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CVS Health Corp CVS

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Status Quo Likely to Be Maintained on U.S. Health Insurance and Tax Rates; Some MCO FVEs Increased

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

After Sen. Joe Manchin (D-VA) announced opposition to the Build Back Better bill, we do not expect Congress to enact policies that will significantly increase the insured rate in the U.S. beyond recent measures. While we view this development as mildly negative operationally for medical services firms, positively, those concerns appear likely to be at least offset in our fair value estimates by a reversal of our assumption that the U.S. corporate tax rate would rise and recent cash flows. However, maintaining the status quo in the U.S. healthcare system could keep ESG risks alive for medical service firms in the long run.

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Company Profile

Business Description

Following its acquisition of Aetna in late 2018, CVS Health now provides an even more integrated healthcare-services offering for its members. Legacy CVS combined both the largest pharmacy benefit manager, processing over 2 billion adjusted claims annually, and a sizable pharmacy operation, including nearly 10,000 retail pharmacy locations primarily in the U.S. Adding a managed-care organization with 24 million medical members gives the company a strong position in the insurance industry and should help CVS better control overall healthcare costs for its clients.

Contact
One CVS Drive
Woonsocket, RI, 02895
T +1 401 765-1500
Sector Healthcare
Industry Healthcare Plans
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Classic Growth
Employees 300,000

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