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CVS

Opening a small position a little after the open. Strong cash flow, consistent margins, solid dividend. Seems the risk is the future insurance and amazon. Also down on acquisition talks. But I think the nature of medication and how it’s prescribed or bought, usually needed immediately, does not translate to online. Defensive stock that I think would  not drop tooooo much if overall market turned. 

Not investment advice. Curious if I’m missing any major risk.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

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If amazon can solve the time sensitivity issue (by offering on-site pickup), all those guys are gonna get killed… but hey they might just buyout CVS? 

Maybe they could partner with CVS or WBA. But I don’t really get what the benefit would be for those co’s or even the patients. Most patients, as long as they just pay a co-pay, most do, only care about convenience.  The pharmacies in place have the switching cost on their side. If you’re paying $10 for a bottle of pills because of insurance, you won’t have any advantage by switching to amazon to pay $10 to them instead.

Doctor phones in a script, to a pharmacy that already has your info, pills will be ready in an hour or so, also a pharmacist must offer consultation on new scripts. After that, the perscription is in the system and refills are a breeze.

OTC, you have the advantage of a lot of choices in person and pharmacist consultation.

other sales, just gravy. I’ve never bought anything in this sector so open to any criticism.

executed at $66.91, we shall see. 

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

first of, their numbers are amazazing. you are very right on their performance historically. their valuation imo is mostly from the pbm side. their retail business is a declining biz. and they are hoping to revamp with minute clinics. etc.

second of, they are deeply worried about two things: cvs was worried about regulation, pbms are getting targeted by congress because they are esentially good for nothing middlemen with conflicts of interest. they lower the prices of pharma, but still continue upcharging customers to pocket their profit, hence why they are really profitable. what couldnt be done by govt, is now being threatened by amazon itself. amazon enters business that have high margin with the sole intent of lowering it in order to scale up and kill its competitors. they have filed for wholesale license and there is talk that they might acquire a pbm to actively compete with cvs. there are rumors that amazon plans will be revealed prior thxgiving.

third, cvs is combating these existential threats by acquiring aetna, the insurance provider. first of, through acquisition, they will get rid of the middlemen label. secondly, they will gain new customers to upsell.  thirdly, this is a strategy followed by one of the most successful once in the biz, united health. now cvs is definitely overpaying for aetna at an offer for 200 bucks pershare, there are reports that it’ll prolly be more than that and is expected to finish before year ends. cvs tried to acquire anthem first but was rebuffed, they made a partnership instead and anthem is trying to build out their own pbm but supplied by cvs. anthem decided to create its own pbm since it sued its former pbm esrx, the largest pure play pbm, who many think amazon might acquire.

as for acquisition idea for amazon, it would be an extremely large acquisiton, cvs is like 100b enterprise value, and esrx is like 50b. many thing they will just target people with no insurance to avoid the regulation. keep in mind amazon has real cheap cost of capital, and it can easily subsidize its endeavors due to its profitable cloud biz.

anyways. i love the drama in this industry. its definitely interestingggg.

I love my cheese. I got to have my cheddar.

Are there any regulatory concerns with CVS regarding medicare drug negotiations, elimination of healthcare tax deductions, or anything else?

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margins decreasing, payout ratio increasing, bv stuck, ok roic.

cash flow does look good.

amazon kills the upside here

"You want a quote? Haven’t I written enough already???"

RIP

Stay far away . Pick WBA over this turd

"You want a quote? Haven’t I written enough already???"

RIP

some sell side analyst who was talking about this on cnbc. said imagine if i can order my pills through alexa. alexa get me my lexapro. lol she openly admitted to taking an anxiety/depression drug on national tv. i rofled so hard.

also cvs so much better than wba imo.

I love my cheese. I got to have my cheddar.

how is cvs better than wba?

"You want a quote? Haven’t I written enough already???"

RIP

Thanks for sharing your thoughts, I learned a lot. Will definitely consider and research a few items in more detail. Will post up of my thoughts change or I have anything meaningful to say ha Holding for now. 

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

Amazon seems to be the threat. How much did mail order prescription hurt the business back in the day? 

Market has had time to mull over the Aetna deal, was slightly positive before but doubters seem to have relented. Risk from Amazon on the back burner, some think the deal lowers that risk. I don’t  have a strong opinion about that. Will have to revisit the numbers when I have a chance. Holding for now.

$76.16

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

saw this on reddit. thought it might interest u. https://reddit.com/r/investing/comments/7hbbik/cvs_buys_aetna_for_69...

I love my cheese. I got to have my cheddar.