CVS Health Corp. (CVS)

Sorprendentemente todavía no existía un hilo para esta empresa en el foro aunque sí que se habló bastante sobre ella a principios de mes en otra sección:

Os dejo la opinión de Chowder sobre los últimos movimientos de la compañía:

CVS is going to blow up the balance sheet and go from a free cash flow cow to a highly leveraged company.
I don’t mind holding turnaround companies, after all we own KMI and TGT, but I liked the way they were taking the company in order to improve the headwinds they faced.
CVS is operating from a position of weakness. They lost contracts a year or so ago and it was assumed they would replace them and that isn’t happening.
The threat to CVS isn’t just AMZN, AMZN simply gets the publicity. Large corporations are now considering doing their own in-house PBM business. That would crush revenue sources.
The attractiveness of CVS to me was high dividend growth and capital gains since it was a low yielding company, and it’s going to be 3 years or more, provided everything works according to plan, for CVS to get back on that track. That’s when they say earnings will be accretive provided the synergies work out. … Key word provided.

I can always get back to CVS once the merger is complete, if I chose to, but again I don’t wish to be in the health insurance field. There is no limit to the claims, or a way to accurately predict losses. When someone has a $100k life insurance policy, at least you know the liability limit. When you insure a piece of property, at least you know the liability limit. You don’t know the limits with healthcare. And let’s not forget, the US Government was helping to subsidize health insurance companies and are now deciding not to. It’s why Obamacare will implode on its own if left to do so.

If I were going to own an insurance company, CB would be my top choice. A company like TRV would be a good choice because again, the limit liabilities are known.

The more advanced medical cures and medicine gets, the more costly the treatment gets, the higher the health insurance claims to health insurance companies. This is why I don’t wish to own health insurance companies and that’s the direction CVS is taking the company. I just don’t like the direction.

If others don’t mind owning health insurance companies, and are willing to be very, very patient, it might work out for them, I’m not trying to talk anyone out of their position. I didn’t pontificate on my reasons for selling until now and it’s only because I was asked.
I’m sure others will have good reasons for holding and I won’t rebuttal their choices. I’d support their decision if that’s what they want to do.

Vaya!. Pues tampoco le pone un futuro muy prometedor. Compré 1/4 de posición hace muy poco con una finalidad un poco especulativa, y buscando tener alguna empresa con fuerte crecimiento de dividendo. Ahora que leo eso me quedo un poco frío.

Ha vendido la posición de su hijo y alguna otra cartera.

En su hijo ha invertido el dinero en ampliar posición de BDX (Becton Dickinson and Co).

Yo seguiré en CVS. No es gran capital el que tengo y puedo esperar a ver cómo evoluciona.

BDX es un empresón, pero está cerca de máximos de 52 semanas con el SP en máximos históricos…bufff

En esta parte difiero de Chowder y le voy a dar tiempo a CVS para que arregle su estado. En mi opinion la integracion con Aetna sera favorable siempre y cuando la gerencia no deje de hacer su excelente trabajo como hasta ahora.

Yo compro CVS mensual y ya casi la llevo al tamaño en el cual dejo de comprar mensual y utilizo ese dinero para ir incrementando otras compañias…dejare que CVS crezca sola hasta que llegue su turno de ponerle mas capital.

Yo tengo una posición pequeña aquí y no la voy a vender al final, pero tampoco voy a aumentar. No van a recortar el dividendo parece, algo es algo, pero la compra de Aetna pinta a que la han pagado muy sobrevalorada. No obstante, el track record de la compañía es impecable hasta ahora, así que habrá que darle un voto de confianza a ver como se manejan con esto. También que sobre los 70$ no parece que sea un buen momento para vender.

Entiendo la venta de Chowder ya que, en cierto modo la tesis de inversión y el gran incremento de dividendo de CVS se ha ido al carajo. Yo también me pillé un buen rebote y en caliente me dieron ganas de vender. Pero vuelvo a no entender su compra, eso de comprar Becton Dickinson a estos precios. Además, si CVS no recorta el dividendo como parece, estaríamos hablando de casi un 3% de RPD ahora mismo, mientras que a estos precios Becton da como un 1,38% inicial. Se calcula que CVS va a tener que congelar el dividendo como 2 años para digerir la deuda…pues bueno, ya veremos si le sale bien la jugada, pero a priori no esta tan claro que mirando el cambio desde un punto de vista income le vaya a salir mejor (o sustancialmente mejor) el cambio.

Que opináis de los resultados de esta empresa? Con los últimos resultados ha bajado más de un 10% adicional, está casi al 50% de los máximos de hace unos años.

Con los números actuales está a un per 8-12 según se coja EPS ajustados o no, reduciendo deuda (aunque menos de lo esperado por lo visto), generando caja y aunque no incrementen el dividendo renta más de un 3% ya.

Me está tentando.


"Narrow-moat CVS Health reported fiscal 2018 results that largely met our expectations for the legacy business, but the addition of Aetna created some volatility in the reported numbers. However, the highlight was 2019 guidance that fell short of our profit expectations across the board while missing prevailing consensus estimates by an even wider margin. As we adjust our model, we may tweak our $96 per share fair value estimate, but we continue to view the firm as deeply undervalued despite the weaker outlook. While 2019 appears to be a more onerous transition year than originally anticipated, shares represent compelling value at current market prices that imply less than 10 times adjusted earnings.

A good portion of the shortfall in 2019 stems from ongoing weakness in the firm’s long-term-care business that’s led to depressed profitability in the retail segment. Management took two separate goodwill write-downs over the course of 2018 as a result of end-market disruption affecting its skilled nursing customers, totaling nearly half the amount spent to acquire Omnicare in 2015. While that was a disappointing outcome for shareholders, we plan on leaving our Standard stewardship rating in place for now. Moreover, persistent prescription reimbursement pressure at the pharmacy combined with a lack of generic launches and weaker branded drug inflation expected in 2019 culminated in overall segment operating profits set to fall at a high-single-digit rate over the coming year.

On the pharmacy benefit management side of the business, performance should be more closely aligned with our model that already calls for structural margin pressure in the coming years. That said, 2019 and 2020 will be further affected by incremental costs needed to coordinate the firm’s new partnership with Anthem. That said, Centene’s decision to bring in-house its PBM operations over the next few years should partially offset the long-term benefits from adding Anthem’s claim volume"

De SeeksQuality, que hoy ha aumentado su posición en CVS (a 62,7$).

"anybody thinking of buying or selling CVS on this earnings report really needs to read through the full conference call (transcript on SA) and slide deck.

What strikes me is how many initiatives are in progress! From the first few pages of the slide deck:

  • Continued rollout of MinuteClinic, claiming 80% of primary care services now available there.
  • New concept stores unveiled this month, the next-gen MinuteClinic.
  • Home visits by Coram for infusion services, up 15%.

They are up front about the challenges – price pressure on pharmacy, questions surrounding PBM rebates, and LTC weakness. But they also have what I believe are solid initiatives in place to address them.

  • A new PBM contracting model, guaranteeing client cost and passing on all rebates to the customer. They aim to prove that they can generate customer value without any shady dealing. (Can the other PBM’s do the same? CVS/Caremark is one of the stronger ones.)
  • Cost controls in the LTC segment. This is necessary, if poorly defined. If the division is losing money, then work to prune it back until it becomes profitable again.
  • Synergy with Aetna. Delayed by the slow approval process and delayed further by the consent agreement with the judge, but I believe that runs just six months (and the clock is already ticking). Once they receive final approval, they may be able to more fully exploit the verticals.
  • Product differentiation for Aetna, through the consumer-facing segments of CVS.
  • Technological partnerships, such as Attain by Aetna (Apple Watch) recently announced.
  • New health care offerings in place for 2021 selling season. You can bet these will be unique to CVS/Aetna, as there is no other company that spans so many verticals in healthcare. (United Health is another integrated offering, but lacks the consumer front.)

Now maybe I’m living in a cave, and everybody else is already doing these things? Maybe CVS is chasing the competition (like IBM in the cloud?) and merely trying to rehash the same old stuff with new window dressing? Or maybe this is an entirely new model for health-care delivery that will add a low-cost easy-access service tier to what is already in place?

My belief is that much of this is truly innovative, and will drive revenues over the next three years. The most novel stuff isn’t really ready for 2019, but pieces of the program will gain traction by 2020 and I expect everything announced to be launched by 2021. By 2022 we should be seeing full benefit from these initiatives – though I would expect continuing growth beyond that.

The risk is that these bomb, stifled by regulators, poor consumer buy-in, etc. You can point to the Omnicare acquisition that they overpaid for as an example that management isn’t perfect. What company is? Apple, Amazon, Google, Microsoft… Have none of them ever seen a project or acquisition bomb? Acquisitions are risky, because you are always betting that you can generate more profit from the business than the current operators.

So why is there any reason to believe that CVS/Aetna will be able to generate greater profit than CVS and Aetna as stand-alone? Look to the slide deck and see if that answers your questions."

"The debt is definitely huge! The combined company has $138B of liabilities, up $80B from last year. Assets are up $100B, but about $65B of that is Goodwill and Intangibles. Insurance operations carry both Assets and Liabilities, so the large increase in numbers is to be expected, but we are still looking at a heck of a lot of net debt.

Looking at the debt maturities, I would guesstimate that half their operating cash flow over the next three years will go towards retiring debt. That is huge, but not unsustainable given their moderate dividend. The deal was financed with 3, 5, 10, 20, and 30 year borrowing, but on top of the other debts it seems likely that the 2021 maturities are the major hump. If they can get past that successfully, without the need for an equity raise, then they will be in great shape going forward.

This article focuses on the debt, with a skeptical tone:…

They quote 4.6x Debt/EBITDA, which sounds about right to me. They need to clear about 20% of that debt to retreat from “scary” levels and 30%+ to get back to healthy levels, HOWEVER an increase in EBITDA would contribute to clearing the excess. They presently have a bit over $70B in debt, so clearing $15B (along with a 10%-15% increase in EBITDA) might get the job done.

In short, they need to pay down those 2019, 2020, and 2021 maturities as/before they come due. Not much due this year. The 2020 maturities should be easy enough to clear. And that 2021 bill of $10B? If they haven’t gotten started on that by 2020, it will be a tough bill to handle – they would need to roll it out further in that case. On the other hand, there is every reason to expect that they can manage the whole $15B+ if they spread it out evenly over 2019-2021. We are looking at $10B+ OCF and $7B+ FCF. Their dividend run rate is around $2.5B. They can’t afford share buybacks or further acquisitions (!), and they can’t afford a meaningful dividend increase, but they ought to be able to maintain the dividend and repair the debt by the end of 2021."

"Right now we are looking at a price of ~9x forward earnings, with growth expectations of 9%-10% going ahead from here. A company with that kind of growth will typically trade at 15x-20x earnings, even with a substantial risk premium baked in. Thus if CVS can execute over the next two to three years, I expect a P/E expansion of 50%+ in addition to fundamentals growth of 9%-10% and an ongoing yield of 3%.

If management can hit expectations, you could be looking at a 25% annualized total return over the next three years. There are real risks involved, but the valuation cannot be ignored. It is a similar P/E to AT&T, which is facing its own debt/integration risk and would be thrilled with 5% fundamental growth (a more realistic estimate is 2%). It is substantially cheaper than IBM which is facing its own major debt/integration risk and is a year behind in the assimilation process, and again which is looking at 2%-5% growth. It is 20% cheaper than WBA which has the same Moodys debt rating and fewer growth avenues going forward. It is 30% cheaper than GIS, another debt/growth/turnaround candidate hoping for 5% growth.

I know dividend investors will point to the yield and the dividend freeze as evidence that T, IBM, and GIS are much better values, however in my opinion you are buying the COMPANY and the CASH FLOW rather than the DIVIDEND. And right now CVS is comparable/cheaper than those three, with superior fundamental growth prospects.

Think about it – the three year plan has them spending $2.5B annually on the dividend and $5B annually on retiring debt. By the end of three years (if not a year earlier due to EBITDA growth) the need for aggressive debt retirement will be past. They could easily choose to double the dividend payment at that time. More likely, they would aim for a 30% payout ratio (which in recent years they have indicated as a target) and a $3/share dividend, a 50% increase from the current level.

That won’t happen this year. That won’t happen next year. If they were to announce a large dividend increase this year or next, I would immediately sell. That would be a STUPID decision for management, when they need to first fix the debt. But once the Debt/EBITDA is down to the low 3’s, you can expect large increases again with a “catchup” increase covering the last 2-3 years. I do not believe they intend to permanently limit the payout."


Comentario de Capturando Dividendos de este viernes:


La perdida que ves de -$0.57 se debe a la unión y compra de Aetna ahora que esta diluido también su negocio Omnicare que resulto una perdida para el año 2018 de $6.1 billones. Omnicare se dedica a Long Term Care (LTC) que es el cuido de ancianos. Desafortunadamente este sector LTC ha sufrido mucho son negocios como por ejemplo de Omega Healthcare Investors (OHI). Prácticamente Omnicare es una farmacia para este tipo de negocio y no al publico como tal como lo es la farmacia CVS. Omnicare distribuye medicamentos a pacientes que se encuentran en cuido como por ejemplo ancianos. Aquí te dejo mas información:

La perdida anual se ve asi como la ves pero creo que hay que saber por que es una perdida para no confundirse. Si se ajusta su beneficio por acción seria $7.08 como indican.

Entonces el negocio tuvo una perdida en sus intangibles así como Kraft. De todas formas el negocio salió bien en el 2018. Su casflow fue de $8.9 billones y después de pagar el dividendo aun le quedo $6.8 billones para el negocio. Así que las ganancias están ahí y eso sin el control completo de la adquisición de Aetna. Cerraron su unión a finales de Noviembre 2018 así que solo se acredita un mes en sus ganancias.

Por que cae CVS?

En mi opinión por varias razones.

Muchos inversores no saben y entienden como Aetna/CVS podrían integrarse juntos y funcionar.

Dieron una guía baja para el 2019 comparado con el 2018. Lo que hay que entender es que dieron una guía conservativa dado que algo así nunca había pasado con CVS.

La perdida en los intangibles no les gusto mucho a los inversores. Además de como CVS podrá recuperarse de la perdida echando su negocio de Omnicare hacia delante en ese campo tan difícil hoy día.

Yo creo en lo personal que es una fabulosa oportunidad. Tenemos un dividendo seguro de por medio con un excelente payout. Tenemos una empresa transformándose con lo mas recién de tener clínicas medicas donde pueden atender varios casos en donde no solo te atienden, te recetan tus medicamentos y a lo que esperas puedes comprar tus cosas que necesitas en la sección Retail como comida, bebidas, juguetes, cosas de belleza, etc.

Es un negocio fácil de entender no propuesto a recesiones pues todos necesitaremos medicamentos o tratamientos de cualquier tipo en cualquier momento.

Estaré capturando mas aquí abajo por lo que sigue es la empresa mas odiada o al menos una de ellas por ninguna razón. Sus fundamentos son excelentes en estos momentos. Ahora toca ver que bajen la deuda como prometieron es lo mas que estaré enfocado este año todo lo demás esta bien.

Me gusta su forma de ver las empresas porque hace un análisis muy de “usuario” y ve los aspectos que más gustan a los clientes de a pie. Aumentaré mi posición en CVS con la entrada de cash de este mes.

Un saludo!

Entro en esta empresa a primera hora de hoy, esperemos que la empresa cumpla con sus previsiones de enderezar el rumbo y a finales de 2019 retomar los dividendos crecientes y recomprar acciones (si cotiza en por estos derroteros 50-60$ casi mejor que se dedicará todo el FCF restante a recomprar acciones).

Pdata: como es el mercado, casi no he acabado de pulsar el botón comprar y ya pierdo casi un 3% extra.

El dividendo no será incrementado por los proximos 2-3 años hasta que bajen considerablemente la deuda.

Ampliamos CVS a 56$. Si sigue bajando seguimos ampliando.

Yo tambien he entrado, en mi caso a 56,25 USD, lo he hecho con la mitad de lo que pensaba invertir. Me voy a esperar unos días para ver como se comporta CVS y WBA para ver si aumento en la primera o inicio con la segunda.

Otro que ha iniciado posición a 56$. También inicie posición en otra del sector salud como ABBV

La verdad es que en estos momentos, al igual que WBA, parece un cuchillo…

Yo voy a esperar y ver si hacen ambas figura de suelo.

Caen a cuchillo pero creo que son buenas empresas, sobre si comparamos con otras como GE o KHZ. Para mi la diferencia es importante. Lo complicado es saber donde está el final de la caída como siempre.

Hace una semana entré en CVS, si sigue bajando y toca los 50 compraré otro paquete y WBAm que no la pensaba comprar por ahora, cuando alcance 3% de RDP es posible que entre también.

Parece que ahora le toca a este sector bajar y que en unos meses es posible que haya recuperado como pasa con todas las empresas cada cierto tiempo. Es el mejor momento para comprar pero debemos de asumir un mayor riesgo.

Yo estoy como tú. Ya comenté que entre en CVS a 56 pero que me esperaba un poco para ver cómo evolucionaban. Desde entonces, CVS -10% y WBA-15% y la caída no parece tener fin. Cuando rebote un poco añadiré más

Opino lo mismo pero no dejo de pensar que WAB cinco años después (la compré en 2014) está por debajo de mi precio medio. De nada sirve que dentro de unos meses haya recuperado si vuelve a caer a los pocos años. Lo digo porque la RPD no es alta. Yo con WAB “jugaba” a una buena revalorización mientras cobraba un dividendo digno y con la esperanza de que fuera mucho más alto a los 10-20-30 años.

Habrá que seguir esperando. Y quizá acumulando.


Resultados del primer trimestre de 2019

Análisis de resultados