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CVS Health Aetna Synergy Impressive, PBM Selling Season Solid
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On Dec 11, we issued an updated research report on CVS Health (CVS - Free Report) . An increasing demand for PBM (Pharmacy Benefit Management) and specialty pharmacy was a major growth driver for the stock. The company carries a Zacks Rank #3 (Hold).
On Nov 29, CVS Health completed its long-awaited $70-billion consolidation of insurance-giant Aetna. The culmination of this huge deal marks the creation of a new healthcare powerhouse, which combines CVS Health’s broad pharmacy business with Aetna’s giant insurance base.
CVS Health now expects to earn $750 million from near-term synergies with low- to mid-single digit accretion in the second year post the transaction’s closure. Per the company, shareholders can look forward to several outcomes with respect to near-term synergy including an enhanced competitive positioning and a new combined platform that might redefine access to high-quality care at low cost, thereby substantially accelerating the consolidated business’ growth.
Notably, with regard to its 2019 PBM selling season, CVS Health has wrapped up more than 70% of its client renewals, roughly in line with the previous year’s tally. The retention rate is currently higher than the figures reported over the last few years.
However, per management, the company sees fewer RFP (Request for Proposals) opportunities in the market as compared to the past few years. Despite this, current gross wins stand at an impressive level of $1.8 billion with net new business of approximately $200 million.
Significantly, in spite of tough pricing competition, CVS Health is currently gaining well. Further, this upside reflects high levels of service and execution, competitive pricing along with a unique integrated model, which allows the company to provide differentiated products and services that have potential to generate savings, better health outcomes as well as convenience.
On the flip side, the company worries about witnessing fewer RFP (Requests for Proposals) opportunities in the market than what it has been observing over the past few years. This might pose an obstacle to its PBM selling season performance in the coming quarters. Also, according to CVS Health, Omnicare business performance should persist to be soft through the second half of 2018.
Shares of CVS Health have underperformed its industry in the past six months. The stock has gained 10.5% compared with the 14.9% rise of the industry.
Key Picks
Some better-ranked stocks in the broader medical space are Veeva Systems (VEEV - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Surmodics, Inc (SRDX - Free Report) .
Integer Holdings has an earnings growth rate of 30.3% for the ongoing year and a Zacks Rank #2 (Buy).
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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CVS Health Aetna Synergy Impressive, PBM Selling Season Solid
On Dec 11, we issued an updated research report on CVS Health (CVS - Free Report) . An increasing demand for PBM (Pharmacy Benefit Management) and specialty pharmacy was a major growth driver for the stock. The company carries a Zacks Rank #3 (Hold).
On Nov 29, CVS Health completed its long-awaited $70-billion consolidation of insurance-giant Aetna. The culmination of this huge deal marks the creation of a new healthcare powerhouse, which combines CVS Health’s broad pharmacy business with Aetna’s giant insurance base.
CVS Health now expects to earn $750 million from near-term synergies with low- to mid-single digit accretion in the second year post the transaction’s closure. Per the company, shareholders can look forward to several outcomes with respect to near-term synergy including an enhanced competitive positioning and a new combined platform that might redefine access to high-quality care at low cost, thereby substantially accelerating the consolidated business’ growth.
CVS Health Corporation Price
CVS Health Corporation Price | CVS Health Corporation Quote
Notably, with regard to its 2019 PBM selling season, CVS Health has wrapped up more than 70% of its client renewals, roughly in line with the previous year’s tally. The retention rate is currently higher than the figures reported over the last few years.
However, per management, the company sees fewer RFP (Request for Proposals) opportunities in the market as compared to the past few years. Despite this, current gross wins stand at an impressive level of $1.8 billion with net new business of approximately $200 million.
Significantly, in spite of tough pricing competition, CVS Health is currently gaining well. Further, this upside reflects high levels of service and execution, competitive pricing along with a unique integrated model, which allows the company to provide differentiated products and services that have potential to generate savings, better health outcomes as well as convenience.
On the flip side, the company worries about witnessing fewer RFP (Requests for Proposals) opportunities in the market than what it has been observing over the past few years. This might pose an obstacle to its PBM selling season performance in the coming quarters. Also, according to CVS Health, Omnicare business performance should persist to be soft through the second half of 2018.
Shares of CVS Health have underperformed its industry in the past six months. The stock has gained 10.5% compared with the 14.9% rise of the industry.
Key Picks
Some better-ranked stocks in the broader medical space are Veeva Systems (VEEV - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Surmodics, Inc (SRDX - Free Report) .
Veeva Systems’ long-term earnings growth rate is estimated at 19.2%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Integer Holdings has an earnings growth rate of 30.3% for the ongoing year and a Zacks Rank #2 (Buy).
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>