5 Most Profitable Pharmaceutical Stocks Now

3. CVS Health Corporation (NYSE:CVS)

Latest TTM Net Income: $8.47 billion

Number of Hedge Fund Holders: 64

Headquartered in the United States, CVS Health Corporation (NYSE:CVS) is a prominent healthcare organization overseeing an extensive network of retail pharmacies and clinics nationwide. The company manages various brands, including CVS Pharmacy (a retail pharmacy chain), CVS Caremark (a pharmacy benefits manager), and Aetna (a health insurance provider).

The third quarter of 2023 witnessed CVS Health Corporation (NYSE:CVS) achieving sales of $89.76 billion, indicating a nearly 11% increase from the corresponding period in the previous year. The company disclosed a net income of $2.27 billion, or $1.75 per share, for the third quarter. This marked a significant turnaround from the net loss of $3.40 billion, or $2.59 per share, reported for the same period a year ago. Excluding specific items such as amortization of intangible assets and capital losses, the adjusted earnings per share for the quarter stood at $2.21.

As of the conclusion of the third quarter in 2023, data from Insider Monkey’s database, monitoring 910 hedge funds, indicated that 64 hedge funds had positions in CVS Health Corporation (NYSE:CVS). The firm’s largest shareholder was John Overdeck and David Siegel’s Two Sigma Advisors, which owned $344 million worth of shares.

Coho Partners Relative Value Equity Fund made the following comment about CVS Health Corporation (NYSE:CVS) in its second quarter 2023 investor letter:

“In December of 2017, CVS Health Corporation (NYSE:CVS) agreed to buy Aetna, which broadened its offering by entering the managed care business. CVS has been moving its portfolio to a more value-based outcome model, and Aetna was a major move in that direction. We were willing to accept the leverage that came with the deal because CVS has a very cash generative model, and we anticipated the free cash flow would enable the company to de-lever fairly quickly.

By mid-2022, CVS was in a position to use the free cash flow that had been going to debt repayment to do bolt-on deals to further prepare for the value-based outcome model and/or return more cash to shareholders in the form of higher dividends or share repurchases. However, CVS lost a “star” in its largest Medicare plan in late 2022 and this will adversely impact earnings in 2024. This was a surprise and disappointment to us, but management should be able to regain the “star” in the back half of 2023, which will then give the company a nice tailwind in 2025…” (Click here to read the full text)