Business Analysis of CVS Health

 Analyze Historical Performance, Strategic Priorities, And Business Improvement Opportunities of CVS Health

CVS HEALTH

Business Overview

CVS Health Corporation, together with its subsidiaries, provides integrated pharmacy health care services. It operates through Pharmacy Services and Retail/LTC segments. The Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management, Medicare Part D services, mail order, specialty pharmacy and infusion services, retail pharmacy network management services, prescription management systems, clinical services, disease management programs, and medical pharmacy management services. This segment serves employers, insurance companies, unions, government employee groups, health plans, Medicare Part D plans, managed Medicaid plans, plans offered on public and private exchanges, other sponsors of health benefit plans, and individuals under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS Pharmacy, CVS Specialty, Accordant, SilverScript, NovoLogix, Coram, Navarro Health Services, and ACS Pharmacy names. As of December 31, 2016, it had 23 retail specialty pharmacy stores, 13 specialty mail order pharmacies and 4 mail order dispensing pharmacies, and 84 branches for infusion and enteral services. The Retail/LTC segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, personal care products, convenience foods, seasonal merchandise, and greeting cards, as well as offers photo finishing services. It has 9,709 retail stores in 49 states, the District of Columbia, Puerto Rico, and Brazil primarily under the CVS Pharmacy, CVS, CVS Pharmacy y mas, Longs Drugs, Navarro Discount Pharmacy, and Drogaria Onofre names; online retail pharmacy Websites; and 38 onsite pharmacy stores, long-term care pharmacy operations, and retail health care clinics. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was founded in 1892 and is headquartered in Woonsocket, Rhode Island.

CVS Health

CVS Health


R&P Rank: 7
Sector: Healthcare Services
Industry:Drug Stores, PBM and Distributors
H.Q Location:Rhode Island
Website: www.cvshealth.com
Company Address:
ONE CVS DR., WOONSOCKET RI 02895
Ph:401-765-1500

Business Analysis of CVS Health

The Healthcare Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how CVS Health compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by CVS Health to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.

Here is the performance snapshot of CVS Health with an interactive chart.

  1. Revenue Growth: CVS Health reported a revenue growth of 15.8% year-on-year during 2016. Drug Stores, PBM and Distributors Industry grew at 10.3% in the same period
  2. COGS share of Revenues: As a percentage of revenue, CVS Health spent 83.7% of its total revenues on COGS. Drug Stores, PBM and Distributors industry average (COGS share of revenue) in the same period was 88.6%
  3. R&D share of Revenues: CVS Health R&D share of Revenues details are not available because either company does not share the data or we do not have it
  4. SG&A share of Revenues: As a percentage of revenue, CVS Health spent 10.4% of its total revenues on Sales, Marketing, and General Administration (SG&A). Drug Stores, PBM and Distributors industry average SG&A spending in the same period was 7.8%
  5. Inventory share of Revenues: As a percentage of revenue, CVS Health spent 8.3% of its total revenues on Inventories. Drug Stores, PBM and Distributors industry average Inventory spending in the same period was 7.5%
  6. Accounts Payable share of Revenues: As a percentage of revenue, CVS Health invested 9.8% of its total revenues on Accounts Payable (A/P) Drug Stores, PBM and Distributors industry average Accounts Payable investment in the same period was 12.5%
  7. Accounts Receivable share of Revenues: As a percentage of revenue, CVS Health invested 6.9% of its total revenues on Accounts Receivable (A/R). Drug Stores, PBM and Distributors industry average Accounts Receivable investment in the same period was 7.1%
  8. PP&E share of Revenues: As a percentage of revenue, CVS Health invested 5.7% of its total revenues on Property, Plants, and Equipments (PP&E). Drug Stores, PBM and Distributors industry average PPE investment in the same period was 3.8%
  9. Intangibles share of Revenues: As a percentage of revenue, CVS Health invested 29.2% of its total revenues on Intangibles. Drug Stores, PBM and Distributors industry average Intangibles investment in the same period was 17.2%
  10. Net Margins: CVS Health Net Margins in the year 2016 were 3.0%. Drug Stores, PBM and Distributors industry average Net Margins in the same period were 2.1%

Sector and Industry Association of CVS Health

For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.

CVS Health is associated with Healthcare Sector Group, Healthcare Services Sector, and Drug Stores, PBM and Distributors Industry.

Healthcare Services sector is comprised of the following industries: Drug Stores, PBM and Distributors; Healthcare Payers; Healthcare Providers; Medical Software; Healthcare Research Services. The definitions for each of the industries is as follows:

  • Drug Stores, PBM and Distributors industry includes nationwide drugstore chains, pharmacy benefit management (PBM) companies, and drug distributors. Drug stores also offer walk-in clinics and related pharmacy services. Distributors distribute branded and generic pharmaceutical and other healthcare products to hospitals, pharmacies and other healthcare providers. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
  • Healthcare Payers industry includes healthcare insurance companies that finance or reimburse the cost of health services. These companies also offer collaborative care, population health management, healthcare technology, Pharmacy Benefit Management, analytics, consulting and administrative services.
  • Healthcare Providers industry consist primarily of hospitals but recent changes in the health services industry have contributed to both increasing numbers of other types of facility providers. Companies in this industry include traditional healthcare providers and emerging healthcare facility providers like ambulatory surgery centers, behavioral healthcare facilities, dialysis clinics, home health care companies and others.
  • Medical Software industry includes companies that offer any software item or system used within a healthcare context. These companies offer standalone software used for diagnostic, therapeutic purposes, clinical financial and operational purposes.
  • Healthcare Research Services industry includes companies that offer biopharmaceutical development services, commercial outsourcing services; commercial pharmaceutical sales and service organizations, consulting, health information analytics and technology consulting.

Industry Ranking of CVS Health

With $177.5 billion revenues, CVS Health ranked number 2 of all the companies in the US Drug Stores, PBM and Distributors industry. There were a total of 14 public companies in the US Drug Stores, PBM and Distributors industry that had revenues greater than $50 million during 2016.

The top-10 companies in the US Drug Stores, PBM and Distributors industry by revenues during 2016 were:

  1. McKesson ($190.9 billion)
  2. CVS Health ($177.5 billion)
  3. AmerisourceBergen ($146.8 billion)
  4. Cardinal Health ($121.5 billion)
  5. Walgreens Boots Alliance ($117.4 billion)
  6. Express Scripts Holding ($100.3 billion)
  7. Rite Aid ($30.7 billion)
  8. Henry Schein ($11.6 billion)
  9. Owens & Minor ($9.7 billion)
  10. Patterson Companies ($5.4 billion)

Business Model Analysis (BMA) Framework

We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.

Next Steps

  • Conduct a holistic benchmarking; to identify and target additional sources of value
  • Get in touch with us to learn more about Business Model Analysis Framework
  • Get free data, charts, and analysis of CVS Healthand its peers on select key performance indicators by clicking the reports provided below

Industry Peers and Competitors of cvs-health

McKesson (MCK) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

McKesson Corp with $191 billion revenues in the year 2016 was the number 1 Drug Stores, PBM and Distributors company. Read this report to know the top competitors of McKesson and identify growth and cost optimization opportunities of McKesson

AmerisourceBergen (ABC) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

AmerisourceBergen Corp with $147 billion revenues in the year 2016 was the number 3 Drug Stores, PBM and Distributors company. Read this report to know the top competitors of AmerisourceBergen and identify growth and cost optimization opportunities of AmerisourceBergen

Cardinal Health (CAH) Business Analysis – Analyze Historical Performance, Strategic Priorities,...

Cardinal Health Inc with $122 billion revenues in the year 2016 was the number 4 Drug Stores, PBM and Distributors company. Read this report to know the top competitors of Cardinal Health and identify growth and cost optimization opportunities of Cardinal Health

Walgreens Boots Alliance (WBA) Business Analysis – Analyze Historical Performance, Strategic...

Walgreens Boots Alliance, Inc. with $117 billion revenues in the year 2016 was the number 5 Drug Stores, PBM and Distributors company. Read this report to know the top competitors of Walgreens Boots Alliance and identify growth and cost optimization opportunities of Walgreens Boots Alliance

Express Scripts Holding (ESRX) Business Analysis – Analyze Historical Performance, Strategic...

Express Scripts Holding Co. with $100 billion revenues in the year 2016 was the number 6 Drug Stores, PBM and Distributors company. Read this report to know the top competitors of Express Scripts Holding and identify growth and cost optimization opportunities of Express Scripts Holding

Rite Aid (RAD) Business Analysis – Analyze Historical Performance, Strategic Priorities,...

Rite Aid Corp with $31 billion revenues in the year 2016 was the number 7 Drug Stores, PBM and Distributors company. Read this report to know the top competitors of Rite Aid and identify growth and cost optimization opportunities of Rite Aid

Revenues Analysis

CVS Health (CVS) Revenues And Revenue Growth From 2012 To 2016

This report provides the last five years revenues and revenue growth of CVS Health Corp (CVS) from 2012 to 2016. CVS Health generated a total of $177.5 billion revenues during 2016. CVS Health reported a revenue growth of 15.8% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in December.

CVS Health (CVS) Revenues And Revenue Growth From 2002 To 2016

This report provides the last fifteen years revenues and revenue growth of CVS Health Corp (CVS) from 2002 to 2016. CVS Health generated a total of $177.5 billion revenues during 2016. CVS Health reported a revenue growth of 15.8% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in December.

CVS Health (CVS) Revenue Growth Comparison With Industry Growth From 2012...

This report provides a comparison of CVS Health Corp (CVS) revenue growth with Drug Stores, PBM and Distributors industry growth during the last five years from 2012 to 2016. CVS Health reported a revenue growth of 15.8% year-over-year during 2016. The Drug Stores, PBM and Distributors industry growth was 10.3% year-over-year during 2016. CVS Health growth was faster than the industry during 2016.

Profit Analysis