Caremark Rx, Incorporated (CMX) is a pharmaceutical services company. Its operations are conducted primarily through its subsidiaries, Caremark Incorporated and CaremarkPCS. Caremark Rx's customers are sponsors of health benefit plans (employers, unions, government employee groups, insurance companies and managed care organizations) and individuals located throughout the United States.

The company dispenses pharmaceuticals to eligible participants in benefit plans maintained by its customers and utilizes its information systems to perform safety checks, drug interaction screening and generic substitution. In addition, Caremark Rx is a provider of drug benefits to eligible beneficiaries under the federal government's Medicare Part D program. 

Caremark Rx operates a national retail pharmacy network with more than 60,000 participating pharmacies, seven mail service pharmacies, the industry's only FDA-regulated repackaging plant and 21 licensed specialty pharmacies for delivery of advanced medications to individuals with chronic or genetic diseases and disorders.

The company serves the needs of its plan participants through prescription benefit services, including local retail pharmacy and mail service options. They also offer specialty pharmacy services, providing pharmaceuticals and other therapeutic services for plan participants with chronic or genetic disorders. In addition, their disease management programs are the first and only suite of programs offered by a prescription benefit manager to be fully accredited by the National Committee for Quality Assurance providing comprehensive plan participant care for specific conditions.

Caremark is solid fundamentally with impressive operating margins, good return on equity and lots of free cash flow. The latest earnings were very good as net revenues for the fourth quarter came in at $9.27 billion, compared with $8.37 billion in the year-ago quarter. 

The stock is looking good technically with a nice Elliott Wave-4 buy pattern forming and projecting gains into the $70 per share area. Caremark Rx is an optional stock with good liquidity rendering them a viable trading alternative. They also offer LEAPS currently going out to January of 2009, so the options strategist can construct long-term strategies as well. 

Figure 1:  Elliott Wave-4 Buy Pattern for Caremark Rx Incorporated

Happy Trading.


Jeff Neal
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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