CVS posted a decent third-quarter 2014 with 9% year over year rise
in adjusted earnings per share (EPS) to $1.15. EPS topped the Zacks
Consensus Estimate by $0.02 as well as the company-provided
guidance range of $1.11 to $1.14. Net revenue, on the other hand,
increased 9.7% to $35.02 billion, edging past the Zacks Consensus
Estimate of $34.61 billion. The generic wave in the pharmaceutical
industry continues to work in CVS' favor, as seen in the consistent
margin expansion of the company. Specialty revenues rose 53% on
Sovaldi along with the addition of the Coram. We are also impressed
with CVS' strong guidance for 2014 wherein an increased adjusted
EPS projection reflects strong year-over-year growth and the
company's optimism about the future. On the contrary, the decline
in front-end sales was disappointing. Moreover, the competitive
landscape remains tough. We also keep an eye on the tussle for
market share gain in the PBM as well as retail pharmacy segment.
Thus, we reiterate our Neutral recommendation on the stock.
Headquartered in Woonsocket, RI, CVS Health Corporation
(formerly known as CVS Caremark Corporation) (CVS) is a pharmacy
innovation company with integrated offerings across the entire
spectrum of pharmacy care.
On Sep 3, 2014, CVS Caremark Corporation announced a change of
its corporate name to CVS Health to reflect its broader health care
commitment and its expertise in driving innovations needed to shape
the future of health. CVS Health includes the company's retail
business, which continues to be called CVS/pharmacy its pharmacy
benefit management business, known as CVS/caremark its walk-in
medical clinics, CVS/minuteclinic and its growing specialty
pharmacy services, CVS/specialty. With 7,700 retail pharmacies, 900
walk-in medical clinics, a leading pharmacy benefits manager with
nearly 65 million plan members, and expanding specialty pharmacy
services, CVS Health enables people, businesses and communities to
manage health in more affordable and effective ways.
The company's Pharmacy Services business provides a full range
of prescription benefit management (PBM) services including mail
service dispensing pharmacy, specialty pharmacy and infusion
service, Medicare Part D Services, plan design and administration,
formulary management, discounted drug purchase arrangement and
claims processing, retail pharmacy network management system,
prescription management system, clinical services, disease
management services and medical pharmacy management services. The
specialty pharmacies (including mail order and retail specialty
pharmacy) support individuals who require complex and expensive
drug therapies. Moreover, CVS has implemented steps to make
prescription drugs more affordable to consumers. Some of these
programs are: Maintenance Choice and Pharmacy Advisor. Maintenance
Choice is a flexible fulfillment option that gives patients the
choice of picking up their 90-day supply of maintenance medications
from any CVS/pharmacy store or obtaining them through mail order.
Pharmacy Advisor is a medication adherence program for chronic
conditions. Pharmacy Advisor was made available to Medicare clients
from Jan 1, 2013.
With Medicare Part D Services, CVS Health participates in the
administration of the drug benefit added to the Medicare program
under Part D of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Medicare Part D) through the provision
of PBM services to the company's health plan clients and other
clients that have qualified as Medicare Part D prescription drug
As of Sep 30, 2014, the Pharmacy Services Segment operated 26
retail specialty pharmacy stores, 11 specialty mail order
pharmacies, 4 mail service dispensing pharmacies and 84 branches
and 6 centers of excellence for infusion and enteral services
located in 40 states, Puerto Rico and the District of Columbia.
The Retail Pharmacy segment sells prescription drugs and general
merchandise (front store products), which include over-the-counter
(OTC) drugs, greeting cards, film and photo finishing services,
beauty and cosmetic products, and convenience food through CVS/
pharmacy and Longs Drugs retail stores as well as at CVS.com (the
company's online store). The company also operates retail health
care clinics under the name, MinuteClinic. These clinics, overseen
by nurse practitioners and physician assistants, aim to treat minor
health conditions, perform health screenings, monitor chronic
health conditions and offer routine vaccinations. They are open
seven days a week and do not require an appointment, thus
discouraging unnecessary and expensive emergency room visits.
As of Sep 30, 2014, the Retail Pharmacy Segment included 7,779
retail drugstores (of which 7,714 operated a pharmacy), 17 onsite
pharmacies, 936 retail health care clinics, and the online retail
websites, CVS.com and Onofre.com.br. The retail drugstores are
located in 44 states, the District of Columbia, Puerto Rico and
Brazil. The retail health care clinics operate under the
MinuteClinic name, and 928 are located within CVS/pharmacy
CVS Health Corporation (CVS): Read the Full
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