Until CVS/AETNA folds under. Which the looks of it pretty soon.
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I think chainsaw Brian is already being prepped to take over. This company is dead money as they say with no growth and investments draining capital.
I honestly think the writing is on the wall for Karen - but not for a while. I doubt she’ll be a stay until she retires CEO. She will definitely be a golden parachute type. I say this but it’s not a now thing, it’ll be a long time of slow bleed.
So first every transformation idea she has had, has been a loss. They will give them time to right the ship but it will eventually be additional nails since that debt service really holds things back.
Next look at mix of what CVS health is - it’s not a store that owns an insurance company, it’s become an insurance company that has a company store. That’s fine and dandy but when retail is keeping the insurance side from making things even worse vs the other way around and it’s so insurance side heavy that’s a dangerous proposition to be in. Cutting the stores only will reduce the impact of retail on the bottom line and will continue to make it even more top heavy Aetna side which means more volatility when utilization rates go up or there is governmental pressure to reduce PBMs or for single payer.
Aetna made CVS too big to the point where statistically growth will be non-existent (there are reports and slide decks internally that can be found that even openly state this - search all documents in
Heartbeat you’ll be surprised what is available to view). Board members of a public company want to hear “we’re large so we won’t shrink but we won’t grow” but basically all the economic stat shows that as the case - unless they get rid of the small guys - but the small guys are only getting bigger.
I honestly give Karen a few more years. If there are layoffs this year and every year then maybe 2 more years before she “leaves for personal reasons”. If things stay static I give her 5 more.
Same day stock goes up 10pct