothing solid, but I think people are concerned that PBM's will be targeted politically. It seems there are some perverse incentives with both pharma, PBM's and insurance companies all being interested in rising list prices.

Yes, I'm assuming that's the reason for this weakness. Plus, Clinton's election promises. Plus, general sell-off in health-care. Plus, smaller drug price increases.

But these are all perception, which I think is creating the opportunity.

Are there any fundamental issues I am missing?

--
I agree that the entire pharma/PBM/insurance industry is a cesspool. But I'm doubtful that the next president will get any meaningful reform given the sad state of the U.S. political process.

I thought the PBM's/insurers were supposed to help reduce prices & improve outcomes?

There goes my theory about reducing the risk of lower margins in biopharma with a corrolary (whew; didn't wanna own one of those anyway...)
I think that was the idea...

PBM's negotiate rebates on list prices of medicine and apparently pocket a bit of the rebate themselves, so it seems pharma and PBM has figured higher prices is good for both of them. Cause higher list prices = higher rebates. And insurance companies pass on the bill, so if margins stay the same, and the bill grows, their earnings increase. That's roughly how I've had it explained by industry source, but please correct me if I'm wrong.

The losers are obviously patients and employers. I think it's a crazy system but there's a lot of money that wants it to stay this way, so I wouldn't expect it to change (but I do hope it does for my fellow US boardmembers).

DooDiligence

  • Hero Member
  • *****
  • Posts: 1477
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Re: CVS - CVS Health Corporation
« Reply #9 on: October 30, 2016, 12:46:01 AM »
Nothing solid, but I think people are concerned that PBM's will be targeted politically. It seems there are some perverse incentives with both pharma, PBM's and insurance companies all being interested in rising list prices.

Yes, I'm assuming that's the reason for this weakness. Plus, Clinton's election promises. Plus, general sell-off in health-care. Plus, smaller drug price increases.

But these are all perception, which I think is creating the opportunity.

Are there any fundamental issues I am missing?

--
I agree that the entire pharma/PBM/insurance industry is a cesspool. But I'm doubtful that the next president will get any meaningful reform given the sad state of the U.S. political process.

I thought the PBM's/insurers were supposed to help reduce prices & improve outcomes?

There goes my theory about reducing the risk of lower margins in biopharma with a corrolary (whew; didn't wanna own one of those anyway...)
I think that was the idea...

PBM's negotiate rebates on list prices of medicine and apparently pocket a bit of the rebate themselves, so it seems pharma and PBM has figured higher prices is good for both of them. Cause higher list prices = higher rebates. And insurance companies pass on the bill, so if margins stay the same, and the bill grows, their earnings increase. That's roughly how I've had it explained by industry source, but please correct me if I'm wrong.

The losers are obviously patients and employers. I think it's a crazy system but there's a lot of money that wants it to stay this way, so I wouldn't expect it to change (but I do hope it does for my fellow US boardmembers).

I never could understand why insurers outsourced the PBM operation.

Seems like the goal of reducing prices would be better achieved by keeping it in house (and they could probably improve their margins a point or 2 to boot.)

If Athena was allowed to buy Cigna & was then able to do its own PBM in house, do you think the outcome would be good for pricing? (I'm positive it'd be bad for ESRX & it seems the government is in ESRX's corner on this one which indicates to me that the government has no interest in lowering prices...)

There may be a bit of fuzzy logic in my last statement.
(Healthcare 42.9% - ABC BBH CVS DVA EW NVO) | (BRK.B - 14.8%) | (Media & Communication 12.6% - CHTR CMCSA DIS)

(Drinkers & Smokers 13.8% - ABEV MO) | (Auto's & Oil 10.3% - GPC VDE) | (Tech & Comms 5.5% - AAPL SFTBY)

(%'s held @ MV 9/04, excludes $)

[prepared 2 wait?]

https://twitter.com/tunawish