Express Scripts Is A Better Investment Than CVS
Uncommon Profit Investor • 21 Comments
Uncommon Profit Investor • 21 Comments
Wed, Jan. 13, 8:28 AM
- According to Bloomberg, heath insurer Anthem (NYSE:ANTM) is aiming to get an additional $3B per year in drug discounts from pharmacy benefits manager (PBM) Express Scripts (NASDAQ:ESRX) and, if it doesn't get it, is threatening to take its business elsewhere.
- Anthem CEO Joseph Swedish commented on the tussle yesterday at the J.P. Morgan Healthcare Conference in San Francisco. "We are entitled to improved pharmaceutical pricing that equates to an annual value capture of more than $3B. To be clear, this is the amount by which we would be overpaying for pharmaceuticals on an annual basis. Much of those savings would be passed on to clients."
- Anthem has an unusual relationship with Express under which it is entitled to periodic reviews of the prices it pays for drugs, the last of which occurred in 2012. The arrangement stems from Anthem's sale of its PBM business to Express in 2009.
- Express spokesman Brian Henry says that Anthem is mischaracterizing the situation, adding, "Express Scripts has consistently acted in good faith and is in full compliance with the terms of its agreement. While the contract calls for good faith negotiations regarding a pricing review, it does not mandate specific price adjustments. Furthermore, Anthem is not entitled to $3B."
- Negotiations are ongoing. If Anthem makes good on its threat, it only has two choices of PBMs, CVS Health (NYSE:CVS) and UnitedHealth Group's (NYSE:UNH) OptumRx. According to Evercore ISI's Ross Muken, Anthem's exit would shave $0.80 per share off ESRX's earnings.
- ESRX is down 5% premarket on light volume.
Dec. 18, 2015, 12:18 PM
- Biogen (BIIB +0.2%) initiated with Overweight rating and $344 (16% upside) price target by Atlantic Equities.
- CVS Health (CVS -0.1%) initiated with Overweight rating and $110 (16% upside) price target by Barclays.
- Clovis Oncology (CLVS +0.9%) initiated with Buy rating and $50 (48% upside) price target by Janney.
- Relypsa (RLYP +2.6%) initiated with Buy rating and $63 (123% upside) price target by H.C. Wainwright.
- HCA Holdings (HCA -0.2%) initiated with Outperform rating and $75 (16% upside) price target; LifePoint Health (LPNT +0.4%) with an Outperform rating and $79 (13% upside) price target; Tenet Healthcare (THC +1.2%) with a Neutral rating and $33 (18% upside) price target and Universal Health Services (UHS +0.4%) with a Neutral rating and $129 (11% upside) price target by Credit Suisse.
- Amgen (AMGN -0.1%) upgraded to Overweight from Equal Weight by Morgan Stanley. Price target raised to $193 (20% upside) from $160.
- Valeant Pharmaceuticals (VRX -1.8%) downgraded to Neutral from Buy by Mizuho Securities. Price target raised to $130 (19% upside) from $111.
Dec. 16, 2015, 8:12 AM
- The $1.9B deal has CVS Health (NYSE:CVS) adding Target's (NYSE:TGT) 1,672 pharmacies across 47 states, and CVS will operate them through a store-within-a-store format, branded as CVS/pharmacy. In addition, this brand will be included in all new Targets offering pharmacy services, and 79 Target clinic locations will be rebranded as MinuteClinic.
- Target will recognize a pretax gain of $575M-$775M in Q4 (though will be excluded from adjusted EPS). Q4 revenues will be cut by about $500M.
- The sale isn't expected to change Q4 comp sales.
- After-tax net proceeds will be about $1.2B, which will be deployed over time into capital priorities, including buybacks. The deal is expected to be accretive to EBITDA and EBIT margin rates, and had 50 basis points or more to return on invested capital over time.
- This deal and more will be discussed at CVS' investor day today.
- TGT +0.9%, CVS +2.05% premarket.
- See also: CVS raises its outlook and boosts the dividend.
Dec. 16, 2015, 7:44 AM
- CVS Health (NYSE:CVS) declares $0.425/share quarterly dividend, 21.4% increase from prior dividend of $0.35.
- Forward yield 1.84%
- Payable Feb. 2; for shareholders of record Jan. 22; ex-div Jan. 20.
Dec. 1, 2015, 12:53 PM
- In a shining example of the beauty of competition, Amgen (AMGN +0.5%) is battling fiercely with Sanofi (SNY) and Regeneron (REGN -0.4%) for favored status of its cholesterol fighter Repatha (evolocumab) versus Praluent (alirocumab) in the leading pharmacy benefit managers (PBMs).
- Amgen won preferred listing in CVS Health (CVS +1.4%) and an exclusive deal with Harvard Pilgrim Health System. Express Scripts (ESRX +1.2%) covers both PCSK9 inhibitors while UnitedHealth's (UNH +2.5%) Oxford unit is taking a different approach. Plan members will have to try Praluent first. If it fails to do the job after 12 weeks, then they can try Repatha.
- UnitedHealth and its OptumRx PBM are largest unsigned accounts and are, no doubt, getting substantial exposure to the companies' representatives.
Nov. 23, 2015, 9:18 AM
- Round one in the Repatha (evolocumab) versus Praluent (alirocumab) competition goes to Amgen (NASDAQ:AMGN). After evaluating both PCSK9 inhibitors, Pharmacy benefit manager CVS Health (NYSE:CVS) exclusively adds Amgen's Repatha to its commercial formularies, effectively shutting out Sanofi (NYSE:SNY) and Regeneron's (NASDAQ:REGN) Praluent.
- No word yet on the decisions from other PBMs.
Oct. 30, 2015, 10:16 AM
- CVS Health (CVS -6.3%) Q3 results: Revenues: $38,644M (+10.3%); COGS: $31,983M (+12.0%); Operating Expense: $4,330M (+2.6%); Operating Income: $2,331M (+3.8%); Net Income: $1,236M (+30.4%); EPS: $1.10 (+35.8%); Quick Assets: $3,011M (+19.7%); CF Ops: $4,841M (+2.7%).
- Q4 Guidance: $1.51 - 1.55; GAAP EPS: $1.41 - 1.45.
- 2015 Guidance: Adjusted EPS: $5.14 - 5.18; GAAP EPS: $4.69 - 4.73; CF Ops: $7.6B - 7.9B; FCF: $5.9B - 6.2B.
- 2016 Preliminary Outlook: Preliminary Adjusted EPS: $5.68 - 5.88.
Oct. 30, 2015, 6:53 AM
- CVS Health (NYSE:CVS): Q3 EPS of $1.29 in-line.
- Revenue of $38.64B (+10.3% Y/Y) beats by $750M.
Oct. 29, 2015, 5:30 PM| Oct. 29, 2015, 5:30 PM | 19 Comments
Oct. 29, 2015, 3:54 PM
- According to CNBC, CVS Health (CVS +0.3%) has kicked Philidor Rx out of its network for some sort of "noncompliance" with its provider agreement. Option holder Valeant Pharmaceuticals (VRX -4.6%) is down on the news.
- Previously: Notes from Valeant's conference call (Oct. 26)
- Previously: Valeant confirms appropriateness of accounting (Oct. 26)
Oct. 29, 2015, 2:32 AM
- Top antitrust lawmakers in the U.S. Senate are calling for close scrutiny of Walgreens Boots Alliance's (NASDAQ:WBA) plan to buy Rite Aid (NYSE:RAD), the latest healthcare consolidation following the rollout of the Affordable Care Act.
- The deal would unite two of the three largest U.S. drugstore chains, the other being CVS Health (NYSE:CVS).
- Walgreens Chief Executive Stefano Pessina said previously that the company had analyzed the antitrust aspect of the deal but did not speculate on the number of drugstores it might need to divest in order to win regulatory approval.
- Previously: Walgreens buying Rite Aid for $17.2B ($9/share) (Oct. 27 2015)
Oct. 5, 2015, 12:44 PM
- Blame it (mostly) on energy/commodities as Markit expects another 62% cut in dividends in the basic resources sector. Payouts in the media sector will decline 21%, but this is due to Disney switching from paying annually to semi-annually, and reallocating $1.1B in returns to next year.
- In total, Markit sees dividend growth of just 3.4% in Q4, down from 11.5%, 11.4%, and 24.1% growth in the previous three quarters. Special dividends in Q4 this year will total just $1.5B, down from $5.6B a year ago.
- The top five dividend increases coming in Q4: MasterCard (NYSE:MA) is expected to boost its payout by 31%; Visa (NYSE:V) by 25%, CVS (NYSE:CVS) Health by 23%, Lincoln Financial (NYSE:LNC) by 20%, and Starbucks (NASDAQ:SBUX) by 19%.
- ETFs: DVY, SCHD, ADX, SDOG, DLN, DHS, FDL, DTD, FVD, DVYL, SDYL
Oct. 1, 2015, 3:03 PM
- CVS Health (NYSE:CVS) declares $0.35/share quarterly dividend, in line with previous.
- Forward yield 1.45%
- Payable Nov. 2; for shareholders of record Oct. 22; ex-div Oct. 20.
Sep. 4, 2015, 12:14 PM
- CVS Health (NYSE:CVS) might be reaching a bit when it implied earlier this week that the company's decision to stop selling tobacco products led to a drop in smoking in different states, according to analysts.
- The retail chain has sold more smoking cessation products over the last year since the tobacco exit, but its impact on the national smoking rate is hard to quantify.
- The percentage rate of smokers in the U.S. has been steady decline over a longer period of time than the CVS action.
- CVS lost 780 bps off its front-end comp in Q2 due to the tobacco decision, but results have held up better than some forecasts.
Aug. 27, 2015, 2:23 AM
- CVS Health (NYSE:CVS) is jumping further into telehealth with a partnership that will expand patients' remote access to doctors.
- Three leading telehealth companies - American Well, Teladoc and Doctor On Demand - will begin receiving referred CVS customers, as well as referring their own customers to 150 CVS walk-in clinics, in six states by the fourth quarter.
- The new move also underscores CVS's push to position itself as a broader healthcare services company, and not just medications.
Aug. 11, 2015, 10:15 AM
- In a letter published in the Journal of the American Medical Association (AMA), CVS Health (CVS -0.5%) urges heart specialists to revamp guidelines for treating patients with high cholesterol to provide clarity on how best to choose the best and most cost effective therapy now that expensive new drugs called PCSK9 inhibitors are now on (or will soon be on) the market.
- PCSK9 inhibitors, led by recently-approved Praluent (alirocumab) (SNY -0.4%)(REGN -0.8%) and soon-to-be-approved Repatha (evolocumab), are, at least initially, more than 20 times more expensive than statins. Pharmacy benefit managers, like CVS, aim to control costs by extracting significant discounts from manufacturers and controlling patient access to the pricier drugs.
- CVS wants the guidelines to include specific LDL targets, which older guidelines did before new ones issued in 2013 did away with them. The emphasis now is on a patient's risk of developing heart disease as the main determinant for more intensive treatment. Unsurprisingly, the American College of Cardiology and the AMA have shown scant enthusiasm for revisiting the issue.
- CVS Chief Medical Officer Dr. Troyen Brennan says that if the guidelines are not changed, then CVS will use its own targets, which will vary depending on each patent's medical history. "We expect patients to first use statins. If they can't use statins or can't make (NYSE:LDL) targets, then they would use PCSK9 inhibitors."
- The PDUFA date for Amgen's (AMGN -1%) Repatha is August 27.
CVS Health Corp. is integrated pharmacy health care provider in the U.S. The company reinvents pharmacy for better health and develops new ways to improve access for patients, promote better health outcomes and control payor costs in a way that no pharmacy retailer or PBM could do separately. It... More
Industry: Drug Stores
Country: United States
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