CVS Health Stock: Divestiture Strengthens Strategic Focus

CVS Health has completed the divestiture of its Medicare Shared Savings Program business to Wellvana in an all-stock transaction. This strategic move grants CVS Health a minority stake in Wellvana while allowing the company to concentrate on its core healthcare competencies. Despite this divestiture, CVS Health reaffirms its commitment to value-based care through existing facilities such as Oak Street Health and MinuteClinic, along with contracts between Aetna and its provider network. The transaction positions Wellvana as a major player in value-based healthcare, now supporting providers across 40 U.S. states and serving approximately one million Medicare patients. Currently, CVS Health shares are trading at $64.91, reflecting a slight 0.02% increase on the NYSE.

Financial Strength Continues

The company maintains robust financial health with annual revenue of $370.66 billion, demonstrating its strong market position. Analysts currently rate the stock as undervalued, suggesting potential for future growth. CVS Health's financial stability is underscored by its 4.1% dividend yield and impressive 55-year streak of consecutive dividend payments. In Q4 2024, the company exceeded consensus expectations with adjusted earnings per share of $1.19, outperforming projections by 29%, supported by favorable medical-loss ratio and better-than-anticipated net capital returns. The Bernstein SocGen Group has raised its price target for CVS Health shares to $71, reflecting increased confidence in the company's earnings potential.

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Source StockWorld