Business Description
CVS Health (CVS) is an integrated pharmacy healthcare provider operating through two major segments, Pharmacy Services (58%) and Retail (42%). Its pharmacy segment provides pharmacy benefit management (PBM) services, the retail segment operates through retail drugstores and retail health clinics. CVS has been steadily rebranding itself as an integrated healthcare company, focusing on retail health clinics and specialty healthcare. It recently completed an acquisition of Omnicare, a long-term care facility provider serving the growing senior population. The company also acquired Target pharmacies and retail clinics. Through both of these acquisitions, CVS is focusing on the higher margin specialty care services and retail …show more content…
CVS Health is in a strong position to capitalize on that growth by providing pharmacy benefit management and walk-in clinics operated by nurse practitioners and physician assistants. Retail clinics are a major part of this investment play as they are a significant growth driver in the industry due to their low cost, convenience and transparency. It is expected that the continued shortage of physicians in the U.S. will benefit retail clinics, which CVS is aggressively expanding; having more than twice the clinics as its closest competitor, Walgreens Boots Alliance. Furthermore, it is a lower risk investment in its sector due to its relatively nonexistent UK exposure, investor aligned management, stable balance sheet and increasing free cash flows. Its closest competitor is plagued with uncertainty brought out by internal and macroeconomic events, it recently lost their CEO due to institutional investors disagreeing with the way the company was being run. Furthermore, Walgreens second largest market is the UK, where uncertainty exists due to its decision the leave the EU. The UK’s NHS is publically funded and if Brexit causes economic harm, it is likely that healthcare companies will suffer. Walgreens is also in the process of taking over Rite Aid through an all-cash deal funded by debt in a deal worth $17 billion, as a result, it is expected that Walgreens will have to divest some existing stores to avoid antitrust regulation. Ultimately, Walgreens presents a lot of uncertainties that are not present for CVS, making CVS a better buy for an investor looking to benefit from the predicted increase in healthcare
CVS Health (CVS) is an integrated pharmacy healthcare provider operating through two major segments, Pharmacy Services (58%) and Retail (42%). Its pharmacy segment provides pharmacy benefit management (PBM) services, the retail segment operates through retail drugstores and retail health clinics. CVS has been steadily rebranding itself as an integrated healthcare company, focusing on retail health clinics and specialty healthcare. It recently completed an acquisition of Omnicare, a long-term care facility provider serving the growing senior population. The company also acquired Target pharmacies and retail clinics. Through both of these acquisitions, CVS is focusing on the higher margin specialty care services and retail …show more content…
CVS Health is in a strong position to capitalize on that growth by providing pharmacy benefit management and walk-in clinics operated by nurse practitioners and physician assistants. Retail clinics are a major part of this investment play as they are a significant growth driver in the industry due to their low cost, convenience and transparency. It is expected that the continued shortage of physicians in the U.S. will benefit retail clinics, which CVS is aggressively expanding; having more than twice the clinics as its closest competitor, Walgreens Boots Alliance. Furthermore, it is a lower risk investment in its sector due to its relatively nonexistent UK exposure, investor aligned management, stable balance sheet and increasing free cash flows. Its closest competitor is plagued with uncertainty brought out by internal and macroeconomic events, it recently lost their CEO due to institutional investors disagreeing with the way the company was being run. Furthermore, Walgreens second largest market is the UK, where uncertainty exists due to its decision the leave the EU. The UK’s NHS is publically funded and if Brexit causes economic harm, it is likely that healthcare companies will suffer. Walgreens is also in the process of taking over Rite Aid through an all-cash deal funded by debt in a deal worth $17 billion, as a result, it is expected that Walgreens will have to divest some existing stores to avoid antitrust regulation. Ultimately, Walgreens presents a lot of uncertainties that are not present for CVS, making CVS a better buy for an investor looking to benefit from the predicted increase in healthcare