CVS Health has been transforming its business model from that of a once-dull drugstore operation into a vertically integrated healthcare business.
CVS Health saw revenue increase 10% to $76.6 bn in Q4 2021, with full year revenue up by 9% to $292.1 bn. Earnings per share grew 15% to $1.98, beating estimates by $0.10.
The investment in Aetna health enabled it to leverage off its pharmacy services, now one of the U.S.’s largest pharmacies, providing managed care for over 23 million members.
The growth in the clinics, with services provided from pharmacy, have become health care destinations, and uses Teladoc’s remote (and affordable) technologies for virtual visits.
CVS Health has an extensive branch network with 40% of the US population living within five miles of a CVS pharmacy (which offers a range of group services). The company has conducted over 32 million Covid-19 tests and have administered 59 million Covid vaccines.
The company’s conservative guidance appears to be based on a substantial revenue contribution from Covid vaccinations in the past quarter, however future growth of the healthcare model should offset a decline in Covid sales.
Bank of America has chosen CVS Health as one of its top stock picks for 2022 and is projecting 23% upside to the current share price. I believe the company will continue to grow earnings thanks to its diversified higher margins offering in the healthcare sector.