2024-04-10 09:12:43 ET
Summary
- In 2017, CVS Health shifted its strategy to become a verticalized healthcare company, with the Aetna, Signify Health, and Oak Street Health transactions anchoring the move.
- The strategy is proving correct, though the stock has lagged the broad market.
- This article examines management's forward guidance versus actual results for the period 2018–2024. Is management adept at setting expectations, then meeting or exceeding them?
- What trends become apparent when reviewing management guidance, and how might long-term investors respond?
For the last several years, I've been constructive on CVS Health Corporation ( CVS ). In my most recent article , published on November 28, 2023, I encouraged investors to “play the long” game.
A Brief History Lesson
No later than 2016, ex-CEO Larry Merlo recognized the corner drug store business wasn't going to age well. So, he set strategy for CVS to become a verticalized health care company. His parting shot was the $69 billion Aetna acquisition. That deal closed in late November 2018....
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For further details see:
CVS Health: Lookback, Management Guidance Vs. Results 2018-To-Date