4. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 60
Forward P/E as of October 23, 2024: 8.7
10 Year Revenue Growth Rate: 10.6%
Trailing 12 Month (TTM) Net Income (June 30): $7.19 Billion
CVS Health Corporation (NYSE:CVS) ranks fourth on our list of the most profitable value stocks to invest in. The healthcare company provides insurance services, offers pharmaceutical benefits, and has a retail pharmacy chain. The company provides affordable healthcare to more than 100 million people. Aetna, its health insurance business, covers almost 39 million people with their medical plans, medicare plans, dental plans, behavioral health programs, and Medicaid services.
CVS Health Corporation (NYSE:CVS) has been leveraging its health expertise to improve the way customers access their services. On October 16, the company’s insurance business, Aetna, introduced SimplePay Health. The new service is an alternative health plan aimed at meeting the diverse needs of self-insured clients. The plan reduces costs for customers and improves health outcomes.
To align with its goals, on October 1, Aetna announced its medicare plans for 2025. The plan is focused on meeting the most important health needs of members by ensuring people have access to reliable and affordable healthcare when needed. In 2025, Aetna will expand its Medicare Advantage Prescription Drug (MAPD) plans to 44 states including Washington DC, bringing the total count to 2,259 counties, accessible by 59 million Medicare-eligible beneficiaries. In addition to that, 83% of Medicare-eligible beneficiaries in the United States will have access to a $0 monthly premium Medicare Advantage (MA) by Aetna.
CVS Health Corporation (NYSE:CVS) not only has an expansive and loyal customer base, but it is also improving its plans and services continuously to ensure its customers are retained for the long term. Speaking of financials, while the company is profitable, it expects to improve its profit margin in 2025, which is supported by cost-saving initiatives.
Ariel Investments’ Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2024 investor letter:
“American healthcare company, CVS Health Corporation (NYSE:CVS), also declined following disappointing earnings results and a subsequent reduction in full year guidance. The miss was primarily due to increased utilization of Medicare Advantage plans and weakness in the health services segment driven by the loss of a large client and continued pharmacy client price improvements. In response, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage. CVS believes the program can remain an attractive business for Aetna and CVS Health over time and will construct its bid for 2025 as a multi-year repricing opportunity across plan level benefits. Meanwhile, CVS continues to return capital to shareholders through dividends and a recent accelerated share repurchase transaction.”
