When it comes to pharmacies — the new version of the old drug store — there is no one better adapting to the new challenges and opportunities than CVS Health Corp (NYSE:CVS).
CVS is a front-line player in the Obamacare world, dispensing prescriptions as well as offering over-the-counter medicines as well as cosmetics and general store merchandise that make each CVS a key center of activity in every town across America.
CVS has 7,800 CVS Pharmacies and Longs Drugs across the U.S., which unsurprisingly makes CVS the largest healthcare provider in the U.S., boasting 65 million plan members.
What’s more, 15 years ago, CVS pioneered the Minute Clinic concept where people can be seen for a variety of low-grade issues, from flu shots to wound care, anything a nurse practitioner or physician’s assistant can handle. There are now 900 locations in 31 states and Washington, D.C. that have had 24 million patient visits with a 95% satisfaction rating.
CVS’ complimentary service also helps drive prescriptions since anyone coming into the clinic that needs medicine will likely get the scrip filled right there at the CVS.
Numbers show that the big money in pharmacies these days is going into prescription medicine. This is the driving force behind the Affordable Care Act; get more people enrolled in Obamacare and give them access to medicine. And that doesn’t even count the growing number of medicines available over the counter.
The U.S. drugstore business brings in over $250 billion annually, and it’s growing at a solid 2.2% clip each year.
CVS stock’s Q1 numbers came in last week and suffice it to say, CVS is growing faster than average. Quarterly revenue was up 11%, and CVS came in with earnings of $1.14 per share, beating analysts estimates of $1.08 per share. Additionally, CVS affirmed forward guidance for 2015 in line with analysts estimates.
This is all good news, and with expanding sales and new stores, CVS Health’s Pharmacy Services revenues increased 18.2%, while revenues from Retail Pharmacy improved 2.9% year over year. Plus, CVS opened 38 new retail drugstores — CVS Health should easily hit its 2015 goals, if not exceed them.
CVS Health’s Pharmacy Services division focuses on pharmacy benefit management (PBM) — basically acting as the middle man between the insurers and the drug companies in dispersing prescription medications.
This is the sector that will continue to grow a very healthy rates for many years to come, and as CVS expands, its role in PBM will grow even faster.
CVS is the second-largest drugstore chain in the U.S., but that may not last for much longer. Everything is going the right way for CVS Health right now, and CVS stock is also doing well. Most analysts that cover CVS rank is as a “buy.”
If you’re looking for a solid long-term play on the expanding healthcare sector, CVS is a great choice.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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