Feb. 28, 2014, 12:49 PM| 2 Comments
Feb. 15, 2014, 10:40 AM
- The decision by CVS Caremark (CVS) to stop selling tobacco products will add to profits despite the immediate hit to revenue from lost cigarette sales, according to analysts watching the sector.
- Mizuho Securities sees a $0.16-$0.21 per share benefit right off the top if CVS renews a deal with the Federal Employee Health Program at the end of the year.
- Other analysts have their eyes on recent trends showing CVS gaining momentum in improving its margins and supply cost reductions.
- The savings from the tobacco exit start piling up even more if CVS wins more market share in pharmacy benefits management with its shift toward becoming a favored health services company.
- What to watch: CVS trades with a valuation that is roughly on par with the S&P 500, but investors may be discounting its transcendent ability to grow profits through its evolution.
Feb. 11, 2014, 9:59 AM
- Tobacco was a major topic during CVS Caremark's (CVS +2.9%) earnings call this morning.
- Execs say the exit from the category will align the company with the goals of patients, clients, and providers.
- Of note, 2014 EPS guidance and five-year financial targets are unchanged despite the new strategy which will send some customers to other retail chains.
- The tone from management suggests that the company is already seeing a general trend toward pharmacy sales outpacing front-end sales so the tobacco play might be less dramatic than feared by some.
- Earnings call webcast
Feb. 11, 2014, 7:16 AM
- CVS Caremark (CVS) saw broad sales growth in Q4, with Pharmacy Services revenue up 5.2% and Retail Pharmacy sales growth of 5.6%.
- Retail Pharmacy Segment same store sales rose 4.0% during the period.
- Gross profit rate fell 60 bps to 30.7%.
- The company expects 2014 EPS of $4.36-$4.50 vs. $4.47 consensus.
- A conference call is scheduled for 8:30 am where more details on the company's exit from tobacco could be discussed. (webcast)
- CVS +0.7% premarket
Feb. 11, 2014, 7:07 AM| Comment!
Feb. 11, 2014, 12:05 AM
Feb. 10, 2014, 5:30 PM
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.
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