Check out CVS stock for healthy returns and sales prospects.

Pharmacy stocks aren’t going to be winners in 2023. Nonetheless, it may be time to write a prescription for CVS Health (NYSE:CVS) stock, especially if you are a value seeker and/or passive income investor.

In addition to charting a course for long-term growth, CVS is taking steps to potentially reform the U.S. pharmaceutical industry. While undoubtedly risky, the status quo is not a viable option as CVS is a leader in making drugs more accessible to American consumers.

A simpler, more transparent model

In what could be considered a landmark event in the U.S. healthcare market, CVS announced three new programs: CostVantage, Caremark TrueCost, and Healthspire. The overarching goal is to streamline the healthcare delivery process and make it more transparent.

First, CostVantage is intended to define drug costs and associated reimbursement through a “transparent formula.” The formula takes into account the “drug cost” itself, along with the “set markup” and “fees that reflect the administration and value of pharmacy services.”

Next, Caremark TrueCost includes a simplified drug pricing model that reflects “the true net cost of prescription drugs with visibility into administrative costs.” If all goes according to plan, Caremark TrueCost customers will be able to “choose the pharmacy benefit model that best suits” their specific needs and plans. Unfortunately, CVS won’t launch this program until 2025.

Healthspire also combines CVS’s Caremark, Cordavis, Oak Street Health, Signify Health and MinuteClinic services into an integrated program.

“Delivering care in a more integrated manner, especially for complex patients with chronic conditions, improves health outcomes and patient experience,” explained Mike Pykosz, CEO of Oak Street Health.

We hope Healthspire will help CVS achieve this ambitious goal.

It is not yet known whether CVS will actually enable these programs to help customers reduce their drug costs. According to a report in the Wall Street Journal, some drugs may be cheaper while others may be more expensive.

Not surprisingly, Karen S. Lynch, president and CEO of CVS Health, thought this was the greatest plan since sliced ​​bread.

“We are successfully executing our strategy to advance the future of healthcare while creating new value for consumers,” Lynch declared.

The multibillion-dollar question for investors is whether CVS can drive cost savings for customers while maintaining high margins. That’s easier said than done, especially when the U.S. health care system is less than ideal. Stay tuned for further updates on this very important story.

2024 Sales Guidance: Outlook Looks Good

CVS’ press release is as follows: bona fide It’s the bomb because it includes so much more than the CostVantage, Caremark TrueCost, and Healthspire announcements. It also provided the pharmacy chain’s guidance for this year and next.

This announcement was not a quarterly earnings report. CVS’s most recent quarterly report came out in early November, and it closed out the quarter with third quarter results.

Instead of quarterly reports, CVS’s latest press release included annual sales forecasts. For 2023, CVS reiterated its goal of total revenue of $351.5 billion to $357.3 billion. So far, very good numbers.

CVS then presented something new: its annual financial forecast for 2024. The company expects to generate revenue of “(a)at least” $366 billion, which would imply moderate growth compared to its 2023 guidance range.

Going back to its final forecast, CVS expects 2023 GAAP-measured diluted earnings per share (EPS) of $6.37 to $6.61, followed by 2024 EPS of “(a)at least” $7.26. Again, for CVS, growth is in the cards. The prediction turned out to be correct.

Of course, there is no guarantee that these predictions will actually come true. Nonetheless, it is encouraging to observe CVS management’s clear confidence in its future guidance.

Come for the dividends. Stay for growth and innovation.

Despite all the aforementioned reasons to consider owning CVS stock, some investors will only invest in the company because of its generous dividend. In the same press release cited earlier, CVS said its quarterly dividend increased about 10% to 66.5 cents per share.

There is nothing inherently wrong with choosing to buy and hold CVS stock for its dividends. But informed investors should also consider whether the company is growing and pushing boundaries within its industry.

CVS’s sales guidance and new programs suggest that it’s actually getting it right on all fronts. So, it’s okay to grab a few CVS shares for a healthy rate of return, but don’t forget to do your due diligence on the company. prepare The entire medical/pharmaceutical industry. You’ll probably find that CVS has a clean slate when all is said and done.

disclaimer: All investments involve risk. Under no circumstances should this article be taken as investment advice or constitute liability for investment profits or losses. The information in this report should not be relied upon for investment decisions. All investors should conduct their own due diligence and consult their own investment advisors when making trading decisions.