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CVS Health (CVS) Digital Tools Gain Steam Amid COVID-19 Crisis

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Increasing demand for both Pharmacy Benefit Management (PBM) and specialty pharmacy along with strong digitalization of business is a key driver of CVS Health’s (CVS - Free Report) persistent growth amid the pandemic. The company currently carries a Zacks Rank #3 (Hold).

Over the past three months, shares of CVS Health have outperformed its industry. The stock has gained 15.1% compared with 10.3% rise of the industry.

CVS Health's revenues across all the three operating segments improved in the first quarter of 2021 and came in better than the company’s expectations. Increased full-year guidance indicates that this bullish trend may continue through the rest of 2021.

In the first quarter, CVS Health delivered market-leading results in controlling drug costs for Commercial clients (with only a 2.9% overall drug trend and with 34% of clients experiencing negative trend in 2020). Specialty pharmacy revenues were up 7.2% year over year, reflecting net new wins on success in trend management program. The company is currently well positioned for continued growth in 2022.

CVS Health Corporation Price

The company noted that consumer-centric digital strategy has become more relevant in the current environment as people are using technology more while staying indoors. In the first quarter, the company achieved higher levels of engagement across digital assets, a trend which began in January 2020 and accelerated with COVID-19.

According to the company’s first-quarter update, its second dose compliance of over 90% is the result of this consumer-centric digital approach. The company has scheduled round-trip visits, booking both appointments at once and also provided appointments for second doses only.

During the first quarter, utilization approached near-normal baseline levels. The company continued with growing momentum in Government Services business. It has also increased membership across all Medicare business lines in the first quarter.

On the flip side, in the first quarter, a weak cough, cold and flu season impacted growth within both Pharmacy Services and Retail/LTC. Also, the repeal of the Health Insurer Fee for 2021 hampered growth for Health Care Benefits.

Within Retail/Long Term Care (LTC), the company faced continued reimbursement pressure and the impact of recent generic introductions.

Key Picks

A few better-ranked stocks from the broader medical space are National Vision Holdings, Inc. (EYE - Free Report) , Envista Holdings Corporation (NVST - Free Report) and Phibro Animal Health Corporation (PAHC - Free Report) . While National Vision carries a Zacks Rank #1 (Strong Buy), Envista Holdings and Phibro Animal Health carry a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.

National Vision has an expected long-term earnings growth rate of 23%.

Envista Holdings has an expected long-term earnings growth rate of 26%.

Phibro Animal Health has a projected long-term earnings growth rate of 11%.

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