In our society. many people suffer from complaints and diseases that require medicine to assist them pull off their unwellnesss while seeking to keep a normal life style. Approximately 75 % of the US population lives within three stat mis of a CVS ( Datamonitor. 2011 ) . a retail pharmaceutics which sells prescription drugs and a scope of general ware including over the counter drugs. beauty merchandises and cosmetics. exposure coating. seasonal ware. salutation cards. and convenience nutrients ( Mergent. 2012 ) . Pharmacy services for CVS besides include a mail order pharmaceutics service. forte pharmaceutics services. program design and disposal. formulary direction and claims treating. CVS besides possesses in shop wellness clinics called MinuteClinics. In 2011. CVS employed about 211. 000 people in 44 provinces. the District of Columbia and Puerto Rico. They have 7. 025 retail shops. 569 MinuteClinic locations. 49 retail pharmaceutics shops. 18 mail order pharmaceuticss. 6 mail service pharmaceuticss. CVS. com and Caremark. com web sites.
Their vision is to better the quality of human life. They strive to supply expert attention and advanced solutions in pharmaceutics and wellness attention that are effectual and easy for their clients. Their strength lies in set uping a strong presence in sectors such as forte pharmaceutics and retail clinics. CVS was established in 1963 in Lowell. Massachusetts by brothers Stanley and Sidney Goldstein along with their spouse Ralph Hoagland. CVS is short for Consumer Value Stores. In 1967. CVS opened its first shop with a pharmaceutics section in Rhode Island. During 1969. CVS is sold to Melville Corporation. CVS achieved $ 100 million in one-year gross revenues in 1974. In 1978 CVS sets itself apart from rivals by opening little health care and beauty assistance shops in enclosed shopping promenades. Becoming the 15th largest pharmaceutics concatenation in the United States in 1980. CVS possesses 408 shops. Stanley Goldstein. cofounder. takes over as president and CEO of Melville Corporation in 1987. The following twelvemonth. CVS celebrates its twenty-fifth Anniversary. with 750 operating shops.
CVS acquired a mass bulk of their shops from Peoples Drug ( 500 shops ) . Eckerd ( 1. 268 shops ) . Revco ( 2. 500 shops ) . Arbor Drugs of Michigan ( 200 shops ) . Long Drugs ( 541 shops ) and Sav-On and Osco apothecary’s shops from Albertson ( 700 shops ) . These acquisitions enabled CVS to stop the twelvemonth of 2005 as the largest pharmaceutics retail merchant in America. possessing more than 5400 locations. . Their central office is located in Woonsocket. Rhode Island. CVS became a portion of the New York Stock Exchange in 1996 after reconstituting their trade name. Caremark was formed by Baxter Healthcare Corporation. a healthcare company that treated and housed centres for disease direction such as the Hemophilia Patient Home Health Care and IGIV Home Care Services. Caremark decided to do pharmaceutical services its core operating unit in 1998. Caremark Customer Care Centers are so opened and recognized extensively. making their ain success before they merged with CVS. In 2006 and 2008. they were recognized for client satisfaction excellence by J. D. Power and Associates. They were best known for their mail service offerings and on-line prescription refills.
CVS Caremark Rx. Inc and CVS Corporation completed their merge in 2007. which they so became CVS Caremark. the nation’s top pharmaceutics services supplier. The amalgamation of CVS and Caremark has unambiguously positioned the company to present important benefits to wellness program patrons through effectual cost direction solutions and plans that engage program members and advance healthier and more cost-efficient behaviours. In add-on. the amalgamation has enhanced the ability to offer program members and consumers expanded pick. greater entree and more individualized services ( Datamonitor. 2011 ) . There are many facets of this company that set them apart from their rivals. The first one being their Extra Care trueness card plan. a card that you scan at check-out procedure that offers price reductions and maintain path on your purchases throughout the twelvemonth.
The MinuteClinic is their following entity that has brought them standalone success from shops like Walgreens. Freds. Walmart. and Rite Aid. MinuteClinic now stands as the nation’s largest walk-in medical clinic. The clinics treat common complaints. performs wellness showings and the give inoculations. The demand for walk-in clinics led to their speedy growing which yielded over 500 shops in 2008. In this paper. I will give you a fiscal analysis of CVS Caremark for the old ages of 2009. 2010. and 2011. I have given an overview of the corporation. now I will measure the company’s exposure to current fiscal menaces and foretell how tendencies will impact their fiscal public presentation in the hereafter. I will analyse their fiscal statements. their stock and give a recommendation to better their stock public presentation. The company’s ratio analysis will give information about their operation and fiscal status. The stock analysis will demo how the company continues to stay competitory after different fiscal menaces.
Financial Threat & A ; Vulnerability
As I look over CVS’ fiscal statements. it is apparent that they can defy menaces such as a recession. Net income is grosss less disbursals. revenue enhancements. and preferable dividends ( Brigham & A ; Ehrhardt. 2011 ) . We late came out of a recession that lasted from 2007 to 2009 and their net income in 2009 ( $ 2. 55 Million ) was higher than their net income in 2010 ( $ 2. 49 Million ) . As a affair of fact. CVS reported higher net income and higher same shop sells on prescription drugs and other points at the terminal of 2009 versus the beginning of 2009 ( Mergents. 2012 ) . It was even stated by one of their executives. that they were impacted by the recession but was resistant at the same clip. During the recession. CVS’ gross revenues merely decreased by 4. 92 % while rival Walgreen’s gross revenues suffered a plumping 18 % . These facts show that CVS can defy any glooming earning season. When compared to other companies in their same field. none of the other companies can bring forth as much net income as CVS.
They compete with other apothecary’s shop ironss. supermarkets. price reduction retail merchants. independent pharmaceuticss. rank nines. cyberspace companies. and retail wellness clinics. every bit good as other mail order pharmaceuticss and Pharmacy Benefit Management ( PBM ) Companies. Walgreens is their top rival and in 2011. they merely grossed $ 2. 71 Million while CVS grossed $ 3. 46 Million. Despite their ferocious public presentation. CVS does confront menaces when being compared to their rivals. Intense competition threatens to hold a negative impact on its profitableness ( Datamonitor. 2011 ) Competitors in the pharmaceutics benefit direction sphere include big PBM companies every bit good as many regional PBMs. There are besides many local and regional PBMs and big health care insurance companies with managed attention programs. The PBM industry has been sing border force per unit area as a consequence of fight and increased client demands for lower monetary values. enhanced services offerings and higher service degrees ( Datamonitor. 2011 ) . All of these companies offer some or all of the same services as CVS Caremark but offer pricing footings that CVS may non be willing to offer. which may impact their ability to remain the top acting company in pharmaceutics benefit direction.
Although companies may confront many fiscal and environmental reverses. CVS Caremark’s public presentation financially has remained above norm. A company’s fiscal public presentation can be evaluated by analysing their fiscal tendencies and ratios. In 2009. 43. 9 % of CVS Caremark’s gross came from pharmaceutics services. while 56. 1 % came from retail pharmaceutics services. 55 % of CVS Caremark’s gross came from retail pharmaceutics services and 45 % from pharmaceutics services in 2010. Tendencies give hints as to whether a firm’s fiscal status is likely to better or companies. executives at CVS will necessitate to often analyse their profitableness ratios. which show the combined effects of liquidness. plus direction. and debt on operating consequences ( Brigham & A ; Ehrhardt. p. 98 ) .
Profitability ratios will assist CVS control disbursals and measure their ability to remain competitory. Profitability ratios that are used are return on assets ( ROA ) and return on equity ( ROE ) . This ratio tells the per centum of every dollar that is invested in the concern returned to the company as net income. The ROA for 2009 was 6. 03 % . 5. 54 % for 2010. and 5. 46 % for 2011. Factors that may reflect a low ROA are a company’s low gaining power and high involvement costs ensuing from usage of debt. To increase their return on assets. CVS needs to diminish their involvement rates on their debt.
The ratio of net income to common equity equals the return on equity ( ROE ) . This ratio tells how well shareholders are making from an accounting position. CVS Caremark’s return on equity for 2009 was 10. 51 % . 9. 33 % for 2010. and 9. 14 % in 2011. To increase their ROE. CVS needs to do better usage of their debt.
There is besides a group of ratios called the Liquidity Ratios. Liquidity ratios find the company’s ability to pay off its short term debts. CVS’s current ratio for 2009 was 1. 43. 1. 6 for 2010. and 1. 56 for 2011. The current ratio is calculated by spliting current assets by current liabilities ( Brigham & A ; Ehrhardt. p. 89 ) .
The speedy ratio. besides referred to as the acerb trial is calculated by deducting stock lists from current assets and spliting it by current liabilities. To better the liquidness ratios. CVS needs to pay down their measures and increase their gross revenues which will increase their hard currency on manus. In 2009. CVS’ speedy ratio was 0. 53. in 2010 0. 57. and in 2011 it was 0. 62.
Based on the tendencies and ratios from 2009-2012. CVS needs to diminish their involvement rates on their debt and do better usage of debt. They besides needs to pay down their short term measures. increase their gross revenues. and reinvest their hard currency on manus so that it will convey those financess back into the corporation. In the hereafter. if these alterations are made. their profitableness and liquidness will stay changeless and increase alternatively of diminishing or fluctuating. Stock
Upon analysing the stock of CVS from 2009 to 2011. it is apparent that their stock monetary values did non alter drastically from one-fourth to one-fourth. Investors that are seeking a consistent investing chance will gain from puting in CVS Caremark. From the 4th one-fourth of 2009. where stock was $ 32. 21 per portion. to the first one-fourth of 2010. where stock was $ 36. 56 per portion. CVS’ stock increased by 13. 51 % . From 2009 to 2010. CVS’ stock monetary value increased by 7. 95 % . with a stock monetary value per portion addition of $ 2. 56. From 2010 to 2011. their stock monetary value increased by 12. 07 % with a $ 6. 01 per portion addition ( McGuire. 2012 ) .
In the hereafter. CVS’s stock will probably execute similar to the old ages of 2009 to 2011. unless they make some alterations such as stock redemption. In a stock redemption. besides known as portion redemption. a house that believe their stock in presently merchandising below its current intrinsic value or true value. will buy back the undervalued portions. delay for the market to better so that their portion monetary values will increase to their true value and so resale them for a net income. If CVS does a stock redemption. they will better their stock public presentation drastically. while doing more per portion and selling more of their stock.
CVS Caremark is the largest pharmaceutics retail merchant in the state. As a company. CVS is making really good financially but can better in some countries. which will bring forth an addition in their net income. I hope that this paper has successfully and expeditiously evaluated the financials of CVS Caremark and gave a clear analysis of their public presentation.
Brigham & A ; Ehrhardt. ( 2011 ) . Fiscal Management: Theory & A ; Practice. Mason. Ohio: Cengage
CVS Caremark ( 2009 ) . Retrieved from hypertext transfer protocol: //www. curriculum vitae. com
Datamonitor ( 2011 ) . CVS Caremark Corporation. Company Profile. Retrieved from
hypertext transfer protocol: //www. datamonitor. com
Datamonitor ( 2011 ) . CVS Caremark Corporation. SWOT Analysis. Retrieved from
hypertext transfer protocol: //www. datamonitor. com
McGuire. Jason. CVS Caremark ( NYSE CVS ) Stock Prices. Retrieved from
hypertext transfer protocol: //www. stocknod. com
Mergent ( 2011 ) CVS Caremark Corporation. Retrieved from
hypertext transfer protocol: //www. mergentonline. com