It has been about a month since the last earnings report for CVS Health (CVS Quick QuoteCVS - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CVS Health due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

CVS Health Q1 Earnings Top Estimates on Balanced Growth in All Arms

CVS Health Corporation's first-quarter 2021 adjusted earnings per share of $2.04 improved 6.8% year over year and also exceeded the Zacks Consensus Estimate by 18.6%. The adjusted earnings per share figure takes into account certain asset amortization costs and acquisition-related integration costs along with other adjustments.

On a reported basis, the company’s earnings of $1.68 per share rose 9.8% year over year.
Total revenues in the first quarter rose 3.5% year over year to $69.09 billion. The top line also beat the Zacks Consensus Estimate by 0.9%.

Quarter in Detail

Pharmacy Services revenues were up 3.8% to $36.33 billion in the reported quarter. Continued price compression and a weak cough, cold and flu season were partially offset by growth net new business, growth in specialty pharmacy, product mix and brand inflation.

Total pharmacy claims processed fell 1% on a 30-day equivalent basis, attributable to a weak cough, cold and flu season, partially offset by strong net new business.

Revenues from CVS Health’s Retail/LTC were up 2.3% year over year to $23.27 billion. In the quarter, increased COVID-19  diagnostic  testing  and  vaccinations  and  brand  inflation were partially offset by lower front store revenues, primarily due to the acceleration of demand in March 2020, a weak cough, cold and flu season, continued reimbursement pressure and the impact of recent generic introductions.

Within Health Care Benefits segment, the company registered revenues worth $20.48 billion in the first quarter, up 6.7% year over year. The improvement was primarily driven by growth in the Government Services business, partially offset by the unfavorable impact of the repeal of the HIF (Health Insurer Fee) for 2021.

Margin

Gross profit (considering benefit cost) improved 3.9% to $12.49 billion. Gross margin expanded 7 basis points (bps) to 38.9%. Operating margin in the quarter under review fell 1 bps to 5.17% despite a 3.3% rise in adjusted operating profit to $3.58 billion.

2021 Outlook

CVS Health has raised its 2021 adjusted EPS guidance. Adjusted earnings per share is expected in the band of $7.56-$7.78 (compared with the earlier provided range of $7.39-$7.55). The Zacks Consensus Estimate for 2021 earnings is pegged at $7.55.

Full-year operating cash flow projection has been reaffirmed in the range of $12 billion-$12.50 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 6.35% due to these changes.

VGM Scores

At this time, CVS Health has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CVS Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.