It has been about a month since the last earnings report for CVS Health (CVS Quick QuoteCVS - Free Report) . Shares have added about 8.6% 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 Q2 Earnings Top Estimates on Balanced Growth in All Arms

CVS Health 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.

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).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, CVS Health has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CVS Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.