Recomendados
Más contenido relacionado
La actualidad más candente
La actualidad más candente (20)
Similar a CVS Pitch
Similar a CVS Pitch (20)
CVS Pitch
- 2. Table$of$Contents I. Investment$Thesis II. Industry$Outlook III. Company$Overview IV. Valuation V. Conclusion 2 Investment Thesis Industry Outlook Company Overview Valuation Conclusion
- 4. Introduction:$CVS • Originally$founded$as$Melville$Corporation$in$1922$ • Later$on$became$CVS$Corporation,$then$CVS$Caremark$Corporation,$and$ now$is$CVS$Health • Operates$in$the$Health$Care$Plans$Industry • Most$companies$in$this$industry$act$as$Pharmacy$Benefit$Managers$(PBM) • CVS$Health$is$split$up$into$4$operating$segments • CVS/pharmacy • CVS/minute$clinic • CVS/caremark • CVS/specialty$ 4 Investment Thesis Industry Outlook Company Overview Valuation Conclusion
- 9. Investment$Thesis Current'Share'Price:'$103.95 |''''''''''''''''''''Implied'Share'Price:'$147.19 Thesis:'CVS'offers'unique'upside'opportunity'as'a'historically'well'positioned'player'in'one'of'the'most' rapidly'expanding'markets'in'the'United'States,'with'a'corporate'structure'leveraged'to'produce' outsized'returns'on'growth'in'the'complexity'and'expenditure'of'healthcare'provision. Catalysts: • Industry'growth • CVS'→'CVS'Health • CVS'Specialty'Connect Risks: • Markets • Tobacco • U.S.'Healthcare'Policy 9 Industry Outlook Company Overview Valuation Conclusion Investment Thesis
- 11. Competitive$Landscape:$Current$State • Industry$made$up$of$PBMs$(Pharmacy$Benefit$Managers) • PBMs:$the$intermediary$between$the$payor and$everyone$else$in$the$healthcare$system • Form$prescriptions$plans • Medicare$Part$D$services • Formulary$management • Increase$in$preventative$cares$services • Flu$vaccinations,$immunizations,$and$health$screenings • Affordable$Care$Act • More$individuals$can$afford$to$visit$doctors • Aging$baby$boomers • Will$require$medications$to$address$their$ailments • An$estimated$89.7%$of$those$65+$currently$use$a$prescription • 76.7%$of$total$industry$revenue$is$expected$to$be$from$prescription$sales Investment Thesis Industry Outlook Company Overview Valuation Conclusion
- 12. 12 Current$State$(cont.) ● The$products$supplied$in$the$ PBM$industry$are$mainly$ medications ● CVS$Health$ ~71m$members, with$~25%$share$of$PBM$market Investment Thesis Company Overview Valuation Conclusion Industry Outlook
- 13. Future$Outlook • Pharmacies$will$be$essential$as$baby$boomers$start$to$transition$into$the$65+$ category$over$the$next$5$years • Healthcare$reform$has$increased$the$number$of$those$insured • Americans$will$pay$lower$outofpocket$costs$for$prescriptions • Brandname$drugs$soon$to$lose$their$patents • Will$cause$new$generics$to$enter$the$market • CVS$will$benefit$from$these$trends • Customer$base$will$grow • Will$supply$more$generics$as$patents$expire • Prescriptions$will$become$cheaper$for$consumers 13 Investment Thesis Company Overview Valuation Conclusion Industry Outlook
- 14. Market$Positioning$and$CVS • CVS$has$acquired$Target$and$Omnicare • Acquisition$of$Target’s$pharmacy$and$clinic$business$is$estimated$to$ increase$CVS’s$market$share • $1.9$billion$deal • Omnicare$is$a$drug$manufacturer$that$produces$drugs$for$seniors • CVS$can$now$offer$lower$prices$on$these$drugs • Revenue$expected$to$grow$by$9.8%$annually$to$$152.9$billion 14 Investment Thesis Company Overview Valuation Conclusion Industry Outlook
- 16. What$is$a$PBM? Pharmacy$Benefit$Manager Responsible$for: • Processing$and$paying$prescription$drug$claims • Developing$and$maintaining$the$formulary • Contracting$with$pharmacies • Negotiating$discounts$and$rebates$with$drug$manufacturers$ 16 Investment Thesis Industry Outlook Company Overview Valuation Conclusion
- 17. CVS/pharmacy • Consists$of$756.0$million$retail$ prescriptions • Prescriptions$70.7%$of$total$ revenue • General$merchandise$13.6% • Overthecounter$and$personal$care$ products$11.0% • Beauty$and$cosmetics$4.7% • Starting$to$add$a$services$component • Flu$vaccinations • Facetoface$counseling • Rebranding$effort 17 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 18. CVS/minuteclinic • MinuteClinicwalkin$medical$clinics$are$staffed$by$nurse$practitioners$who$ specialize$in$family$health$care$ • CVS$is$a$market$leader$for$lowcost$clinics$ 56%$of$the$national$clinic$market$ share • Of$the$14$million$new$health$care$customers,$7$million$are$expected$to$face$ physician$shortages,$creating$a$demand$for$comparable$services$at$low$ costs.$ • CVS$currently$owns$900$Minuteclinics,$with$plans$to$expand$to$1,500$locations$ by$2017.$(Walgreen$has$400$location) • The$increasing$shortage$of$primary$care$physicians$is$expected$to$benefit$ MinuteClinic,$in$the$future 18 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 20. CVS/caremark • PBM$for$CVS$(thirdparty) • Specialty$Connect$Program • Dropping$Drugs • Biosimilars • Medicare$Part$D 20 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 21. CVS/specialty • Dedicated$to$providing$specialized$services$for$a$wide$range$of$more$specific$and$ complicated$medical$conditions$ranging$from$cancer$and$HIV$to$infertility$and$ cystic$fibrosis • CVS$has$over$35$years$of$operational$experience$in$the$specialty$space$and$is$the$ current$market$leader • Through$its$SpecialtyConnect,$customers$ailing from$such$conditions$can$receive$the$same services$across$the$entire$range$of$CVS$locations ranging$from$clinical$support$to$insurance advisory$after$their$prescriptions$are$filled 21 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 22. Management$Team • Larry$J.$Merlo$– CEO$– 59$years$old • Previously$employed$as$Vice$President$of$stores$by$CVS • Also$was$Chairman$by$National$Association$of$Chain$Drug$Stores •Troyen$A.$Brennan$– Chief$Medical$Officer • Previously$employed$by$Aetna$as$CMO$and$Vice$President • CEO$of$Brigham$and$Women’s$Physicians$Organizations.Inc$ • Professor$of$Law$and$Public$Health$by$Harvard$School$of$Public$Health • Professor$of$Medicine$by$Harvard$Medical$School • David$M.$Denton$– CFO • Also$Independent$Director$at$Coach.Inc • Previously$employed$by$PharmaCare$Management$Services.Inc 22 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 23. Mergers$and$Acquisitions • Acquired$Omnicare$for$~$12.9$billion$in$August • Will significantly expand its ability to dispense prescriptions in assisted living and long term care facilities that serve the senior patient population • Help establish CVS in another important business segment • Captures America’s aging population • Acquired Target’s 1,660 pharmacies over 47 states • Will be rebranded as MinuteClinic and CVS Health • As Target expands so does CVS • Significant purchasing and revenue synergies 23 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 24. Mergers$and$Acquisitions 24 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 25. Catalysts • ‘CVS$Health’$rebranding • CVS$‘Specialty$Connect’$program • U.S.$Healthcare$Spending$jumped$to$5.5%$in$2014 25 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 26. Risks • Tobacco • Market$Conditions • Competitive$Environment • Regulatory$Compliance • Declining$Discounts 26 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 27. Financial$Performance 27 Investment Thesis Industry Outlook Valuation Conclusion Company Overview
- 28. 28 IV.$Valuation
- 32. Discounted$Cash$Flow$Analysis Implied$Share$Price:$ $147.19 WACC:$ 10.83% Implied$EV:$ $121.149.87 Perpetuity$Growth$Rate: 4.50% PRAT$Growth$Model$– DuPont$Analysis 32 Investment Thesis Industry Outlook Company Overview ConclusionValuation
- 34. Summary:$Positioning$for$Today,$Preparing$for$Tomorrow CVS$has$made$the$right$moves: • Positioned$as$a$safe$play$within$a$growing$market,$PBM$play$ without$significant$unrealized$risks • Offers$investors$balance$between$stability$and$exposure$to$industry wide$trends$in$healthcare • The$new$acquisitions$for$CVS$will$prevent$costs$from$going$up$in$a$ continually$highly$regulated$industry.$ • Favorable$industry$trends$are$currently$coming$to$fruition$for$CVS 34 Investment Thesis Industry Outlook Company Overview Valuation Conclusion
- 36. Appendix$1 36
- 37. Appendix$2 37
- 38. Appendix$3 38