Thursday, May 26, 2016

1 Number From CVS Health That Blew Me Away

Source: Department of Labor
After it rang up more than $153 billion in total sales last year -- making it one of the largest retail operations in the world -- industry watchers expect the company's top-line to surpass $181 billion this year. That represents double-digit growth off of an enormous base, which is an impressive accomplishment for a company of CVS Health's size.

I've been digging deep into CVS Health's recent financial results and have been blown away by just how big this company has become. Below is a list of 15 numbers that amazed me and might help you put this behemoth's size into perspective.

97.3%: This was CVS Health's retention rate for its PBM customers last quarter. It's a remarkably high number that demonstrates just how much its services are valued by customers.

Tyrone's Comment:  97.3% is especially high when you consider plan sponsors can't make heads or tails about how much they actually pay for the services. This is different from plan costs; hidden somewhere in the total spend are the legacy PBM's service revenues (fee).

$2.1 billion: That's how much the company spent on repurchasing its own shares during the first quarter. In total, 22.4 million shares were retired for an average price of $98.52 per share, and management has plans to buy back another $1.8 billion worth by year-end. That should ensure that the company's share count continues to decline at a rapid rate.

$40 billion: That's how much revenue CVS Health pulled in from its specialty drug business in 2015, which was up 32% percent over the prior year.

$5 billion: That's how much total capital will be returned to shareholders in 2016 through a combination of dividends and buybacks. Still, the company's cash balance is expected to grow this year, as management plans to throw off at least $5.3 billion in total cash flow for the year.

80 million: That's about how many members are covered by CVS Health's pharmacy benefits management (PBM) business. That's the second-largest network in the country, behind only Express Scripts.

9,600: That's the approximate number of pharmacies that are currently in CVS Health's retail empire. This number took a sizable step forward last year when the company ponied up $1.9 billion to take over Target's pharmacy and clinic business, and the company continues to grow organically, too. Management has plans to net a total of 100 new store openings during 2016.

17.5% to 19%: That's how much total revenue growth CVS Health expects to show for the full year. Acquisition-related costs and slightly lower margins are going to curtail profit growth, but management is still guiding for adjusted earnings to fall in the range of $5.73 to $5.88. That's growth of at least 11% versus the prior year.

23.9%: That is CVS Health's retail pharmacy market share during the first quarter of 2016. That's up 245 basis points versus the same quarter a year ago, mostly because of inclusion of its Target acquisition -- but the company believes that it grew organically, too. That's a healthy lead over the 19.5% market share that Walgreens Boots Alliance boasted over the same period.

85.2%: This is the percentage of dispensed drugs from its PBM business that were generics in the first quarter. It was up 170 basis points versus the same period last year, and with more drugs losing patent protection each year and the rise of biosimilars, it is likely to keep climbing.

By Brian Feroldi

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