Jim Cramer’s Latest Game Plan: 15 Stocks to Watch

6. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 60

Cramer highlighted CVS Health Corporation’s (NYSE:CVS) new CEO and said:

“Wednesday CVS reports and we’ll learn about new CEO David Joyner’s turnaround plans, we hope. He’s got some real heavy lifting to do because CVS has a very jumbled set of assets. I’m rooting for him. Poor guy needs all the help he can get.”

CVS Health (NYSE:CVS) offers a wide range of health solutions in the U.S., including health insurance products and services, pharmacy benefit management, and pharmacy services. It serves diverse customers, such as employer groups, individuals, health plans, and government programs. Additionally, the company sells prescription drugs, and over-the-counter products, and provides consulting services to healthcare facilities.

However, the company has faced multiple challenges these few past years, marked by slow revenue growth and declining stock performance. Since January, the company’s shares have dropped by over 32%. This downturn is partly attributed to rising labor costs, both at the corporate level and in pharmacy operations. The healthcare benefits segment, which includes Aetna, has also struggled due to higher healthcare costs and increased utilization.

According to the company, there was a notable increase in its Medical Benefit Ratio (MBR) in the most recent quarter, and it cited higher Medicare Advantage utilization, lower Star ratings, and greater Medicaid acuity as key factors.

In light of these difficulties, CVS Health (NYSE:CVS) announced a significant leadership change in October 2024, appointing David Joyner as President and Chief Executive Officer. This change coincided with the company’s decision to withdraw its 2024 earnings forecast and disclose that its third-quarter profits would fall well below analysts’ expectations, which led to further declines in its stock price.

As reported by Bloomberg News, in an internal memo to employees, Joyner acknowledged the challenges facing the company and called for financial and operational improvements to ensure the company’s continued leadership in the healthcare industry. According to Reuters, Joyner has highlighted his previous experience at Aetna, where he addressed similar issues, and expressed confidence in his ability to navigate the current difficulties and drive the company forward.