Feb. 10, 2014, 2:19 PM
- Arena Pharmaceuticals (ARNA +4.9%) and Japanese partner say their Belviq weight loss drug will be available to more people thanks to an agreement with pharmacy benefits manager CVS Caremark (CVS +0.6%), which means more than half of all Americans with insurance should now have access to the drug.
- Aetna (AET) recently announced it would offer Belviq as a preferred brand to eligible patients as part of its pilot program to self-insured plan sponsors.
- Belviq is approved for use in adults who are obese or who are overweight and have at least one serious medical condition, such as diabetes or high cholesterol.
Feb. 5, 2014, 7:29 AM
- CVS Caremark (CVS) says it will stop selling tobacco products by October 1, 2014.
- The company estimates it will lose $2B in annual revenue and $0.17 in profit per year. The impact on 2014 EPS will be $0.06-$0.08.
- The end game is that CVS could be in a much position than Walgreen (WAG) or Rite Aid (RAD) to strike deals with medical groups and insurance companies.
- CVS -1.7% premarket
Feb. 5, 2014, 7:11 AM
- CVS Caremark (CVS) will become the first retail pharmacy chain to remove tobacco products from its shelves, according to The Washington Post.
- The company says the move will cost it billions in revenue, but will help it make the transition to a full-service healthcare provider as its business model evolves.
- Tobacco stocks are on watch: MO, LO, RAI.
Jan. 27, 2014, 7:14 AM
- Insurers, patients and other payers are pushing back against what they believes is the exorbitant fee that Gilead (GILD) is charging for its new hepatitis C drug Sovaldi.
- Previously: Pfizer lung-cancer drug fails in two Phase III studies
- The pill costs $1,000 a pop, or $84,000 for a 12-week treatment vs $66,000 for the current standard of care.
- The likes of Express Scripts (ESRX), Catamaran (CTRX), Aetna (AET) and CVS Caremark (CVS) are among those who are looking to pit similar treatments against each other, declining to provide coverage for some, and refusing to pay a premium based on one therapy being more convenient than another.
Jan. 18, 2014, 9:00 AM
- Not finding a lot of value in the U.S. market, Oscar Schafer mostly looks overseas for his picks at this year's Barron's Roundtable, but still offers a domestic recommendation. Taking advantage of a major stumble in BioScrip (BIOS) as the company struggled integrating four large acquisitions, Schafer has built up a large stake.
- Seventy percent of infusion pharmacies are independent, and BioScrip - along with Option Care (now WAG), and Coram (now CVS) - is one of three major consolidators. After a tough year, management is focused on completing the integration, cutting expenses, and boosting margins in the infusion business. "Current margins dramatically understate the earnings power of the franchise," says Schafer, and the company could see $120M of EBITDA and $0.85 of free cash flow in 2015. CVS paid 16x EBITDA for Coram, and Schafer wouldn't be surprised to see it, Walgreen, or another strategic acquirer pay the same for BioScrip.
- BioScrip was trading at $5.90 prior to the late-November Coram deal. It closed at $7.54 yesterday. Schafer values the stock at $13.
Jan. 7, 2014, 3:33 AM
- National healthcare spending grew less than 4% for the fourth year in a row in 2012, rising 3.7% to $2.8T, a report by the Centers for Medicare & Medicaid Services shows.
- As a proportion of the total economy, expenditure edged down to 17.2% from 17.3%.
- The authors of the report said that the continued slow increase in spending was due to the lingering impact of the recession but that Obamacare has had a limited effect. However, the White House said the figures vindicated the President's signature policy.
- The authors were also cautious about whether the trend will continue, or whether growth will return to the higher levels experienced prior to the recession.
- The cost of hospital care rose 4.9% in 2012 and that for doctors' services and outpatient clinics 4.6%, although spending on prescription drugs increased just 0.4%, due to patent expiries.
- Relevant tickers: AET, HNT, HUM, UNH, WLP, MOH, HCA, CYH, THC, UHS, HMA, LPNT, WAG, CVS, BIOS, RAD, MHS, PMC, OCR, MCK, CAH, ABC, ESRX, MHS, CAH.
- ETFS: XLV, XHE, VHT, FXH, IHF, IHI, IYH, PTH, RYH, PSCH, RXL, RXD, XHS.
Jan. 5, 2014, 3:48 AM
- Early reports from health providers and online medical booking service ZocDoc indicate that demand for care from those who bought insurance under Obamacare has been modest so far.
- There have been fears that the technical problems of the government's HealthCare.gov Web site would cause a flood of patients who thought they had bought insurance to request care only to find that they weren't yet covered.
- The actual pace of demand should give insurers more time to process the applications that they need to enter into their systems and issue membership cards.
- More on Obamacare.
- Health insurers: AET, HNT, HUM, UNH, WLP, MOH.
- Hospital operators: HCA, CYH, THC, UHS, HMA, LPNT.
- Pharmacies: WAG, CVS, BIOS, RAD, MHS, PMC, OCR.
- ETFS: XLV, XHE, VHT, FXH, IHF, IHI, IYH, PTH, RYH, PSCH, RXL, RXD, XHS.
Jan. 3, 2014, 1:14 PM
- Rite-Aid (RAD +8.5%) shares continue an ascent sparked by strong Dec. comp sales numbers.
- Deutsche Bank's George Hill, who reiterated a Buy rating and PT of $7, believes the numbers are indicative of Rite-Aid's progress on store remodels and closings of less productive locations.
- +2.9% in overall Y/Y growth was dragged by a 2% Y/Y decline in prescription count, which Hill attributed to a decrease in flu-related prescriptions and shots.
- The jury is still out on whether "Rite Aid is taking share [from other drug retailers], possibly indicating more promotional pricing at Rite Aid," the analyst observes.
- Walgreen WAG +0.2% and CVS +0% are close to neutral on the day.
Jan. 3, 2014, 8:40 AM
- A new Wal-Mart Express will open in Columbia, Missouri this week just across the campus from the University of Missouri. The college town is a slightly different market than Wal-Mart (WMT) has targeted previously with its new small-store concept.
- The quick-stop shopping outlet will have a pharmacy and sell fresh produce in its grocery section.
- The store's placement and tight space (3.7K!) could be an eye-opener for Walgreen (WAG), CVS Caremark (CVS), and Rite Aid (RAD), notes retail analyst Brian Sozzi.
Dec. 31, 2013, 4:09 AM
- As of yesterday, only around half of those who had signed up for healthcare coverage offered by over 100 insurers in 17 states under Obamacare had paid for their plans.
- As a result, confusion is set to reign when the coverage takes effect tomorrow and until insurers can process those payments and issue membership cards. Around 2M people have signed up for coverage.
- Insurers are attempting to alleviate the situation for customers by saying they'll accept payment as late as January 31 for coverage that starts tomorrow.
- Meanwhile, Pharmacy chains such as CVS Caremark (CVS) and Walgreen (WAG) will provide prescription medications to consumers who have started but not completed the sign-up process.
- More on Obamacare.
- Relevant company tickers: AET, HNT, HUM, UNH, WLP, MOH. ETFS: XLV, XHE, VHT, FXH, IHF, IHI, IYH, PTH, RYH, PSCH, RXL, RXD, XHS.
Dec. 18, 2013, 8:58 AM| Comment!
Dec. 10, 2013, 11:16 AM
- Cardinal Health (CAH +4.1%) and CVS Caremark (CVS +1.9%) are teaming up to create the country's largest generic sourcing entity.
- Ultimately, this is a joint venture that combines and leverages the companies' supply chain management capabilities in order to negotiate generic supply deals.
- No physical assets are being contributed by either side and the initial term of the arrangement is 10 years.
- CAH will make quarterly payments of $25M to CVS over the life on the arrangement in order to "reflect an equitable 50/50 JV."
- The companies have also inked a three-year extension of their pharma distribution agreements. (PR)
Dec. 2, 2013, 3:08 PM| Comment!
Nov. 27, 2013, 11:00 AM
- CVS Caremark's (CVS) agreement to acquire Coram, the specialty infusion services and enteral nutrition business unit of Apria Healthcare Group, for approximately $2.1B will strengthen its position relative to market leader Walgreens (WAG), Wells Fargo says.
- "This transaction should strengthen CVS' positioning in the specialty pharmaceutical business, which we believe is increasingly critical in driving growth for the PBMs, particularly as we believe historical sources of earnings growth taper (including generics and mail order). Walgreens is currently the market leader in the specialty pharmacy business, followed closely by CVS and the acquisition of Coram should strengthen CVS' positioning."
- "Prior to Caremark being solely a PBM, it was one of the largest home infusion therapy companies in the country, but Caremark sold these assets in 1995 to Coram for about $310M in cash and preferred stock, with estimated revenues of under $500M. Today's announcement will bring back this business despite the now resolved litigated history regarding the original sale, though Coram is now considerably larger and includes ambulatory infusion sites."
- Coram peer BioScrip (BIOS) is +20% today, a move that appears directly related to the acquisition of Coram.
Nov. 27, 2013, 8:48 AM
- CVS Caremark (CVS) beefs up its specialty pharmacy offerings, agreeing to buy specialty infusion services and enteral nutrition business Coram, LLC from Apria Healthcare for about $2.1B.
- Coram is expected to generate about $1.4B in revenue in the first year following the deal's close (expected in Q1), but to have a negligible impact on CVS' overall 2014 results. The purchase is expected to add $0.03-$0.05 to EPS in 2015.
- Press release
Nov. 5, 2013, 10:14 AM
- In creating its list of top investment ideas, Credit Suisse allows its analysts a max of 3 picks over a 6-12 month horizon. Those who don't list a name under $3B in market cap are allowed a "bonus small-cap pick."
- Picks are broken down by sector and by analyst, with each allowed a few words for his/her elevator pitch ... a neat read for ideas to keep by your desk.
- Additions to the Top Picks list since the last publication in basic materials: CE, FOE, NUE, STLD.
- In consumer discretionary: BYD, MAR, CAB.
- Consumer staples: CVS.
- Energy and utilities: JKS.
- Financials: EV.
- Health care: ABBV, BMY.
- Industrials: PH.
- Media/Internet/Telecom: NXST.
- Tech: AVGO, NXPI, KLAC, TER, ULTI, CTXS.
- See also: Those removed from the list.
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