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CVS Health Corp (CVS)
NYSE:CVS
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CVS Health
(NYSE:CVS)76Outperform
Positive Factors
Earnings Growth
The steady build back to normalized earnings growth for CVS took a number of important steps, giving analysts enough to become constructive while also seeing numerous upside levers for future growth.
Valuation
The stock remains at a discounted level compared to historical ranges, offering potential for growth.
Negative Factors
DOJ Investigation
A DOJ investigation into peer UNH and its Medicare billing practices will create a near-term sentiment disruption.
CVS Health (CVS) vs. S&P 500 (SPY)
Market Cap
$82.86B
Dividend Yield4.1%
Average Volume (3M)11.40M
Price to Earnings (P/E)18.0
Beta (1Y)0.59
Revenue Growth4.02%
EPS Growth-43.51%
CountryUS
Employees300,000
SectorHealthcare
Sector Strength74
IndustryMedical Service Plans
Share Statistics
EPS (TTM)3.66
Shares Outstanding1,260,795,000
10 Day Avg. Volume9,033,091
30 Day Avg. Volume11,404,193
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.22
Price to Cash Flow (P/CF)11.00
P/FCF Ratio8.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.83Price Target Upside11.87% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering20
CVS Health Business Overview & Revenue Model
Company DescriptionHeadquartered in Rhode Island and founded in 1963, CVS Health Corp. is a healthcare company in the U.S. that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; Aetna, a health insurance provider, among many other brands.
How the Company Makes MoneyCVS Health generates revenue through multiple channels. The Pharmacy Services segment, which includes pharmacy benefit management services, specialty pharmacy, and mail order pharmacy, is a significant source of income. The Retail/LTC segment encompasses the sale of prescription drugs, over-the-counter medications, beauty products, and general merchandise through CVS Pharmacy stores and Long-Term Care facilities. The Health Care Benefits segment, primarily driven by Aetna, offers a wide array of health insurance products and services, including Medicare, Medicaid, and commercial health insurance plans. Revenue is further bolstered by strategic partnerships with healthcare providers and organizations, as well as initiatives aimed at integrating and expanding healthcare services across its platforms.
CVS Health Financial Statement Overview
Summary
CVS Health displays solid revenue growth, but profitability metrics suggest challenges in maintaining margins. The balance sheet reveals high leverage, which could be risky if economic conditions change. Cash flow remains a strong point, though recent declines in free cash flow warrant attention. Overall, CVS Health is in a stable but cautious position financially.Income Statement
CVS Health has shown consistent revenue growth over the years, with a notable increase from 2023 to 2024. However, the gross profit margin has decreased slightly, and net profit margin has also seen a decline. The EBIT and EBITDA margins have dipped, indicating pressure on operational efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio is relatively high, indicating significant leverage. While the return on equity has been positive, the equity ratio shows that a large portion of the assets is financed by debt, posing potential risks if not managed carefully.68
Positive
Cash Flow
The operating cash flow to net income ratio is healthy, and free cash flow remains positive despite a decrease from the previous year. However, the significant decline in free cash flow from 2023 to 2024 highlights potential concerns in cash management and capital expenditure efficiency.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 372.81B | 357.78B | 322.47B | 292.11B | 268.71B | Gross Profit |
| 51.40B | 54.43B | 54.50B | 52.12B | 49.05B | EBIT |
| 8.52B | 13.74B | 7.95B | 13.31B | 13.91B | EBITDA |
| 13.70B | 18.20B | 12.35B | 17.53B | 17.12B | Net Income Common Stockholders |
| 4.61B | 8.34B | 4.31B | 8.00B | 7.18B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 10.99B | 11.46B | 15.72B | 12.53B | 10.85B | Total Assets |
| 253.22B | 249.73B | 228.28B | 233.00B | 230.72B | Total Debt |
| 82.92B | 79.39B | 70.73B | 76.00B | 85.04B | Net Debt |
| 74.33B | 71.19B | 57.79B | 66.59B | 77.19B | Total Liabilities |
| 177.49B | 173.09B | 156.51B | 157.62B | 161.01B | Stockholders Equity |
| 75.56B | 76.46B | 71.47B | 75.08B | 69.39B |
| Cash Flow | Free Cash Flow | |||
| 6.33B | 10.39B | 13.45B | 15.74B | 13.43B | Operating Cash Flow |
| 9.11B | 13.43B | 16.18B | 18.27B | 15.87B | Investing Cash Flow |
| -7.61B | -20.89B | -5.05B | -5.26B | -5.53B | Financing Cash Flow |
| -1.14B | 2.68B | -10.52B | -11.36B | -7.70B |
CVS Health Technical Analysis
Positive
64.21
Price Trends
54.24
Positive
55.43
Positive
56.27
Positive
Market Momentum
2.84
Positive
63.45
Neutral
59.40
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CVS, the sentiment is Positive. The current price of 64.21 is above the 20-day moving average (MA) of 61.77, above the 50-day MA of 54.24, and above the 200-day MA of 56.27, indicating a bullish trend. The MACD of 2.84 indicates Positive momentum. The RSI at 63.45 is Neutral, neither overbought nor oversold. The STOCH value of 59.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CVS.
CVS Health Risk Analysis
CVS Health disclosed 47 risk factors in its most recent earnings report. CVS Health reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CVS Health Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $80.67B | 29.50 | 51.23% | 0.41% | 14.29% | -1.20% | |
76 Outperform | $82.86B | 17.98 | 6.11% | 4.10% | 4.02% | -43.51% | |
69 Neutral | $85.25B | 25.69 | 0.84% | 1.80% | 25.19% | ― | |
67 Neutral | $31.70B | 26.31 | 7.37% | 1.35% | 10.70% | -49.85% | |
65 Neutral | $434.13B | 30.61 | 14.66% | 1.75% | 8.35% | -35.14% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% | |
46 Neutral | $9.36B | ― | -79.12% | 9.75% | 5.62% | -1637.59% |
* Healthcare Sector Average
Performance Comparison
CVS
CVS Health
64.21
-6.89
-9.69%
CI
Cigna
308.86
-26.86
-8.00%
HUM
Humana
262.78
-72.51
-21.63%
MCK
McKesson
643.69
121.05
23.16%
UNH
UnitedHealth
474.61
9.30
2.00%
WBA
Walgreens Boots Alliance
10.84
-8.69
-44.50%
CVS Health Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 16.75% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with notable achievements in revenue growth, Aetna stabilization, and market leadership in biosimilars. However, challenges remain with ongoing issues in Medicare Advantage and individual exchange losses, compounded by elevated medical trends and pressure on pharmacy operating income.Highlights
Revenue Growth and Performance
Fourth quarter revenues of nearly $98 billion, a 4% increase over the prior year, driven by growth in healthcare benefits and pharmacy and consumer wellness segments.
Aetna Business Turnaround
Significant progress in stabilizing Aetna's operations and financial discipline, with a focus on restoring Medicare Advantage business to target margins.
Biosimilar Market Leadership
Successful launch of biosimilars with Cordavis, converting over 90% of eligible Humira patients to a biosimilar and generating almost a billion dollars in savings for clients.
CostVantage and TrueCost Models
Introduction and adoption of transparent pricing models - CostVantage and TrueCost, with 100% commercial adoption for CostVantage and over 75% of Caremark's commercial members adopting TrueCost.
Record Volume at Signify
Signify achieved a record volume year, completing over 3 million in-home health evaluations, contributing to a 32% revenue growth compared to the prior year.
Lowlights
Medicare Advantage and Medicaid Challenges
Continued elevated medical trends in Medicare Advantage and Medicaid, with a projected contraction in Medicare Advantage membership by high single digits in 2025.
Individual Exchange Losses
The individual exchange business ended the year with nearly a billion-dollar loss, prompting significant pricing and product adjustments for 2025.
Pharmacy and Consumer Wellness Operating Income Decline
A 13% decline in adjusted operating income for the pharmacy and consumer wellness segment, driven by continued pharmacy reimbursement pressure.
Debt and Leverage Concerns
Leverage ratio remains at approximately 4.7 times, above the long-term target, despite liability management efforts.
Company Guidance
During the CVS Health Q4 2024 earnings call, the company provided initial guidance for 2025, projecting adjusted earnings per share (EPS) in the range of $5.75 to $6.00. This guidance reflects a recovery in the Aetna business, particularly in Medicare Advantage, and continued growth in health services. CVS Health aims to achieve a medical benefit ratio of approximately 91.5% and expects revenue of about $132 billion in healthcare benefits, $185 billion in health services, and $134 billion in the pharmacy and consumer wellness segment. The company is focusing on a multi-year $2 billion cost efficiency effort and anticipates cash flow from operations to be approximately $6.5 billion. Additionally, CVS Health is committed to improving Aetna's target margins and has implemented new pricing models like TrueCost and CostVantage to enhance transparency and efficiency in their pharmacy operations.CVS Health Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
CVS Health Expands Board with Strategic Appointments
Positive
Nov 18, 2024
CVS Health has expanded its Board of Directors by appointing Leslie Norwalk, Larry Robbins, Guy Sansone, and Doug Shulman, following discussions with Glenview Capital Management. This strategic move aims to enhance the company’s financial and operational performance, bringing diverse expertise to drive innovation and improve healthcare outcomes. The appointments are part of a confidentiality agreement with Glenview, emphasizing long-term value creation for stakeholders through customer-centric initiatives and optimal capital allocation.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.