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CVS Health (CVS) Q2 Earnings Beat Estimates, EPS View Up
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CVS Health Corporation's (CVS - Free Report) second-quarter 2021 adjusted earnings per share (EPS) of $2.42 declined 8.3% year over year but exceeded the Zacks Consensus Estimate by 16.9%. The adjusted EPS 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 $2.10 per share fell 7.1% year over year.
Total revenues in the second quarter rose 11.1% year over year to $72.62 billion. The top line also beat the Zacks Consensus Estimate by 3.6%.
Quarter in Detail
Pharmacy Services revenues were up 9.8% to $38.31 billion in the reported quarter. Increased pharmacy claims volume, growth in specialty pharmacy and brand inflation were partially offset by continued price compression in the quarter.
Total pharmacy claims processed rose 11.2% on a 30-day equivalent basis, attributable to strong net new business, COVID-19 vaccinations and increased new therapy prescriptions. Without considering the COVID-19 vaccinations, total pharmacy claims processed increased 8.4% on a 30-day equivalent basis.
CVS Health Corporation Price, Consensus and EPS Surprise
Revenues from CVS Health’s Retail/LTC segment were up 14.2% year over year to $24.73 billion. In the quarter, benefit from increased prescription volume, COVID-19 vaccinations and diagnostic testing and higher front store revenues across all product categories were partially offset by continued pharmacy reimbursement pressure.
Within Health Care Benefits segment, the company registered revenues worth $20.53 billion in the second quarter, up 11.1% 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
Total cost (including Benefit Cost) rose 14.3% to $59.42 billion in the second quarter. Gross profit fell 1.1% to $13.19 billion and accordingly gross margin contracted 226 basis points (bps) to 18.2%. Operating margin in the quarter under review fell 121 bps to 5.9% on a 7.6% decline in operating profit to $4.33 billion.
2021 Guidance
CVS Health raised its 2021 adjusted EPS guidance. Adjusted EPS is expected in the band of $7.70-$7.80 (compared with the earlier provided range of $7.56-$7.68). The Zacks Consensus Estimate for 2021 earnings is pegged at $7.66.
Full-year operating cash flow projection has been raised to the range of $12.5 billion-$13 billion ($12 billion-$12.50 billion).
Our Take
CVS Health’s second-quarter earnings and revenues surpassed the respective Zacks Consensus Estimate. However, adjusted EPS declined year over year on escalating costs and expenses which are putting pressure on both the margins.
Revenues across all the three operating segments improved in the quarter. Increased guidance amid the pandemic is another positive.
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 their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Chemed Corporation (CHE - Free Report) .
Encompass Health, carrying a Zacks Rank #1 (Strong Buy), reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical, a Zacks Rank #1 stock, reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
Chemed reported second-quarter 2021 adjusted EPS of $4.60, surpassing the Zacks Consensus Estimate by 3.4%. Revenues of $532.3 million surpassed the Zacks Consensus Estimate by 0.8%. Chemed carries a Zacks Rank #2 (Buy).
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CVS Health (CVS) Q2 Earnings Beat Estimates, EPS View Up
CVS Health Corporation's (CVS - Free Report) second-quarter 2021 adjusted earnings per share (EPS) of $2.42 declined 8.3% year over year but exceeded the Zacks Consensus Estimate by 16.9%. The adjusted EPS 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 $2.10 per share fell 7.1% year over year.
Total revenues in the second quarter rose 11.1% year over year to $72.62 billion. The top line also beat the Zacks Consensus Estimate by 3.6%.
Quarter in Detail
Pharmacy Services revenues were up 9.8% to $38.31 billion in the reported quarter. Increased pharmacy claims volume, growth in specialty pharmacy and brand inflation were partially offset by continued price compression in the quarter.
Total pharmacy claims processed rose 11.2% on a 30-day equivalent basis, attributable to strong net new business, COVID-19 vaccinations and increased new therapy prescriptions. Without considering the COVID-19 vaccinations, total pharmacy claims processed increased 8.4% 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 14.2% year over year to $24.73 billion. In the quarter, benefit from increased prescription volume, COVID-19 vaccinations and diagnostic testing and higher front store revenues across all product categories were partially offset by continued pharmacy reimbursement pressure.
Within Health Care Benefits segment, the company registered revenues worth $20.53 billion in the second quarter, up 11.1% 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
Total cost (including Benefit Cost) rose 14.3% to $59.42 billion in the second quarter. Gross profit fell 1.1% to $13.19 billion and accordingly gross margin contracted 226 basis points (bps) to 18.2%. Operating margin in the quarter under review fell 121 bps to 5.9% on a 7.6% decline in operating profit to $4.33 billion.
2021 Guidance
CVS Health raised its 2021 adjusted EPS guidance. Adjusted EPS is expected in the band of $7.70-$7.80 (compared with the earlier provided range of $7.56-$7.68). The Zacks Consensus Estimate for 2021 earnings is pegged at $7.66.
Full-year operating cash flow projection has been raised to the range of $12.5 billion-$13 billion ($12 billion-$12.50 billion).
Our Take
CVS Health’s second-quarter earnings and revenues surpassed the respective Zacks Consensus Estimate. However, adjusted EPS declined year over year on escalating costs and expenses which are putting pressure on both the margins.
Revenues across all the three operating segments improved in the quarter. Increased guidance amid the pandemic is another positive.
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 their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Chemed Corporation (CHE - Free Report) .
Encompass Health, carrying a Zacks Rank #1 (Strong Buy), reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical, a Zacks Rank #1 stock, reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
Chemed reported second-quarter 2021 adjusted EPS of $4.60, surpassing the Zacks Consensus Estimate by 3.4%. Revenues of $532.3 million surpassed the Zacks Consensus Estimate by 0.8%. Chemed carries a Zacks Rank #2 (Buy).