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CVS Declares Quarterly Dividend and Gets a Boost from Relaxed Rebate Policy

Streetwise Reports, Streetwise Reports
0 Comments| July 12, 2019

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CVS Healthcare announced a $0.50/share quarterly dividend yesterday and got an added boost today as news spreads regarding easing of federal restrictions on pharmacy rebate plans.

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CVS Health Corp. (CVS:NYSE) along with many other pharmacy benefits managers (PBMs) and healthcare providers got a huge shot in the arm on news out of Washington today that the Trump administration will ease back on plans to limit drug rebate programs.

CVS also announced yesterday that it will continue its quarterly dividend of $0.50/share payable to shareholders of record as of July 25, 2019, on August 2, 2019. The company's $2/share annual dividend equates to an annual yield of 3.45% based upon today's share price of around $58/share.

Reuters reported earlier today that the Trump administration just scrapped one of its most ambitious proposals for lowering prescription medicine prices, backing down from a policy that would have required health insurers to pass on billions of dollars in rebates they receive from pharmaceutical companies to Medicare patients. The Reuters report concluded that firms like CVS and Cigna Corp. (CI:NYSE) that negotiate rebates with pharmaceutical manufacturers on behalf of the government's Medicare program will continue to benefit from those discounts.

The report also raises questions about whether the administration's other efforts to lower prices will affect the major pharmaceutical manufacturers more directly.

Shares of many of the large health insurers, PBMs, and retail pharmacies are up sharply today on the news. Cigna, which partners closely with CVS on walk-in clinic and pharmacy programs, is seeing a greater than 10% increase in its share price today.

CVS is a leading pharmacy benefits manager with 94 million plan members and operates more than 9,900 retail locations and 1,100 walk-in medical clinics. The firm also serves an estimated 38 million people through traditional consumer-directed health insurance products including Medicare Advantage offerings.

Cigna is a global health service company offering products and services that include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, and related products including group life, accident and disability insurance to 165 million customers in 30 countries.

CVS shares are trading up today greater than 5% above the prior day's close of $55.38 on significantly higher than average volume. Shares have traded between $58.08-60.13/share. Cigna shares are also trading much higher between $177.38-185.77 over Wednesday closing price of $160.51.

1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

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