CVS Health Corporation (CVS - Free Report) recently announced three major programs that will allow the company to share the tax benefit earned from the implementation of the latest U.S. Tax Cuts and Jobs Act with employees. This news comes on the heels of the company’s promising fourth-quarter 2017 results. Along with the results, the company exhibited unwavering commitment toward employees’ welfare.
According to management, the improvement in employee wages and benefits totaled $425 million annually. These are long-term and compensation investments, expected to create growth opportunities for the company and its employees.
The programs include the following three employee-focused investments:
First, CVS Health will lift the starting wage rate to $11 an hour for hourly employees, effective April 2018. With a view to grow its retail stores into a healthcare destination, the company plans to adjust pay ranges and rates for many of its retail pharmacy technicians, front store associates and other hourly retail employees later this year.
Second, the company wishes to consistently offer affordable healthcare services to workers by not increasing employee premiums for 2018-19, despite a 5% year-over-year rise in medical and prescription costs. CVS Health will absorb the entire increase for the 100,000 employees who are part of the company-sponsored health plan.
Finally, a new paid parental leave plan will be put into effect starting April 1, 2018, for full-time employees. Per management, an employee who welcomes a new child can take up to four weeks away from work at 100% of their pay, so as to ensure proper care of the newborn.
Additionally, management indicated that it will put the remaining benefits earned from tax savings back into the business. The company expects to channelize this money toward data analytics, care management solutions and store service, in order to improve health outcomes, reduce cost for patients and also debt reduction related to the planned acquisition of Aetna.
Recently, CVS Health has been recognized as one of the World’s Most Admired Companies by Fortune Magazine. The company was honored as No. 39 on corporate rankings, up six spots from the previous year in terms of corporate performance and reputation and ability to attract and retain talented people, quality of services, management, innovation and social responsibility.
Over the last six months, CVS Health has outperformed the industry. The stock has lost 11.9%, lower than the industry’s decline of 13.6%.
Zacks Rank & Stocks to Consider
CVS Health carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Amphastar Pharmaceuticals Inc. (AMPH - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and athenahealth Inc. (ATHN - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphastar has an impressive expected long-term growth rate of 25%. In the last six months, the stock has rallied 25.3%.
HCA Healthcare has a projected long-term growth rate of 11.5%. In the last three months, the stock has gained 29.2%.
athenahealth has a long-term growth rate of 23.1%. Over the last three months, the stock has rallied 6.8%.
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