CVS Health Corporation (CVS) | Investment Case

1. Company Snapshot

1.a. Company Description

CVS Health Corporation provides health services in the United States.The company's Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services.It serves employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates.

Its Pharmacy Services segment offers pharmacy benefit management solutions, including plan design and administration, formulary management, retail pharmacy network management, mail order pharmacy, specialty pharmacy and infusion, clinical, and disease and medical spend management services.It serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, plans offered on public health insurance and private health insurance exchanges, other sponsors of health benefit plans, and individuals.This segment operates retail specialty pharmacy stores; and specialty mail-order, mail-order dispensing, and compounding pharmacies, as well as branches for infusion and enteral nutrition services.

The company's Retail/LTC segment sells prescription and over-the-counter drugs, consumer health and beauty products, and personal care products; and provides health care services through its MinuteClinic walk-in medical clinics.This segment also distributes prescription drugs; and provides related pharmacy consulting and other ancillary services to care facilities and other care settings.As of December 31, 2021, it operated approximately 9,900 retail locations and 1,200 MinuteClinic locations, as well as online retail pharmacy websites, LTC pharmacies, and onsite pharmacies.

The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014.CVS Health Corporation was founded in 1963 and is headquartered in Woonsocket, Rhode Island.

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1.b. Last Insights on CVS

CVS Health's recent performance was driven by strong Q2 earnings, beating expectations by a wide margin, and a raised full-year outlook. The company's diversified business, including its prescription pharmacy segment, contributed to the positive results. UBS analysts upgraded CVS to "Buy" citing confidence in the company's recovery trajectory and multiple levers for earnings growth. The company's focus on technology-led care and stabilization of its Aetna segment also supported growth. Additionally, CVS's solid revenue growth and margin gains across key healthcare segments further bolstered its performance.

1.c. Company Highlights

Last Price	75.63
Change Percentage	-1.46%
Open	76.73
Previous Close	76.75
Market Cap ( Millions)	96007
Volume	5858041
Year High	85.15
Year Low	43.56
M A 50	78.63
M A 200	69.63

FCF Yield	6.55%
Dividend Yield	3.52%
ROE	0.62%
Debt / Equity	112.10%
Net Debt / EBIDTA	684.88%
Price To Book	1.32
Price Earnings Ratio	204.64
Price To FCF	15.26
Price To sales	0.24
EV / EBITDA	15.91

2. CVS Health's Q3 2025 Earnings: A Strong Beat

CVS Health reported a robust third quarter, with adjusted earnings per share (EPS) of $1.60, significantly beating analyst estimates of $1.37. The company's revenue grew 10% year-over-year to $133 billion, driven by strong performances across its Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The adjusted operating income was $3.5 billion, and the company increased its full-year 2025 adjusted EPS guidance to $6.55-$6.65, up from $6.30-$6.40. The company's cash flows from operations were approximately $7.2 billion year-to-date through the third quarter, and it ended the quarter with $2.3 billion in cash at the parent and unrestricted subsidiaries.

Publication Date: Oct -30

                                    📋 Highlights
                                    Revenue Growth Across Segments:
                                                Health Services revenue rose 11% YoY to $49B, while Pharmacy & Consumer Wellness hit $36B, a 12% increase.
Adjusted EPS Guidance Raised:
                                                Full-year 2025 adjusted EPS guidance increased to $6.55–$6.65, up $0.25 from prior estimates due to Q3 performance.
Goodwill Impairment:
                                                Health Care Delivery segment recorded $5.7B goodwill impairment from slowed Oak Street Health Clinic growth.
Pharmacy Market Share Gains:
                                                Retail pharmacy script share reached 28.9%, with same-store sales up 17% YoY and IVF initiative targeting lower drug prices.
2026 Margin Improvements:
                                                Aetna expects meaningful margin gains from MA plan design, and Health Services anticipates growth from Oak Street Health recovery.

                                

Segment Performance

The Health Care Benefits segment generated nearly $36 billion in revenue, a 9% increase from the prior year, driven by favorable year-over-year impact of premium deficiency reserves and improved underlying performance in the government business. The Health Services segment delivered revenues of over $49 billion, an 11% year-over-year increase, while adjusted operating income decreased 7% due to continued pharmacy client price improvements. The Pharmacy & Consumer Wellness segment reported revenues of over $36 billion, a 12% increase, with retail pharmacy script share growing to 28.9%.

Guidance and Outlook

CVS Health is increasing its full-year 2025 guidance for adjusted EPS and expects total revenues of at least $397 billion, driven by increases across all segments. For 2026, the company expects another year of meaningful margin improvement at Aetna, driven by disciplined plan design and repricing opportunities. The Health Services segment is expected to improve, primarily driven by Oak Street Health, while the Pharmacy & Consumer Wellness segment is expected to continue its momentum.

Valuation

CVS Health's current P/E Ratio is 218.08, indicating a relatively high valuation. However, the company's Dividend Yield is 3.3%, which may appeal to income investors. The P/S Ratio is 0.26, suggesting a reasonable valuation relative to revenue. The EV/EBITDA ratio is 16.5, which is relatively moderate. As the company continues to execute its strategy and drive growth, its valuation may be justified. As Brian Newman mentioned, "We're pleased with the third quarter performance, despite 100 basis points of impact from provider liabilities and worsening expectations for individual exchange risk adjustment." This indicates that the company is navigating challenges and is focused on delivering strong results.

3. NewsRoom

Aetna expands initiatives to simplify experiences for health care professionals and patients

Dec -04

Source: prnewswire.com

First Look: Insurers, Auto Rules, AI and Fed Jitters

Dec -04

Source: gurufocus.com

2 Soaring Healthcare Stocks to Buy and Hold for a Decade

Dec -04

Source: fool.com

Arrowstreet Capital Limited Partnership Raises Holdings in CVS Health Corporation $CVS

Dec -03

Source: defenseworld.net

17 dividend-stock bargains from a value manager with a stellar track record

Dec -02

Source: marketwatch.com

CVS to pay $37.8 million to settle claims over insulin pens

Dec -02

Source: reuters.com

Cornerstone Community Development, Winterwood, CVS Health, and Community Organizations Announce the Prichard Centennial Residential Reveal and Next-Phase Preview

Dec -01

Source: prnewswire.com

Harrow: Vevye Replaces Xiidra On Tier 1 Formulary At CVS

Dec -01

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.21%)

6. Segments

Health Services

Expected Growth: 6.3%

CVS Health's growth is driven by its diversified healthcare services, including pharmacy benefit management, specialty pharmacy, and retail pharmacy, as well as its expanding healthcare offerings, such as Medicare Advantage and Medicaid plans.

Health Care Benefits

Expected Growth: 7.4%

CVS Health's growth is driven by its strategic acquisitions, increasing demand for prescription benefits, and expansion of its healthcare services offerings, positioning it as a leader in the healthcare industry.

Pharmacy & Consumer Wellness

Expected Growth: 7.4%

Growing demand for healthcare services, expansion of healthcare access, and increasing adoption of digital health solutions drive CVS Health Corporation's pharmacy and consumer wellness products and services segment growth.

Corporate/Other

Expected Growth: 6.4%

CVS Health's Corporate/Other segment growth is driven by its Omnicare long-term care business and expanding services in specialty pharmacy and infusion therapies.

Intersegment Eliminations

Expected Growth: 5.3%

CVS Health's intersegment eliminations are expected to grow steadily driven by the company's diversified healthcare services, including pharmacy benefit management and retail pharmacy operations, as well as its strategic acquisitions and partnerships.

7. Detailed Products

Retail Pharmacy

CVS Health operates a chain of retail pharmacies that offer prescription filling, health clinics, and other health-related services.

Pharmacy Benefit Management (PBM)

CVS Health's PBM business, CVS Caremark, manages prescription drug benefits for health plans, employers, and government programs.

Specialty Pharmacy

CVS Health's specialty pharmacy business provides medications and services for complex, chronic, and rare conditions.

MinuteClinic

MinuteClinic is a retail health clinic chain that provides walk-in medical care for minor illnesses and injuries.

Long-Term Care Pharmacy

CVS Health's long-term care pharmacy business provides medications and services to residents of long-term care facilities.

Coram Infusion Services

Coram is a home infusion services company that provides medications and care to patients with complex conditions.

8. CVS Health Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

CVS Health Corporation operates in a highly competitive industry, and there are many substitutes available to customers. However, the company's strong brand recognition and extensive network of pharmacies and clinics help to mitigate the threat of substitutes.

Bargaining Power Of Customers

CVS Health Corporation's customers have some bargaining power due to the availability of substitutes, but the company's strong brand recognition and extensive network of pharmacies and clinics help to reduce this power.

Bargaining Power Of Suppliers

CVS Health Corporation's suppliers have some bargaining power due to the company's reliance on them for pharmaceuticals and other products. However, the company's large size and scale of operations help to mitigate this power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the healthcare industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry in the healthcare industry is high due to the presence of many competitors, including other pharmacy benefit managers, retail pharmacies, and healthcare providers.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	50.94%
Debt Cost	4.47%
Equity Weight	49.06%
Equity Cost	6.71%
WACC	5.57%
Leverage	103.82%

11. Quality Control: CVS Health Corporation passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

McKesson

A-Score: 6.2/10

Value: 5.4

Growth: 8.3

Quality: 4.5

Yield: 0.0

Momentum: 9.5

Volatility: 9.7

1-Year Total Return ->

CVS Health

A-Score: 5.3/10

Value: 4.6

Growth: 4.0

Quality: 2.6

Yield: 6.0

Momentum: 7.5

Volatility: 7.0

1-Year Total Return ->

Elevance Health

A-Score: 4.8/10

Value: 6.6

Growth: 5.7

Quality: 6.8

Yield: 3.0

Momentum: 0.5

Volatility: 6.3

1-Year Total Return ->

UnitedHealth

A-Score: 4.3/10

Value: 4.9

Growth: 6.1

Quality: 5.1

Yield: 4.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

Humana

A-Score: 4.2/10

Value: 6.0

Growth: 5.3

Quality: 5.2

Yield: 1.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

Centene

A-Score: 3.6/10

Value: 9.3

Growth: 5.7

Quality: 3.3

Yield: 0.0

Momentum: 0.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.09%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.57%

CVS Health Corporation - US1266501006

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CVS

1.c. Company Highlights

Higher Yield

Less Volatile

Higher Growth

Earnings Miss

Average Growth

Revenues Miss

Stable Momentum

Earnings Beats

Revenues Beats

Lower Quality

Weak Momentum

Medium Volatility

Strong Momentum

Average Quality

2. CVS Health's Q3 2025 Earnings: A Strong Beat

Segment Performance

Guidance and Outlook

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.21%)

6. Segments

Health Services

Expected Growth: 6.3%

Health Care Benefits

Expected Growth: 7.4%

Pharmacy & Consumer Wellness

Expected Growth: 7.4%

Corporate/Other

Expected Growth: 6.4%

Intersegment Eliminations

Expected Growth: 5.3%

7. Detailed Products

Retail Pharmacy

Pharmacy Benefit Management (PBM)

Specialty Pharmacy

MinuteClinic

Long-Term Care Pharmacy

Coram Infusion Services

8. CVS Health Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: CVS Health Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

75.63$

Current Price

75.63$

Potential

12.e Scoring ^Insights

12.f DCF ^BETA