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(CVS) stock rises

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(CVS) stock rises

The CVS pharmacy logo is displayed on a sign above a CVS Health Corp. store in Las Vegas, Nevada, on Feb. 7, 2024.

After a dismal 2024, CVS Health could be starting to turn itself around. Some investors seem convinced, especially after the retail drugstore chain posted a big beat on fourth-quarter earnings and a 2025 profit outlook that was in line with expectations.

Shares of CVS are now up more than 45% for the year, unlike the company’s main retail pharmacy rival Walgreens, whose stock is up nearly 3%. Shares of other insurers UnitedHealth Group and Cigna are up about 4% and nearly 8%, respectively.

The upbeat quarterly results may be a sign that brighter days are ahead for CVS – or at least that things may not be as bad as they were last year. The company’s stock plummeted more than 40% in 2024 after it missed earnings estimates for three straight quarters and withdrew its annual forecast, largely due to higher-than-expected medical costs in its insurance unit, along with other issues like pharmacy reimbursement pressure.

CVS isn’t out of the woods yet. Medical costs were less severe during the fourth quarter but will likely remain elevated in 2025, as more seniors flock to hospitals and doctor’s offices and use more health-care benefits.

But some analysts are more optimistic about the company’s ability to navigate those challenges moving forward and reach its full-year 2025 adjusted earnings outlook of $5.75 to $6 per share. CVS has pursued store closures and other cost cuts, and its new CEO David Joyner has spent much of his first 100 days at the helm focusing on the company’s insurance unit Aetna.

"The pieces are in place for [CVS to return] from what has been a bottoming of operations performance," said Leerink Partners analyst Michael Cherny, who upgraded the stock on Wednesday after the results.

Cantor Fitzgerald analysts on Wednesday also upgraded CVS’ stock, citing "increased confidence in a successful turnaround."

Insurance Business Woeful

CVS has already taken steps to rightsize its insurance business, which includes plans for the Affordable Care Act, Medicare Advantage and Medicaid, as well as dental and vision. The company exited certain unprofitable health plans in 2024, and hiked premiums to enroll fewer members this year.

In a research note, Cantor Fitzgerald analysts said they are "incrementally more confident" that CVS will improve margins in its Medicare Advantage business and return to "normal levels" by 2027.

CVS has said it wants to get the Medicare Advantage business back to a 3% to 5% margin. They were in the negative 4.5% to 5% range at the end of 2024, CVS CFO Tom Cowhey said during an earnings call on Wednesday.

CVS and other insurers such as UnitedHealth Group and Humana have seen medical costs spike over the last year as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic.

Medicare Advantage Challenges

Medicare Advantage, a privately run health insurance plan contracted by Medicare, has long been a driver of growth and profits for insurers. But investors have become concerned about the runaway costs tied to those plans, which cover more than half of all Medicare beneficiaries.

To improve margins, the company plans to shrink Medicare Advantage membership by a "high single-digit percentage" from the end of 2024, executives said on Wednesday. Aetna had 4.4 million Medicare Advantage members as of December, up from 3.5 million the year before, according to the company’s fourth-quarter release.

Overall, CVS executives said they expect to decrease insurance members by more than 1 million this year, including 800,000 in the individual market. Patients who lose insurance can enroll in a new Medicare Advantage plan or join traditional Medicare plans.

Aetna also scored better Medicare Advantage star ratings for the 2025 payment year, which should boost its federal payments in 2026. Those crucial ratings help patients compare the quality of Medicare health and drug plans and determine how much an insurer receives in bonus payments from the Centers for Medicare & Medicaid Services.

CVS Stock Outperforms Rivals

Shares of CVS are outperforming most of its health-care rivals, both on the insurance and retail pharmacy sides. Jefferies analyst Brian Tanquilut said that is likely due to CVS’ unique position as a company that owns a health insurer, a retail drugstore chain, and a pharmacy benefit manager, or PBM, called Caremark.

"I think what they’re starting to show is the real synergy…in owning all three assets," Tanquilut said.

PBMs such as Caremark sit at the center of the drug supply chain in the U.S., negotiating drug rebates with manufacturers on behalf of insurers, creating lists of preferred medications covered by health plans, and reimbursing pharmacies for prescriptions.

That means Caremark also sits at the intersection of CVS’ retail pharmacy operation and its Aetna insurer, boosting the competitive advantage of both of the businesses.

Conclusion

CVS is showing signs of turning itself around after a dismal 2024. While medical costs will likely remain elevated in 2025, the company’s unique position in the health-care industry could be paying off. With its insurance, retail pharmacy, and PBM businesses working together, CVS may be well-positioned to outperform its rivals in the years to come.

FAQs

Q: What is the current stock performance of CVS?
A: Shares of CVS are up more than 45% for the year.

Q: How is CVS’ insurance business performing?
A: The company is working to rightsize its insurance business, which includes plans for the Affordable Care Act, Medicare Advantage, and Medicaid, as well as dental and vision.

Q: What are the challenges facing CVS’ Medicare Advantage business?
A: Medical costs have spiked over the last year as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic.

Q: How is CVS addressing these challenges?
A: The company is pursuing store closures and other cost cuts, and its new CEO David Joyner has spent much of his first 100 days at the helm focusing on the company’s insurance unit Aetna.

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Global Trends and Politics

NY Yankees Beard Ban Is Over

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NY Yankees Beard Ban Is Over

The New York Yankees’ Facial Hair Policy Update: A New Era of Expression

The New York Yankees have made a significant change to their long-standing facial hair policy, allowing players to grow beards for the first time in nearly 50 years. The announcement came in a statement from owner Hal Steinbrenner, who revealed the decision to permit "well-groomed beards" after consulting with former and current players.

A Shift in Policy

The Yankees’ facial hair policy, first implemented by George Steinbrenner in the 1970s, prohibited most facial hair and scalp hair below the collar for players, coaches, and male executives. The policy was meant to instill discipline and pride in the team, but it has also been met with resistance and restrictions from some players.

A Recent Catalyst

The decision to relax the policy comes after pitcher Devin Williams, acquired from the Milwaukee Brewers, sported a beard in an official team photo. Williams had previously maintained a beard during his time with the Brewers. This incident may have sparked the conversation, leading to the team’s decision to re-evaluate their policy.

A Change in Attitude

George Steinbrenner, who died in 2010, justified the original policy, stating that it would help develop pride in the team. However, the policy has also been criticized for being restrictive and outdated. The new policy marks a shift in the team’s attitude, acknowledging that players should be allowed to express themselves through their appearance.

Impact on Current and Future Players

The change in policy may have a significant impact on current and future players. Prospective players may no longer feel the need to alter their appearance to conform to the team’s standards. Current players, such as Paul Goldschmidt and Cody Bellinger, may be more comfortable expressing themselves through their facial hair.

Frequently Asked Questions

Q: What does the new policy allow?
A: The new policy permits "well-groomed beards."

Q: What is the definition of a "well-groomed beard"?
A: The team has not provided a specific definition, leaving it up to individual interpretation.

Q: Will the policy affect other facial hair styles, such as mustaches or sideburns?
A: The policy does not address other facial hair styles, leaving it unclear whether they will be permitted as well.

Q: Will the change in policy affect team morale and cohesion?
A: Only time will tell, but the relaxed policy may lead to a more relaxed and expressive team environment.

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Global Trends and Politics

From Diverse Hiring to Inclusive Leadership: The Next Step for Political Institutions

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From Diverse Hiring to Inclusive Leadership: The Next Step for Political Institutions

As the world becomes increasingly globalized, it’s crucial for political institutions to adapt to the changing landscape of diversity and inclusion. One of the most significant steps towards achieving this goal is to prioritize diverse hiring practices within the political sphere. In this article, we’ll explore the benefits of diverse hiring, the challenges that come with it, and the next step towards inclusive leadership in political institutions.

The Importance of Diversity in Political Hiring

Diversity in political hiring is not just a social nicety; it’s a necessity for effective governance. A study by the Center for American Progress found that diverse governments are more likely to make better decisions, as they bring in a broader range of perspectives and experiences. Moreover, diverse governments are more representative of the population they serve, leading to increased trust and accountability.

The Challenges of Diverse Hiring

While the benefits of diverse hiring are numerous, there are several challenges that political institutions face when attempting to implement this practice. For instance, biases and stereotypes can influence the hiring process, leading to a lack of representation in leadership positions. Additionally, the existing power structures within institutions can resist change, making it difficult to bring in new and diverse talent.

The Next Step: Inclusive Leadership

Inclusive leadership is the natural progression from diverse hiring. It’s about creating an environment where diverse voices can thrive, and everyone feels valued and heard. This requires a shift in the way we think about leadership, from being hierarchical to being collaborative. Inclusive leaders foster open communication, empathy, and understanding, which leads to better decision-making and more effective governance.

Practical Steps Towards Inclusive Leadership

So, what can political institutions do to achieve inclusive leadership? Here are some practical steps:

* Foster a culture of empathy and understanding
* Encourage open communication and active listening
* Provide training and resources for leaders to develop their inclusive leadership skills
* Create a sense of belonging and inclusivity within the organization
* Hold leaders accountable for their actions and decisions

Real-Life Examples of Inclusive Leadership

Inclusive leadership is not just a theoretical concept; it’s being practiced by political leaders around the world. For instance, the city of Seattle, USA, has implemented an inclusive leadership program, which focuses on creating a more diverse and representative city council. The program includes training for council members, as well as community engagement initiatives to ensure that diverse voices are heard.

Another example is the government of Canada, which has implemented a diversity and inclusion strategy, which includes training for public servants and leaders, as well as initiatives to increase diversity in the public service.

Cases to Avoid: The Consequences of a Lack of Inclusive Leadership

On the other hand, the consequences of a lack of inclusive leadership can be severe. For instance, the 2016 US presidential election, which was marked by divisive rhetoric and a lack of inclusivity, led to increased polarization and social unrest. Similarly, the 2019 Australian federal election, which was characterized by a lack of diversity in the major parties’ leadership, led to a significant backlash from voters.

Conclusion

In conclusion, diversity in political hiring is a necessary step towards creating a more inclusive and representative government. However, it’s just the first step. Inclusive leadership is the key to ensuring that diverse voices are heard and valued, leading to better decision-making and more effective governance. By following the practical steps outlined above and learning from real-life examples of inclusive leadership, political institutions can create a more just and equitable society for all.

FAQs

Q: What are the benefits of diverse hiring in political institutions?

A: Diverse hiring leads to more representative and effective governance, as well as increased trust and accountability.

Q: What are the challenges of diverse hiring?

A: Biases and stereotypes can influence the hiring process, and existing power structures can resist change.

Q: What is inclusive leadership?

A: Inclusive leadership is about creating an environment where diverse voices can thrive, and everyone feels valued and heard.

Q: How can political institutions achieve inclusive leadership?

A: By fostering a culture of empathy and understanding, encouraging open communication, providing training and resources for leaders, creating a sense of belonging, and holding leaders accountable for their actions and decisions.

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Global Trends and Politics

Bluebird Bio Gene Therapy Sells Itself to Carlyle and SK Capital

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Bluebird Bio Gene Therapy Sells Itself to Carlyle and SK Capital

Bluebird Bio Sells Itself to Private Equity Firms for $30 Million

Bluebird Bio, a biotech firm that was once on the cusp of creating one-time treatments for genetic diseases, has sold itself to private equity firms Carlyle and SK Capital for approximately $30 million. The sale marks the end of Bluebird’s fall from its peak as one of the buzziest biotech firms to a company on the verge of running out of money.

The Rise and Fall of Bluebird Bio

For over 30 years, Bluebird has been at the forefront of creating one-time treatments that promised to cure genetic diseases. At one point, its market cap hovered around $9 billion as investors bought into the idea that the company could find success with its gene therapies. However, the company faced several scientific setbacks, separated its cancer work into another company, and fell into financial despair.

The Turning Point

The turning point came in 2018, when a patient who received Bluebird’s gene therapy for sickle-cell disease developed cancer. Bluebird concluded that its treatment did not cause the condition, but the revelation started a series of questions surrounding the safety of its DNA-altering treatments.

Challenges and Setbacks

Bluebird also faced pushback from European payers after pricing its gene therapy for blood disorder beta thalassemia, called Zynteglo, at $1.8 million per patient. The company withdrew the treatment from Europe in 2021, just two years after it was approved there. Bluebird said it would instead focus on the US, where it was preparing for the approval of Zynteglo for beta thalassemia, Lyfgenia for sickle cell disease, and another therapy Skysona for a rare brain disease called cerebral adrenoleukodystrophy.

Approval of Gene Therapies

All three of these gene therapies were approved in recent years, but none of them have been able to ease Bluebird’s financial woes. The company had been spending hundreds of millions of dollars a year. Offloading Bluebird’s cancer treatments into new company 2Seventy Bio also eliminated an important source of revenue.

The Sale

At last update in November, Bluebird said its cash would fund the company’s operations into the first quarter of this year. The sale marks a stark reversal of Bluebird’s past performance. The upfront price of about $30 million is a fraction of the $80 million Bluebird’s former CEO Nick Leschly made from selling the company’s stock during his time there.

Conclusion

Bluebird’s treatments could still change many lives. They just weren’t enough to change the company’s fate. The entire field is facing tough questions right now about whether companies can translate the promise of one-time treatments for rare diseases into viable businesses.

Frequently Asked Questions

Q: Why did Bluebird Bio sell itself?
A: Bluebird Bio sold itself to private equity firms Carlyle and SK Capital for approximately $30 million.

Q: What happened to Bluebird Bio’s stock price?
A: Bluebird’s stock price fell 40% on Friday after the company announced the sale.

Q: What is the future of Bluebird’s gene therapies?
A: Although Bluebird’s gene therapies were approved, they did not generate enough revenue to save the company. The company’s treatments could still change many lives, but they were not enough to change the company’s fate.

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