A month has gone by since the last earnings report for CVS Health (CVS Quick QuoteCVS - Free Report) . Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

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

CVS Health Q3 Earnings Top Estimates, 2021 EPS View Up

CVS Health third-quarter 2021 adjusted earnings per share of $1.97 rose 18.7% year over year and exceeded the Zacks Consensus Estimate by 10.1%. 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 $1.20 per share rose 29% year over year.

Total revenues in the third quarter rose 10% year over year to $73.79 billion. The top line also beat the Zacks Consensus Estimate by 5.1%.

Quarter in Detail

Pharmacy Services revenues were up 9.3% to $39.05 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 6.9% 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 5.3% on a 30-day equivalent basis.

Revenues from CVS Health’s Retail/LTC segment were up 10% year over year to $24.99 billion. In the quarter, the benefit from the administration of COVID-19 vaccinations and diagnostic testing, increased prescription and front store volume were partially offset by continued pharmacy reimbursement pressure and the impact of recent generic introductions.

Within Health Care Benefits segment, the company registered revenues worth $20.48 billion in the third quarter, up 9.5% 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 10.4% to $61.09 billion in the third quarter. Gross profit rose 8.4% to $12.70 billion. Gross margin contracted 27 basis points (bps) to 17.2%. Operating margin in the quarter under review contracted 11 bps to 4.7% despite a 7.5% rise in operating profit to $3.49 billion.

2021 Guidance

CVS Health raised its 2021 adjusted earnings per share guidance. Adjusted earnings per share is expected in the band of $7.90-$8.00 (compared with the earlier range of $7.70-$7.80). The Zacks Consensus Estimate for 2021 earnings is pegged at $7.78.

Full-year operating cash flow projection has been raised to the range of $13.00-$13.50 billion ($12.50-$13.00 billion).

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, 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 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 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.