How the CVS-Aetna merger will change the company's outlook in 2019

1 month ago by James Mattone in Features

CVS Health ($NYSE:CVS) is the largest pharmacy company in the country, and it now has one of the largest healthcare companies, Aetna ($NYSE:AET) in its portfolio after a $69 billion merger.

But the company just warned its investors to manage expectations for profits in the new year. That's not necessarily a bad thing — growing pains are good. So, with that, here's an overview of where the company stands and what it is getting with the Aetna workforce.

Needless to say, it might just continue to outpace its competition.

An arms race with Walgreens Boots Alliance ($NASDAQ:WBA)

The second-largest pharmacy company in America, Walgreens, still has plenty of ground to gain if it wants to usurp CVS as #1.

Between these two pharmacies are 17,957 locations across 50 states, with CVS having 9,804 of those locations. 

This doesn't even count the CVS pharmacies located inside over 1,750 Target ($NYSE:TGT) stores. Until recently, also CVS had a co-location deal with Walmart ($NYSE:WMT), but a pricing dispute severed the relationship. Without Walmart, however, CVS remains the largest pharmacy in the nation.

And the demand is still there at the average CVS location; same store sales at CVS increased by 5.7% in the fourth quarter as compared to last year's holiday season.

Wanted still: Pharmacy Technicians

Not only are sales ticking up at CVS, but the company's demand for more employees is also peaking.

CVS Health is hiring for 30,839 individual positions as of February 17, 2019. While not a 52-week peak - it once was looking to fill 31,480 positions in late June — it's still at a higher clip than what it was hiring for back in 2017.

Within these job openings is a high demand for shift supervisors, store associates, and, most importantly, pharmacy technicians, who are one of the most in-demand positions in the industry at the moment. That's partially thanks to CVS, as it has 8,110 individual job postings for unspecified pharmacy technicians in regular retail stores alone, and another 1,660 for technicians in Target stores with CVS locations.

Title
Number of Openings (Feb. 17)
Shift Supervisor Management Trainee 8,212
Retail Store Associate 8,189
Pharmacy Technician 8,110
Pharmacy Technician - Target Store 1,660
Beauty Consultant 629
Pharmacy Manager 240
Staff Pharmacist FT 234
Operations Manager 195
Operations Supervisor 143
Staff Pharmacist Floater PT 78

With taxonomical difference combines, the total open head-count for pharmacy techs at CVS is well over 10,000 individual openings.

Behind the Glassdoor of CVS and Aetna

Despite business going well for CVS on the surface, the company took two separate multi-billion dollar goodwill impairments due to Omnicare Inc., a long-term care provider that it acquired in 2015. In other words, CVS is being held back by a struggling limb of its otherwise healthy body of industry.

Glassdoor data, which aggregates employee reviews written anonymously about companies, illustrates this struggle.

The overall ratings for Omnicare — including Business Outlook CEO Approval ratings — are all significantly lower than its parent company CVS, which for some metrics, is below or barely at the Food & Drug Retailers industry average.

As for recently acquired Aetna, it is above the curve of its own industry (Health Care Equipment & Services) in all three of these metrics.

However, during the merger process, the company's Business Outlook dropped below the industry average at times, and is only less than a percentage point above the average today.

So long as the new boss of CVS doesn't muddy the waters after this deal, and so long it can quell fears of lower profits in the new year due to this merger, Aetna looks to be a bright spot of hope amid investor troubles for the new year.

James Mattone

James is the Associate Editor at Thinknum Media, and he has an interest in video games, music, and tech news. You can find him on Twitter @TheJamesMattone.

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