By coinnews 
00:00 Madison
Shares of CVS really popping here after beating Wall Street’s expectations on the top and bottom lines in the first quarter. The shares up over 7%. CVS shaking off concerns about Medicare Advantage costs prompted by disappointing results from United Health. CVS also raising its full-year outlook for both adjusted earnings and revenue. For more on this, I want to bring in Brian Tanquilut. He is Jefferies’s Healthcare Services equity research analyst. Brian, a very different tone to come into my conversation with you than recent quarters where we’ve gone to chat about CVS. To what extent do you think that this is a new day for the company?
01:01 Brian Tanquilut
Hey Madison, thanks for having me in good morning. Yes, so it is a new day, right? It’s nice to see that uh margins came in good, especially in that Aetna Medicare Advantage business. I mean, that’s been kind of like the problem child of the last year. So, I think a lot of the things that we chatted about last year, the things that CVS, the levers that they were pulling, are finally kicking in, you know? So, whether that’s exiting certain parts of the market, um, and then the bonus payments that they’re getting from Medicare for 2025, they’re all working together and that drove a pretty good margin beat in that Aetna side of the business. And then the pharmacy did pretty well as well. Uh, at least on the, on the true pharmacy side of the business, and then the PBM did as well. So it’s, it feels like things are finally clicking for CVS and we’re starting to see trends kind of stabilize across the business lines.
02:27 Brad
Okay, so with that stabilization, Brian, for the stock at the levels we’re seeing it trade at, does, does that make it more appetizing for investors who are looking to layer in more of kind of the PBM business back into their portfolio?
03:00 Brian Tanquilut
Yeah, Brad, thanks for that question. So, the way I’m thinking about it is that, look, I mean, I think number one, the stabilization is a good sign for investors that we’re more cautious thinking about the trends here, right? Like especially as, as Madison mentioned earlier, you know, United had a bad print uh coming into today’s release from CVS. So, seeing that CVS is seeing a trend that is more stable, or, you know, stronger than some of its peers, and then, of the obviously the diversification of its business, I think this is where investors can step in and say, okay, I can have the confidence that we’re just going to get better from here. I mean, management adjusted some guidance ranges here. It looks like there’s still conservatism in their projections for 2025. So, we, we feel really good about this. And then the other side of this is, I think the defensibility of this business, right? I mean, it’s a, it’s a drug business. It’s an insurance business that obviously has heavy Medicare exposure. So, at a time when we’re looking at macro volatility, macro concerns, I think as things stabilize for CVS, it becomes even more compelling.