CVS Health (NYSE:CVS) isn’t a conventional growth stock. The healthcare provider owns and operates retail pharmacies across the United States and the health insurance provider Aetna. When you just take a quick glance at the stock, you might assume it’s just another dull healthcare business only dividend investors want to acquire.

But, CVS (NYSE:CVS) isn’t happy with things as they are. It has an insatiable appetite for expansion and is constantly searching for new opportunities to broaden its scope.

Currently, it is considering a move that could be among its most significant: expanding into primary care.

Possible Agreement Before the End of the Year

Management of CVS Health (NYSE:CVS) stated its interest in potential mergers and acquisitions on its most recent earnings call. Executive Vice President and Chief Operating Officer Karen Lynch stated, “We are very encouraged and confident that we’ll take the next step on this journey by the end of this year.” This was about the company’s stated intention to expand its services, with Lynch citing primary care as a critical opportunity for the business. And yet, Lynch stressed, “We can’t be in primary care without M&A.”

With the company’s financial resources, anything is possible. Over $12 billion was available in cash and cash equivalents as of the end of June when CVS reported its financials. Amazon, the online retail giant, has revealed ambitions to enter the primary care market by acquiring One Medical for a relatively small $3.9 billion.

CVS Health (NYSE:CVS) and Walgreens (NASDAQ:WBA) compete with one another in the pharmacy market, and eventually, they may compete in the primary care clinic market as well. Walgreens stated last year that it would spend $5.2 billion on VillageMD, increasing its interest in the primary care business from 30% to 63%. Thanks to the funding, Walgreens expects to have one thousand primary care practices in its shops by 2027.

The big question is how CVS Health’s (NYSE:CVS) ambitions stack up against Walgreens and whether the two will compete head-to-head. Since Walgreens intends to have primary care practices in 30 U.S. markets by 2025, competition is likely.

CVS (NYSE:CVS) is reportedly considering an M&A strategy, suggesting that the company is not pleased with a low-key expansion plan. Gaining traction and market share in a specific economy sector can be time-consuming and challenging, but an acquisition or strategic alliance might help speed up the process.

Is CVS Health (NYSE:CVS) a Better Investment After This Change?

Customers may have additional incentives to visit their neighborhood CVS if primary care is offered, especially if it is located adjacent to stores like Walgreens plans. Virtual care is already available, and MinuteClinics serve as a follow-up clinic for patients with chronic diseases. Expanding into primary care may seem like a logical next step. Furthermore, CVS has a sizable consumer base since an estimated 4.8 million individuals visit the chain’s stores daily.

CVS (NYSE:CVS) expansion into primary care will strengthen the company’s foundation for future expansion. The only real worry is how it would affect the company’s thin profit margins. CVS made $8.2 billion in the prior-year period on approximately $308 billion in sales for a 2.7% profit margin. Getting into primary care should, at the very least, boost sales statistics, so this might be a net plus for CVS if it doesn’t hurt its bottom line too much.

Is CVS Health (NYSE:CVS) an Excellent Stock to Purchase Today?

Compared to the S&P 500’s 10% loss in value this year, CVS’s year-to-date stock performance of roughly 4% seems very good. The stock’s forward price-to-earnings multiple of 12 represents significant value for buyers, especially compared to the average multiple over 16 for the Health Care Select Sector SPDR Fund. Moreover, the company’s dividend yield of 2.1% exceeds the S&P 500 average of 1.5%.

Due to its established market position, substantial resources, and relentless pursuit of expansion, CVS Health (NYSE:CVS) can be a great healthcare company to hold for the long term.

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