CVS Health (CVS 1.09%) is a busy company. It runs the nation's largest drugstore chain with nearly 10,000 locations; it also manages prescription drug plans for employers and insurers; and, through its Aetna division, it provides health coverage for more than 25 million people.

But the company has been facing some challenges. The shares are down 27% so far this year amid falling earnings per share (EPS) and lowered guidance in its first-quarter report. In fact, the healthcare stock just hit its 52-week low on Tuesday before bouncing back a little later in the day.

Is this dip a buying opportunity, or is there more pain ahead for CVS investors? Here are two reasons not to buy the stock and two why you should.

No. 1 reason not to buy: Lowered guidance

On May 3, the company lowered its yearly guidance in its first-quarter report. It said it expected yearly adjusted EPS between $8.50 and $8.70, compared to adjusted EPS of $8.69 in 2023. That's 20 cents lower on both halves of the range from the guidance that it reaffirmed in February. 

The company seems to be retrenching a bit. Two years ago, it said it planned to cut 900 stores by 2024, and CEO Karen Lynch said the company had closed 100 stores so far this year and is on track to shutter 300 retail locations in 2023. In May, the company announced it was closing the clinical trials business it began just two years ago during the height of the COVID-19 pandemic.

No. 2 reason not to buy: Benefits management woes

CVS Caremark lost out on a $35 billion pharmacy benefits management (PBM) contract that Centene awarded to Cigna for 2024. Part of the reason is that CVS' Medicare Advantage score fell from four stars, where it had been for a decade, to 3.5 stars.

In November, CVS said the impact of losing the PBM contract would be $2 billion in 2024. "That would leave a headwind of about $1 billion or $0.55 a share for 2024," CFO Shawn Guertin said during the company's 2022 third-quarter earnings call.

No. 1 reason to buy: It's an industry leader

CVS is a multifaceted health solutions company, but it is also the largest pharmacy chain in the country. Like Amazon in e-commerce and Apple in smartphones, CVS has several advantages over its smaller competitors.

It is more profitable than Walgreens Boots Alliance or Rite Aid, and its size gives it a certain familiarity with customers, increasing brand loyalty. 

The company's better profit margin and larger cash reserves also make it more resilient to economic downturns. That financial strength also makes it easier for the company to find growth through acquisitions.

So far this year, it completed a $10.6 billion purchase of primary care provider Oak Street Health in May and an $8 billion deal in March to buy home healthcare provider Signify Health. Both moves are taking advantage of the trend toward value-based care, with billpayers such as Medicare rewarding doctors for keeping patients healthy rather than paying them for each procedure they perform. The point is that by keeping people on their medications and helping them better manage chronic health problems, they can avoid more expensive medical treatments and hospital stays.

CVS has steadily increased revenue for 12 consecutive years and eight consecutive quarters. In the first quarter, it said it grew revenue by 11%, year over year, to $85.2 billion. That's in the face of headwinds caused by lowered revenue from COVID-19 vaccinations.

No. 2 reason to buy: An above-average dividend

CVS has increased its quarterly dividend for two consecutive years, including a 10% boost this year to $0.605 a share. Since the company began delivering quarterly dividends in 1997, it has increased them by 124%.

The dividend's yield is about 3.58%, more than double the average dividend of the S&P 500. Considering that CVS has an annual dividend of $2.42 and its adjusted EPS estimate is between $8.50 and $8.70, there's plenty of room for continued growth.

That dividend can make a huge difference for long-term investors. For example, while the company's stock price has risen 15.8% over the past 10 years, its total return price to investors, counting the dividend, is a more impressive 46.5% over that period.