A girl walks past a CVS Pharmacy in Washington, D.C., on Nov. 2, 2022.
Brendan Smialowski | AFP | Getty Images
CVS on Wednesday reported third-quarter adjusted earnings and revenue that topped Wall Street’s expectations, lifted partially by strong revenue from the corporate’s health services business.
CVS booked sales of $89.76 billion for the quarter, up nearly 11% from the identical period a yr ago.
The corporate reported net income of $2.27 billion, or $1.75 per share, for the third quarter. That compares with a net lack of $3.40 billion, or $2.59 per share, for a similar period a yr ago. Excluding certain items, akin to amortization of intangible assets and capital losses, adjusted earnings per share were $2.21 for the quarter.
Here’s what CVS reported for the third quarter in comparison with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly often called Refinitiv:
- Earnings per share: $2.21 adjusted vs. $2.13 expected
- Revenue: $89.76 billion vs. $88.25 billion expected
CVS lowered its full-year unadjusted earnings forecast to a spread of $6.37 to $6.61, down from a previous range of $6.53 to $6.75. Nevertheless, it maintained its forecast on an adjusted basis, guiding to full-year adjusted earnings of $8.50 to $8.70 per share.
The outcomes come on the last day of a nationwide walkout by pharmacy staff from CVS, Walgreens and Rite Aid to protest what they call harsh working conditions that put each employees and patients in danger. CVS told CNBC last week that the corporate is engaging with staff to directly address any concerns that they might need.
Additionally they come one quarter after CVS launched a sweeping cost-cutting program as a part of its push to rework from a significant drugstore chain to a big health-care company. The corporate deepened that push earlier this yr with its nearly $8 billion acquisition of health-care provider Signify Health and $10.6 billion deal to purchase Oak Street Health, which operates primary care clinics for seniors.
Shares of CVS were down nearly 26% for the yr through Monday’s close, putting the corporate’s market value at around $88 billion.
Growth across business segments
The corporate’s health services segment generated $46.89 billion in revenue for the quarter, a virtually 8% increase compared with the identical quarter in 2022. The division includes CVS Caremark, which negotiates drug discounts with manufacturers on behalf of insurance policy, in addition to health-care services delivered in medical clinics, through telehealth and at home.
Analysts had expected the division to herald $45.19 billion in sales, in response to estimates compiled by StreetAccount.
CVS said the rise was driven partially by growth in specialty pharmacy services, which help patients who’re affected by complex disorders and require specialized therapies. The corporate’s recent acquisitions of Oak Street Health and Signify Health also boosted the segment results, in response to CVS.
The division processed 579.6 million pharmacy claims throughout the quarter, a slight decrease from the year-ago period on account of a drop in Covid vaccinations and a Medicaid customer contract change.
The corporate’s pharmacy and consumer wellness division booked $28.87 billion in sales for the quarter, up 6% from the year-ago period. That segment dispenses prescriptions in CVS’s retail pharmacies and provides other pharmacy services, akin to diagnostic testing and vaccination.
Analysts had expected the division to herald $28.81 billion in sales, in response to estimates compiled by StreetAccount.
Same-store sales grew 8.8% throughout the three-month period compared with the identical time a yr earlier, but not equally across the shop. Same-store sales jumped 11.9% within the pharmacy division, but were down by 2.2% within the front of the shop, partially as customers reduce on buying over-the-counter Covid tests.
CVS said a slight increase in prescription volume contributed to the segment’s revenue growth. The division filled 407.1 million prescriptions throughout the quarter, fractionally up from the identical period a yr ago. But same-store prescription volume jumped nearly 3.5%, excluding Covid vaccines.
The corporate counts 9,000 brick-and-mortar drugstores across the U.S.
CVS’s medical health insurance segment generated $26.30 billion throughout the quarter, a virtually 17% increase from the second quarter of 2022. That division includes plans by CVS-owned health insurer Aetna for the Reasonably priced Care Act, Medicare Advantage, Medicaid, and dental and vision.
The insurance segment’s medical profit ratio— a measure of total medical expenses paid relative to premiums collected — increased to 85.7% from 83.4% a yr earlier. A lower ratio typically indicates that the corporate collected more in premiums than it paid out in advantages, leading to higher profitability.
Analysts had expected that ratio to be 84.7%, in response to StreetAccount estimates.
CVS will hold an earnings call with investors at 8 a.m. ET.