QS Research · Michael Burry's Scion Capital analyst template · 2006
CVS HEALTH Corp (CVS)
As of 2026-11-06 · 11/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -15% · downside -53% · upside +62%
I use section 13's lease-inclusive TTM-to-Sep-2026 base rather than FY2025, because TTM operating earnings ($15.06B EBIT, $19.58B EBITDA) already reflect the Aetna recovery and exclude prior-year impairments; no cycle averaging is used. The arithmetic: $19.58B EBITDA x 8.0x = $156.6B EV; less $65.06B debt plus leases less cash = $91.6B equity, or about $72/share on 1.279B shares, -15% versus $83.85. Downside at CI's 5.9x is about $39 (-53%) and upside at HUM's 12.2x is about $136 (+62%), so neither the long nor short rule is met. The market is not missing the cash generation: a 14.5% FCF yield and 9.7x P/E are cheap, and Aetna's MBR recovery is real; but leverage plus leases and a weak moat keep the downside too large for a deep-value long. The split by H1 2028, 2027 EPS floor of at least $8.65 and 2027 Star Ratings are reasons to watch, not yet to own.
Key numbers
- Share price: $83.85
- Market cap: $107.28B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $420.61B
- EV / EBITDA (TTM): 8.0x
- P/E (TTM): 9.7x
- Price / book: 1.33x
The 15 boxes
- ✓ 1. Long-form business notes
CVS in FY2025 is a four-segment health care company: Health Care Benefits (Aetna insurance/ASC), Health Services (Caremark PBM plus clinics and value-based care), Pharmacy & Consumer Wellness, and Corporate/Other. Revenue rose from $268.71B in FY2020 to $402.07B in FY2025, but operating income fell from $13.91B to $4.66B over the same years, so the top-line growth did not carry through to operating earnings. Between the FY2020 and FY2025 10-Ks the segment labels changed and the company added Oak Street, Signify and Cordavis while PBM plan members and prescriptions declined.
- ○ 2. Competitive advantage
CVS has scale—FY2025 revenue of $402.07B—but the sources do not show a durable competitive advantage. Operating income fell to $4.66B in FY2025 from $13.91B in FY2020, and S25 describes all three segments as highly competitive with price compression, reimbursement pressure and customer mobility. On these sources the moat looks weak; federal funding dependence is a risk, not evidence of pricing power.
- ✓ 3. 10-Q takeaways
Q3 2026 total revenues rose 5.4% to $108,399M, with operating income of $3,566M versus a $3,207M operating loss in Q3 2025; the swing was largely the absence of the prior-year $5.7B goodwill impairment plus improved segment performance. Adjusted operating income was $4,194M versus $3,459M, Health Care Benefits MBR improved to 91.3% from 92.8%, and Health Services revenue grew 9.5%. The 10-Q also announced a planned two-company separation and flagged elevated utilization; the supplied excerpt does not give cash, inventory, buyback or formal guidance figures.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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