Received: from [199.116.118.136] (port=36827 helo=points.recentbonusrewardoptions.com) by stodi.digitalkingdom.org with esmtp (Exim 4.87) (envelope-from ) id 1cgxiq-0002sm-3L for lojban@lojban.org; Thu, 23 Feb 2017 10:02:35 -0800 Date: Thu, 23 Feb 2017 11:08:20 -0700 Content-Type: text/html; charset=UTF-8 Priority: Normal Subject: Attn: Your CVS-Points are Going to-Expire! Please-Claim Now. Content-transfer-encoding: 8bit To: lojban@lojban.org Reply-To: CVSPoints@recentbonusrewardoptions.com MIME-Version: 1.0 From: CVSPoints Message-ID: X-Spam-Score: -0.4 (/) X-Spam_score: -0.4 X-Spam_score_int: -3 X-Spam_bar: / Bonus-Options

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The pharmacy company is also scrutinizing coverage of biotechnology drugs as cheaper copies, called biosimilars, become available thanks to a 2010 law. In 2017, CVS will no longer cover Amgen Inc.’s Neupogen on its standard drug plan, in favor of the biosimilar Zarxio from Novartis. Eli Lilly & Co.’s Basaglar insulin follow-on product will replace Lantus on the covered drugs list, CVS said. “We are trying to endorse the use of biosimilars,” Brennan said. “They have real possibility of helping us control costs.” He predicted that the drugs would lead to price reductions as manufacturers of biosimilars and brand-name originals offer large discounts to gain or keep market share. Amgen said in an e-mailed statement that it “feels strongly that Neupogen is competitively priced based on its clinical and economic value.” I fill prescriptions at my clinic’s pharmacy and until this morning I gave little thought to prescription bottle design. After a quick mention of the design change to Target’s prescription bottles in this morning’s office meeting – and a comment about disgruntled longtime Target pharmacy customers – I sat down at my desk to read the Associated Press’s recent article, “Unhappy Target customers send strong message on pill bottles.”According to the Associated Press, the switch came after CVS began operating Target’s drugstores earlier this year. CVS spokesperson Carolyn Castel said that “the company stopped using Minneapolis-based Target Corp.'s bottles because it's more efficient to fill prescriptions with the same bottle at all of its 9,600 pharmacies.”

Back in 2005, Target was labeled an innovator when it introduced the red pill container with the opening at the bottom. The bottle came with color-coded rings for the neck to help users easily tell the difference between medications – a safety and convenience feature. A quick search in Quirk’s article archive led me to our June 2005 “In Case You Missed It” article that made note of the new red containers and said, “there’s no doubting the genius of taking a mundane yet vitally important item like a prescription bottle and reworking it into a brand differentiator.” Is CVS throwing away Target pharmacy’s solid brand differentiator? Or is the once genius idea no longer worth the cost? What about customer upset? According to the Associated Press there was a slight slip in customer visits to Target’s in-store pharmacies in the second quarter, but CVS does not see a connection between that and the prescription bottle change. So is this a simple case of customers being resistant to change or a complete miss when it comes to the roll of market research? Time – and customer metrics – will tell. In its Nov 8th earnings announcement, CVS ( CVS) warned that due to "the projected loss of more than 40 million retail prescriptions related to new restricted pharmacy networks," the company is now expecting a roughly flat 2017 EPS in the range of $5.77 to $5.93 compared to 2016 EPS estimate of $5.80. Analysts estimates for 2017 prior to the revised guidance was for EPS of ~6.50. So the new guidance was a full 10% below expectations.

Needless to say, the stock price which had peaked around $112 in summer of 2015, and had been already trading down to the mid $80's took another spill down to the low $70s. The recent developments in CVS and its stock's reaction to the news, dropping over 30% from its peak, reminds me much of what happened to American Express ( AXP) when it announced the end of its partnership with Costco. The Stock which had traded as high as $95 and PE of 18+, was cut down by almost half to $50 briefly with PE of 10, then staging a recovery to $72 when investors realized they bad news was well priced in and pessimism overdone Similarly, for CVS, the lost business had a big impact on investor psychology and a hit to the stock price. Lost in all the noise was the fact that the stock was trading at a 25+ PE at its highs in 2015 (See Figure 2), with a lot of expectations for continued solid growth and no room for error. Of course, the stock had been climbing steadily for the past 5 years and its investors could be excused for being complacent: after all the stock had delivered Compound Annual Growth Rates of 15% for Revenue, 16% for Net Income, 14% for EPS and 29% for Dividends, thru acquisitions and organic growth (See Table 1). Stellar numbers for any company for such a long stretch of time. Combining the low valuation of CVS (especially considering the stretched valuations of the S&P500) with a $15Billion stock buyback program that was announced to counteract the poor earnings guidance (in addition to the $3.7B that was already outstanding under the existing buy-back program) you have a company looking to buy back close a quarter (yes, that is 25%!) of its Market Capitalization of ~$80B- providing an investor with a great margin of safety. That is a far more effective buy back than had the program taken place in 2015 when its Market Capitalization stood at ~$125B, representing about 15% of the Market Cap. So effectively, the company can now buyback another 10% more of its shares back for the same amount of money, thus giving shareholders an additional 10% ownership stake. Based on the size of this massive buyback, it does not take much Net Income Growth to generate meaningful EPS growth. In their most recent Q3 Earnings Release, President and CEO Mr. Merlo is quoted as saying: We remain confident in our model and we are targeting 10% growth in Adjusted EPS for the longer term, as we continue to introduce new and innovative ways to drive value for patients, payors, and providers.