CVS Health (CVS) has sold off despite the company reporting better-than-expected first-quarter results. Revenue of $85.28 billion was up 11% year over year, while adjusted earnings per share of $2.20 easily beat Wall Street’s estimate of $2.09.
However, management lowered its full-year earnings guidance due to costs related to the recent acquisitions of Signify Health for $8 billion and Oak Street Health for $10.6 billion.
Signify operates a healthcare platform “that leverages advanced analytics, technology, and nationwide healthcare provider networks to create and power value-based payment programs,” while Oak Street Health operates “a network of value-based primary care centers for adults on Medicare.”
These acquisitions are part of CVS’ strategy to become a leading low-cost, local health care company.
Let’s take advantage of the post-earnings volatility and sell a put two weeks out. The income we generate will reduce our net debit on the position.
You can enter today’s trade even if you were not in the previous one. Just be aware that we will be managing and tracking it based on the ongoing position.
Current Stock Price: $68.26
Net Debit: $12.35
Action: Sell to open the CVS May Monthly (5/19) 68 Put for around $1.29, but adjust as needed to sell a put today
New Net Debit: $11.06
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