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CVS Health (CVS) Q3 Earnings Surpass Estimates, View Up
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CVS Health Corporation's (CVS - Free Report) third-quarter 2022 adjusted earnings per share (EPS) of $2.09 improved 6.1% year over year and exceeded the Zacks Consensus Estimate by 5%. The adjusted EPS figure considers opioid litigation charges, certain asset amortization costs, and other adjustments.
On a reported basis, the company’s GAAP loss was $2.60 per share against the year-ago earnings of $1.20 per share.
Total revenues in the third quarter rose 9.9% year over year to $81.16 billion. The top line also beat the Zacks Consensus Estimate by 6%.
Quarter in Detail
Pharmacy Services revenues were up 10.7% to $43.22 billion in the reported quarter. The upside was primarily driven by increased pharmacy claims volume and growth in specialty pharmacy and brand inflation, partially offset by continued client price improvements.
Total pharmacy claims processed rose 3.6% on a 30-day equivalent basis, attributable to net new business and increased utilization, partially offset by a decrease in COVID-19 vaccinations.Excluding the impact of COVID-19 vaccinations, total pharmacy claims processed increased 4.5% on a 30-day equivalent basis.
CVS Health Corporation Price, Consensus and EPS Surprise
Revenues from CVS Health’s Retail/LTC segment were up 6.9% year over year to $26.71 billion. The impressive growth was driven by increased prescription and front store volume, including the sales of COVID-19 over-the-counter test kits and pharmacy drug mix and brand inflation. However, this growth was partially offset by decline in COVID-19 diagnostic testing and vaccinations, the impact of recent generic introductions and continued pharmacy reimbursement pressure.
Within the Health Care Benefits segment, the company registered revenues worth $22.51 billion in the third quarter, up 9.9% year over year. The upside was primarily driven by growth across all product lines. The segment also benefited from favorable development of the prior years’ health care cost estimates in its Government Services and Commercial businesses.
Margin
Total cost (including Benefit Costs) rose 10.9% to $67.78 billion in the third quarter. Gross profit rose 5.3% to $13.38 billion. The gross margin contracted 73 basis points (bps) to 16.5%.
The operating margin in the quarter under review contracted 9 bps to 4.6%, despite a 7.9% rise in operating profit to $3.77 billion.
2022 Guidance Raised
CVS Health raised its EPS guidance for full-year 2022.
The company raised its adjusted EPS to the band of $8.55-$8.65 (up from the earlier projected $8.40-$8.60). The Zacks Consensus Estimate for 2022 earnings is pegged at $8.54.
The company has also raised its full-year operating cash flow projection to the range of $13.5-$14.5 billion (from the prior projection of $12.5-$13.5 billion).
Our Take
CVS Health exited the third quarter of 2022 on a strong note, with earnings and revenues beating the Zacks Consensus Estimate. Robust sales growth across all three operating segments drove the top-line results. Within the Health Care Benefits arm, the continued growth across the entire range of insured and self-insured medical, pharmacy, dental and behavioral health products and services instills optimism. The raised EPS guidance for 2022 is indicative of this growth momentum continuing.
However, the contraction of margins on escalating costs does not bode well. The decline in COVID-19 vaccinations and testing sales is a downside. Further, persistent pharmacy reimbursement headwinds also continued to impact business performance in the quarter under review.
Zacks Rank and Key Picks
CVS Health currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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CVS Health (CVS) Q3 Earnings Surpass Estimates, View Up
CVS Health Corporation's (CVS - Free Report) third-quarter 2022 adjusted earnings per share (EPS) of $2.09 improved 6.1% year over year and exceeded the Zacks Consensus Estimate by 5%. The adjusted EPS figure considers opioid litigation charges, certain asset amortization costs, and other adjustments.
On a reported basis, the company’s GAAP loss was $2.60 per share against the year-ago earnings of $1.20 per share.
Total revenues in the third quarter rose 9.9% year over year to $81.16 billion. The top line also beat the Zacks Consensus Estimate by 6%.
Quarter in Detail
Pharmacy Services revenues were up 10.7% to $43.22 billion in the reported quarter. The upside was primarily driven by increased pharmacy claims volume and growth in specialty pharmacy and brand inflation, partially offset by continued client price improvements.
Total pharmacy claims processed rose 3.6% on a 30-day equivalent basis, attributable to net new business and increased utilization, partially offset by a decrease in COVID-19 vaccinations.Excluding the impact of COVID-19 vaccinations, total pharmacy claims processed increased 4.5% on a 30-day equivalent basis.
CVS Health Corporation Price, Consensus and EPS Surprise
CVS Health Corporation price-consensus-eps-surprise-chart | CVS Health Corporation Quote
Revenues from CVS Health’s Retail/LTC segment were up 6.9% year over year to $26.71 billion. The impressive growth was driven by increased prescription and front store volume, including the sales of COVID-19 over-the-counter test kits and pharmacy drug mix and brand inflation. However, this growth was partially offset by decline in COVID-19 diagnostic testing and vaccinations, the impact of recent generic introductions and continued pharmacy reimbursement pressure.
Within the Health Care Benefits segment, the company registered revenues worth $22.51 billion in the third quarter, up 9.9% year over year. The upside was primarily driven by growth across all product lines. The segment also benefited from favorable development of the prior years’ health care cost estimates in its Government Services and Commercial businesses.
Margin
Total cost (including Benefit Costs) rose 10.9% to $67.78 billion in the third quarter. Gross profit rose 5.3% to $13.38 billion. The gross margin contracted 73 basis points (bps) to 16.5%.
The operating margin in the quarter under review contracted 9 bps to 4.6%, despite a 7.9% rise in operating profit to $3.77 billion.
2022 Guidance Raised
CVS Health raised its EPS guidance for full-year 2022.
The company raised its adjusted EPS to the band of $8.55-$8.65 (up from the earlier projected $8.40-$8.60). The Zacks Consensus Estimate for 2022 earnings is pegged at $8.54.
The company has also raised its full-year operating cash flow projection to the range of $13.5-$14.5 billion (from the prior projection of $12.5-$13.5 billion).
Our Take
CVS Health exited the third quarter of 2022 on a strong note, with earnings and revenues beating the Zacks Consensus Estimate. Robust sales growth across all three operating segments drove the top-line results. Within the Health Care Benefits arm, the continued growth across the entire range of insured and self-insured medical, pharmacy, dental and behavioral health products and services instills optimism. The raised EPS guidance for 2022 is indicative of this growth momentum continuing.
However, the contraction of margins on escalating costs does not bode well. The decline in COVID-19 vaccinations and testing sales is a downside. Further, persistent pharmacy reimbursement headwinds also continued to impact business performance in the quarter under review.
Zacks Rank and Key Picks
CVS Health currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.