CVS Health Corporation
Health Care · Health Care Providers & Services
Structural: vertically integrated payor (Aetna) + PBM (Caremark, ~1/3 of US scripts) + retail pharmacy + primary care (Oak Street ~210 clinics) + home eval (Signify). Same Optum-style flywheel as $UNH, two years behind on execution. ~$370B revenue, ~$115B market cap, trades at depressed multiple post-2024 MLR blowup.
(1) Aetna MLR normalizes as 2024 Medicare Advantage rate notice + bid repricing flows through 2025-26; (2) Caremark renewals re-up at scale, GLP-1 formulary leverage real; (3) Oak Street value-based care ramp toward ~300 clinics by 2027 monetizes captive Aetna lives; (4) cost program + portfolio review (rumored retail/PBM separation chatter) unlocks SOTP; (5) dividend yield ~4-5% covered by ~$8B FCF run-rate.
(1) Medicare Advantage utilization step-change may persist into 2026, MLR slow to fix; (2) PBM regulatory overhang (FTC, Congress) caps Caremark rebate economics; (3) GLP-1 cost pass-through still uncertain on Aetna book; (4) Oak Street + Signify integration costs eat near-term EPS; (5) $UNH Optum is 2-3 years ahead on care delivery scale and tech stack; (6) retail pharmacy foot traffic structurally declining ($WBA precedent).
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