Core Insights - Rising prescription drug costs are a significant concern in healthcare, with pharmacy benefit managers (PBMs) under scrutiny for their management of drug benefits [1] - CVS Health's Caremark has secured a five-year contract with CalPERS, replacing OptumRx, to provide outpatient prescription drug benefits to nearly 587,000 members starting January 1, 2026 [2][8] - CVS Caremark was chosen for its ability to offer more affordable drug benefits and strong contract terms, including a $250 million risk for failing to meet cost control and clinical quality targets [3][8] Company Developments - CVS Caremark will manage formulary changes for CalPERS, promoting affordability in drug coverage, including weight management medications, potentially saving clients 10-15% annually [4][8] - CVS shares have increased by 6.3% over the past year, contrasting with a 17.7% decline in the industry [7] - The stock is trading at a forward one-year price-to-earnings ratio of 9.60, below the industry average of 14.00, and has a Value Score of A [9] Industry Trends - The global PBM market is growing, with CVS Caremark, OptumRx, and Express Scripts leading the market [5] - Elevance Health reported a 33% year-over-year increase in CarelonRx operating gains, driven by higher prescription volumes and recent acquisitions [5] - Humana has partnered with Epic to integrate health plan information into MyChart, enhancing access for Medicare Advantage members [6] Financial Outlook - Analyst estimates for CVS Health's earnings in 2025 and 2026 show an upward trend, with current estimates for the next year at $7.00 per share [10][11] - CVS currently holds a Zacks Rank 1 (Strong Buy), indicating positive market sentiment [11]

Core Viewpoint - Ferguson Wellman Capital Management sold a significant portion of its shares in UnitedHealth Group, indicating potential concerns about the company's performance and outlook [1][2]. Company Overview - UnitedHealth Group is one of the largest healthcare companies in the U.S., operating across insurance, care delivery, and pharmacy benefit management, which supports a broad customer base and recurring revenue streams [4]. - The company reported a trailing twelve months (TTM) revenue of $410.06 billion and a net income of $22.11 billion, with a dividend yield of 2.95% [2][6]. Recent Performance - UnitedHealth's stock has underperformed significantly, with a one-year price change of -41.5%, and it is trading 52.5% below its 52-week high as of July 9, 2025 [5][10]. - The stock closed at $304.10 on July 11, 2025, and has underperformed the S&P 500 by 52.8 percentage points over the past year [5]. Challenges Faced - The company has faced multiple challenges, including a significant rise in medical costs, leading to a withdrawal of its earnings guidance [5][10]. - Allegations of Medicare billing fraud and secret bonuses to nursing homes have surfaced, contributing to a turbulent year for the company [8][9]. - The abrupt resignation of CEO Andrew Witty in mid-May has added to the company's instability [8]. Future Outlook - Despite current challenges, UnitedHealth has appointed former CEO Stephen J. Hemsley back to the role and expects to return to growth in 2026, with long-term earnings per share growth projected at 13% to 16% [10].

CVS Health Corporation (CVS) is scheduled to report first-quarter 2025 results on May 1, before the opening bell. 3 Factors to Focus on Ahead of CVS' Q1 Earnings A Turnaround at Aetna Expected: Aetna's underperformance in 2024 was concerning. However, CVS expected benefit redesigns and improved rate negotiations to lead to margin recovery starting from 2025. While utilization trends remained elevated in the fourth quarter of 2024, data showed moderation in inpatient costs, a positive sign for medical cost c ...