Author Topic: CVS - CVS Health Corporation  (Read 43458 times)

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #130 on: November 08, 2018, 04:12:44 AM »
I was recently reminded in a post about insurance, that I didn't write anything about my visit to the Minute Clinic, so here goes.

As many of you will remember, and would like to forget, I had a stye on my eye and had visited a Baptist Hospital Urgent Care Clinic, twice, with no cure.

In the shipping world this would be a "no cure, no pay" situation but I still had to make a copay.

It finally dawned on me that this was an opportunity to experience a CVS Minute Clinic first hand.

Initially, I was underwhelmed.

I checked in through an electronic kiosk emblazoned with signs and ironically, one of the signs said that they are affiliated with Baptist Healthcare system, so I wasn't expecting my stye to get any better as a result of the visit.

Next, I looked over to the waiting room which was just a row of chairs along the back wall in a way which screamed "this is NOT a doctors office"

The "waiting room" was facing an isle of nostrums that did not instill further confidence in my upcoming medical consultation (it also did not attract me to any kind of impulse purchase.) Somehow, I believe I should have been staring at a gigantic magazine rack surrounded by a well thought out display of ???

On another note, this particular CVS location is the only Minute Clinic in Pensacola and it is a poor choice for a clinic as there are others which have layouts that would give a better "doctors office" feel (I sent a message to the BOD about this recently.)

BTW, even though the waiting area was poorly thought out, there was standing room only and a steady trickle of new patients were coming in.

The person who treated me was a PA and she was very professional and knowledgable and more importantly, she prescribed a different set of oral antibiotics and an antibio cream, which subsequently made the stye go away.

I walked straight over to the pharmacy counter and picked up my prescription.

This is not necessarily a ringing endorsement of the Minute Clinics and it is obvious from this one anecdotal experience that they have a lot of work to do.

The end?
Healthcare 40.4% - ABC BBH CVS DVA EW NVO // BRK.B - 19.8% // Media & Communication 10.8% - CHTR DIS

Drinkers & Smokers 12.0% - ABEV MO // Auto's & Oil 13.0% - CLB GPC VDE // Tech & Comms 4.0% - AAPL SFTBY

%'s held @ MV 01/18/2019 minus $$$ 4 skool

patience?

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Cigarbutt

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Re: CVS - CVS Health Corporation
« Reply #131 on: November 08, 2018, 05:18:16 AM »
The end?
CVS recently reported decent results with significant free cash flow generation. They seem to meet the usual acquisition hurdles and, maybe, the best is yet to come. Will watch.

They seem to have some willingness to try things.
Interesting example:
https://www.bizjournals.com/bizwomen/news/latest-news/2018/11/cvs-pharmacy-launches-pilot-membership-program.html
It smells like a reactive move to a certain competitor but reaction is probably better than inaction and a lot of first movers will fall.

For your case (if you want to disclose the info), what was your part of the bill (co-pay and deductible) and what was the total amount of the bill?

For a superficial and visually apparent condition such as yours, online consultation seems like a good option. In my area where healthcare is "free", innovation sometimes comes from the embryonic private sector. Recently, a dermatologist started to offer a consultation option based on an online platform which seems to be quite efficient (to make an appointment, list data, upload photos and virtually "meet" the specialist). The fee, which does not cover the prescription costs, is 180$ (CDN) to get an appointment within 72 hours and 250$, within 24 hours.
I understand that this is also becoming available in the Great Again country, hear that fees as low as 59$ (USD) are advertised and that CVS may have showed an interest:
https://cvshealth.com/newsroom/press-releases/cvs-healths-minuteclinic-introduces-new-virtual-care-offering

But they will have to work on their bill length.
https://nypost.com/2018/11/02/woman-gets-6-foot-cvs-receipt-after-buying-3-items/
« Last Edit: November 08, 2018, 05:23:12 AM by Cigarbutt »

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #132 on: November 08, 2018, 06:12:20 PM »
The end?
CVS recently reported decent results with significant free cash flow generation. They seem to meet the usual acquisition hurdles and, maybe, the best is yet to come. Will watch.

They seem to have some willingness to try things.
Interesting example:
https://www.bizjournals.com/bizwomen/news/latest-news/2018/11/cvs-pharmacy-launches-pilot-membership-program.html
It smells like a reactive move to a certain competitor but reaction is probably better than inaction and a lot of first movers will fall.

For your case (if you want to disclose the info), what was your part of the bill (co-pay and deductible) and what was the total amount of the bill?

For a superficial and visually apparent condition such as yours, online consultation seems like a good option. In my area where healthcare is "free", innovation sometimes comes from the embryonic private sector. Recently, a dermatologist started to offer a consultation option based on an online platform which seems to be quite efficient (to make an appointment, list data, upload photos and virtually "meet" the specialist). The fee, which does not cover the prescription costs, is 180$ (CDN) to get an appointment within 72 hours and 250$, within 24 hours.
I understand that this is also becoming available in the Great Again country, hear that fees as low as 59$ (USD) are advertised and that CVS may have showed an interest:
https://cvshealth.com/newsroom/press-releases/cvs-healths-minuteclinic-introduces-new-virtual-care-offering

But they will have to work on their bill length.
https://nypost.com/2018/11/02/woman-gets-6-foot-cvs-receipt-after-buying-3-items/

The Minute Clinic receipt was printed on an 8.5 x 11 sheet & listed a charge of $129. (my co-pay was $33.)
The prescription consisted of Tobramycin 0.3% eye drops ($12.57) & Cephalexin 500mg capsules ($4.29).

Baptist Urgent Care cost $33 x 2 & the prescription was for Bacitracin 500 unit/gm OPHTH ointment ($75 & ineffective).

---

I'm betting that CVS will be successful in the long run & will have it's ups & downs (whether the Minute Clinics will ever be anything WTFK?)
I don't need the money ATM & am feeling very patient so we'll see.
Healthcare 40.4% - ABC BBH CVS DVA EW NVO // BRK.B - 19.8% // Media & Communication 10.8% - CHTR DIS

Drinkers & Smokers 12.0% - ABEV MO // Auto's & Oil 13.0% - CLB GPC VDE // Tech & Comms 4.0% - AAPL SFTBY

%'s held @ MV 01/18/2019 minus $$$ 4 skool

patience?

https://twitter.com/tunawish

Cigarbutt

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Re: CVS - CVS Health Corporation
« Reply #133 on: November 08, 2018, 08:33:12 PM »
I'm betting that CVS will be successful in the long run & will have it's ups & downs (whether the Minute Clinics will ever be anything WTFK?)
I don't need the money ATM & am feeling very patient so we'll see.
Thanks for the follow-up.
20 years ago, I also bought a pharmacy retailer (one of my first stocks, pharmacy chain based in Canada) and sold it around 2004 because of a planned expansion in what I considered to be Fortress Retail, USA. Then, the #1 was Walgreens and the #2 was CVS. As 2018 nears its end, the #1 is still Walgreens and the #2 is still CVS. The more it changes... So your "bet" is reasonable for the long run to come. Fascinating though, because the parallel path is possibly reaching a juncture because the two are taking 2 fundamentally different directions.

An exercise I've done over the years is to follow the two, side by side (ŕ la Ben Graham) and submit the following report for your interest:
https://www.fungglobalretailtech.com/wp-content/uploads/2018/08/CVS-and-Walgreens-AUG-20-2018.pdf

If I'd be a betting man, I would go with Walgreens but I'm not.

PS Bacitracin is still in use but has a nice historical feature. The drug was named because of a girl named Traci (misspelled in fact).
https://web.archive.org/web/20140428190211/https://files.nyu.edu/jmm257/public/other/bacitracin.html
Talk about an enduring moat.

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #134 on: November 09, 2018, 07:30:40 PM »
I'm betting that CVS will be successful in the long run & will have it's ups & downs (whether the Minute Clinics will ever be anything WTFK?)
I don't need the money ATM & am feeling very patient so we'll see.
Thanks for the follow-up.
20 years ago, I also bought a pharmacy retailer (one of my first stocks, pharmacy chain based in Canada) and sold it around 2004 because of a planned expansion in what I considered to be Fortress Retail, USA. Then, the #1 was Walgreens and the #2 was CVS. As 2018 nears its end, the #1 is still Walgreens and the #2 is still CVS. The more it changes... So your "bet" is reasonable for the long run to come. Fascinating though, because the parallel path is possibly reaching a juncture because the two are taking 2 fundamentally different directions.

An exercise I've done over the years is to follow the two, side by side (ŕ la Ben Graham) and submit the following report for your interest:
https://www.fungglobalretailtech.com/wp-content/uploads/2018/08/CVS-and-Walgreens-AUG-20-2018.pdf

If I'd be a betting man, I would go with Walgreens but I'm not.

PS Bacitracin is still in use but has a nice historical feature. The drug was named because of a girl named Traci (misspelled in fact).
https://web.archive.org/web/20140428190211/https://files.nyu.edu/jmm257/public/other/bacitracin.html
Talk about an enduring moat.

Thanks, I just got through the Walgreen v CVS report (and the Tracy story.)

Hmmm...
Healthcare 40.4% - ABC BBH CVS DVA EW NVO // BRK.B - 19.8% // Media & Communication 10.8% - CHTR DIS

Drinkers & Smokers 12.0% - ABEV MO // Auto's & Oil 13.0% - CLB GPC VDE // Tech & Comms 4.0% - AAPL SFTBY

%'s held @ MV 01/18/2019 minus $$$ 4 skool

patience?

https://twitter.com/tunawish

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #135 on: November 30, 2018, 06:54:44 AM »
CVS completes the purchase of Aetna.

It's the latest merger between two major healthcare players that could affect tens of millions of Americans. Last week, CVS and insurance giant Aetna finalized a nearly $70 billion merger. The deal could impact where people get their care, how they get their drugs and how much choice they have. Judy Woodruff discusses with Larry Merlo, CEO of CVS Health.

https://youtu.be/vuBca96cUUw

Managements value proposition for this merger? Merlo says (in the last part of the interview) that $300B a year in drug spend is wasted due to patient non-conformance to prescriptions and he wants to use the merger of Aetna to increase adherence by reinforcement with face to face interactions.

---

Merlo said Wednesday that he expects one of the first initiatives of the new company would be to roll out some expanded clinics and “learn from our customers in terms of what they value and what perhaps we need to go back to the drawing board on.”

https://www.courant.com/business/hc-biz-cvs-aetna-closing-20181128-story.html

---

Here's another older pre-merger interview of Merlo & Bertolini on CNBC where they discuss the merger. They go into their ideas on the regulatory & political aspects of healthcare delivery.

https://youtu.be/-FzZN4v-LUI

---

I'd like to hear any & all negative ideas to counterbalance, and even overwhelm, my bullish sentiment for the next decade.
Healthcare 40.4% - ABC BBH CVS DVA EW NVO // BRK.B - 19.8% // Media & Communication 10.8% - CHTR DIS

Drinkers & Smokers 12.0% - ABEV MO // Auto's & Oil 13.0% - CLB GPC VDE // Tech & Comms 4.0% - AAPL SFTBY

%'s held @ MV 01/18/2019 minus $$$ 4 skool

patience?

https://twitter.com/tunawish

Cigarbutt

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Re: CVS - CVS Health Corporation
« Reply #136 on: December 01, 2018, 05:48:28 AM »
CVS completes the purchase of Aetna.

It's the latest merger between two major healthcare players that could affect tens of millions of Americans. Last week, CVS and insurance giant Aetna finalized a nearly $70 billion merger. The deal could impact where people get their care, how they get their drugs and how much choice they have. Judy Woodruff discusses with Larry Merlo, CEO of CVS Health.

https://youtu.be/vuBca96cUUw

Managements value proposition for this merger? Merlo says (in the last part of the interview) that $300B a year in drug spend is wasted due to patient non-conformance to prescriptions and he wants to use the merger of Aetna to increase adherence by reinforcement with face to face interactions.

---

Merlo said Wednesday that he expects one of the first initiatives of the new company would be to roll out some expanded clinics and “learn from our customers in terms of what they value and what perhaps we need to go back to the drawing board on.”

https://www.courant.com/business/hc-biz-cvs-aetna-closing-20181128-story.html

---

Here's another older pre-merger interview of Merlo & Bertolini on CNBC where they discuss the merger. They go into their ideas on the regulatory & political aspects of healthcare delivery.

https://youtu.be/-FzZN4v-LUI

---

I'd like to hear any & all negative ideas to counterbalance, and even overwhelm, my bullish sentiment for the next decade.
Not much to add but read the following this AM:
https://www.law.com/nationallawjournal/2018/11/29/justice-dept-lawyer-faces-wrath-of-judge-whos-still-weighing-cvs-aetna-deal/?slreturn=20181101081336

This seems to be a simple case of an over-sensitive judge but underlines a potential underlying driver: arrogance.

In the stuff that you submit above, Ken Langone politely suggests to not forget the customer and mentions that, so far, the "bragging" of the industry about their results (which are financial in nature) has not translated in better quality/cost for the "consumer". It's hard to believe Mr. Langone's personal and anecdotal direct experience with CVS but maybe the lesson here is to maintain the connection with main street even when you reach the high spheres of power. Keeping both feet on the ground is compatible with reaching higher grounds but it means you may need to "share" your margin expansion that comes with increasing market concentration.

So investing in CVS for the long term means that you believe that they (combined entity) are ready to adapt to an environment where the end result will be a better and more affordable product for the end user. Arrogance, if it persists, will make the achievement of that goal more difficult.
« Last Edit: December 01, 2018, 06:12:45 AM by Cigarbutt »

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #137 on: December 01, 2018, 11:03:31 AM »
CVS completes the purchase of Aetna.

It's the latest merger between two major healthcare players that could affect tens of millions of Americans. Last week, CVS and insurance giant Aetna finalized a nearly $70 billion merger. The deal could impact where people get their care, how they get their drugs and how much choice they have. Judy Woodruff discusses with Larry Merlo, CEO of CVS Health.

https://youtu.be/vuBca96cUUw

Managements value proposition for this merger? Merlo says (in the last part of the interview) that $300B a year in drug spend is wasted due to patient non-conformance to prescriptions and he wants to use the merger of Aetna to increase adherence by reinforcement with face to face interactions.

---

Merlo said Wednesday that he expects one of the first initiatives of the new company would be to roll out some expanded clinics and “learn from our customers in terms of what they value and what perhaps we need to go back to the drawing board on.”

https://www.courant.com/business/hc-biz-cvs-aetna-closing-20181128-story.html

---

Here's another older pre-merger interview of Merlo & Bertolini on CNBC where they discuss the merger. They go into their ideas on the regulatory & political aspects of healthcare delivery.

https://youtu.be/-FzZN4v-LUI

---

I'd like to hear any & all negative ideas to counterbalance, and even overwhelm, my bullish sentiment for the next decade.
Not much to add but read the following this AM:
https://www.law.com/nationallawjournal/2018/11/29/justice-dept-lawyer-faces-wrath-of-judge-whos-still-weighing-cvs-aetna-deal/?slreturn=20181101081336

This seems to be a simple case of an over-sensitive judge but underlines a potential underlying driver: arrogance.

In the stuff that you submit above, Ken Langone politely suggests to not forget the customer and mentions that, so far, the "bragging" of the industry about their results (which are financial in nature) has not translated in better quality/cost for the "consumer". It's hard to believe Mr. Langone's personal and anecdotal direct experience with CVS but maybe the lesson here is to maintain the connection with main street even when you reach the high spheres of power. Keeping both feet on the ground is compatible with reaching higher grounds but it means you may need to "share" your margin expansion that comes with increasing market concentration.

So investing in CVS for the long term means that you believe that they (combined entity) are ready to adapt to an environment where the end result will be a better and more affordable product for the end user. Arrogance, if it persists, will make the achievement of that goal more difficult.

I agree and did catch the admonition by the Mr. Langone but I didn't extrapolate what you so wisely pointed out.

---

I'm looking further into Merlo, the man, and found the following.

https://moneyinc.com/cvs-health-ceo-larry-j-merlo/

The link is a pretty quick read but here's my takeaways.

His Dad died of tobacco related cancer which may have been more of a driver in halting cig sales at CVS. I had thought it was because he wanted to make CVS look more like a healthcare facility, which may still be true but...

He started out as a pharmacist, which gives him direct insight into operations at the customer level but still doesn't answer the question of whether he'll act to lower costs.

---

For a slightly more in depth, and possibly biased look:

https://www.courant.com/business/hc-biz-larry-merlo-ceo-cvs-20171228-story.html

To me, the following quote shows how he wants to make more money for CVS by selling more drugs, and save costs for Aetna by targeting adherence.

“He understands how sometimes spending more money on drugs makes the overall cost of a disease less,” she said. “So if someone is taking their diabetes medicine, for instance, the diabetes medications are going to cost more money, but the reality is they may stay out of the hospital. So the overall cost is lower.”

The invitation to sit with Michelle Obama at the inauguration is interesting too.

"The same year, CVS’ decision to stop selling cigarettes drew plenty of positive attention, including an invitation to sit with former First Lady Michelle Obama at the next State of the Union address. At the White House, Obama advocated healthy living and President Barack Obama struggled to kick the smoking habit."

and this one could be BS but leads me to believe he's a thoughtful guy:

"Muskin likes to tell the story of a swing through California last year with Merlo and other CVS executives to visit big investors in the company. A Suburban pulled up to transport Merlo and the others and Merlo was pulling on the lever to go into the third row of the vehicle."

“This guy is running a top S&P 500, Top 25 company, billions of dollars and there he is crawling into the back of a Suburban,” Mushkin said. “It’s kind of who he is.”

---

I have to get back to studying for finals & a jury for piano proficiency but will delve back in to Ken Langone to see if he has anything new to say on CVS because he seems sharp. The following story may just be him claiming to have dodged Madoff but if it's legit, he'd be the one to smell a rat in Merlo.

https://www.reuters.com/article/us-madoff-langone-sb/langone-says-steered-clear-of-cool-madoff-report-idUSTRE50L0NU20090122
Healthcare 40.4% - ABC BBH CVS DVA EW NVO // BRK.B - 19.8% // Media & Communication 10.8% - CHTR DIS

Drinkers & Smokers 12.0% - ABEV MO // Auto's & Oil 13.0% - CLB GPC VDE // Tech & Comms 4.0% - AAPL SFTBY

%'s held @ MV 01/18/2019 minus $$$ 4 skool

patience?

https://twitter.com/tunawish

DooDiligence

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Re: CVS - CVS Health Corporation
« Reply #138 on: December 01, 2018, 12:05:59 PM »
Healthcare 40.4% - ABC BBH CVS DVA EW NVO // BRK.B - 19.8% // Media & Communication 10.8% - CHTR DIS

Drinkers & Smokers 12.0% - ABEV MO // Auto's & Oil 13.0% - CLB GPC VDE // Tech & Comms 4.0% - AAPL SFTBY

%'s held @ MV 01/18/2019 minus $$$ 4 skool

patience?

https://twitter.com/tunawish

Cigarbutt

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Re: CVS - CVS Health Corporation
« Reply #139 on: December 02, 2018, 05:12:22 AM »
...
I'm looking further into Merlo, the man, and found the following.
https://moneyinc.com/cvs-health-ceo-larry-j-merlo/
...
For a slightly more in depth, and possibly biased look:
...
https://www.courant.com/business/hc-biz-larry-merlo-ceo-cvs-20171228-story.html
...
Quote
Character assessment is difficult but may be an important variable to consider. The CVS chief certainly deserves a high CEO to average Joe ratio but he does often appear on television.

Apart from whom one partners with, another aspect you may want to consider is to look at the competitive landscape (present and future). I tend to follow this area and a recent video I watched perhaps is worth a listen when you have time. The video features John Doerr, a guy who acknowledges mistakes but also who has had an unusual ability (can't be just luck) to be at the right place and at the right moment.

https://www.cnbc.com/2018/11/29/john-doerr-convinced-amazon-will-roll-out-prime-health.html

The video is not really about a specific Prime healthcare option, it's about all this capital looking for "entrepreneurs" and the huge potential from the "liberation" of all data lying within the "proprietary" models of the established players. If you watch the video, you will find that Mr. Doerr fails to come up with a satisfactory answer in relation to a relatively straighforward question coming from the audience (addiction specialist). However, there is a lot of people with boots on the ground who have actionable ideas that do not involve MinuteClinics and who are looking for capital. Opinion: the bridge between capital and ideas is about to be completed and there will be a lot of failures but the moat around the castle will be challenged, perhaps sooner than you (or Mr. Merlo, who is also featured in the link) think. A potential conclusion at the end of the video is to wonder if any of this information technology stuff is relevant and that may be the biggest risk of all. Take that with a grain of salt since I thought that this Bezos guy did not stand a chance against Barnes and Nobles in the 90's.
« Last Edit: December 02, 2018, 05:14:46 AM by Cigarbutt »