CVS Health Corporation ( CVS Quick Quote CVS - Free Report) is scheduled to report fourth-quarter 2021 results on Feb 9, before the opening bell.
In the last-reported quarter, the company delivered an earnings surprise of 10.06%. It beat earnings estimates in each of the trailing four quarters, the earnings surprise being 12.6%, on average.
Factors at Play
In recent months, CVS Health’s specialty digital solutions for patients have been growing strongly. The company is seeing a significant part of its specialty orders being placed digitally, with primary growth drivers being engagement in an expanded set of digital health services such as COVID testing, vaccinations and omni-channel pharmacy. The company’s continued efforts to modernize its operating systems and enhance the integration of the pharmacy model simplifying consumer interactions are attracting more customers to its omni-channel pharmacy.With the growing number of new COVID-19 cases through the fourth-quarter months, we expect this momentum to have continued through the quarter, thus adding to the top line of CVS Health.
Moreover, per CVS Health’s October 2021 update, nearly 20,000 pharmacists, pharmacy technicians, and nurses have joined the CVS Health team, supporting flu season, as well as COVID-19 vaccinations and testing. This should have positively contributed to the company’s Q4 top line.
Specifically, in terms of COVID-19 vaccination and testing, in January 2022, the company noted that through 2021, it collectively administered roughly 59 million vaccines and 32 million tests. Considering the rapid emergence of new COVID variants through the months of Q4, we believe a significant part of these testing and vaccine administrations to have taken place in the quarter.
CVS Health has also been expanding access to care through digital and virtual channels. In 2021, CVS Health launched the first national Virtual Primary Care program. This program had more than 750,000 eligible members as of Jan 1, 2022.This is expected to have aided CVS Health’s growth in the to-be-reported quarter. As a major step toward digital health, the company’s recently launched CVS Health Ventures fund that gives insight into new digital health innovations is also expected to have benefited the company in the fourth quarter, thus adding to the top line.
Within pharmacy services, the company is expected to have achieved strong revenue growth, given the gradual increase in the number of walk-in-clinical appointments and patient visits. Moreover, the company has a huge PBM client base, which is expected to have seen a strong rebound in fourth-quarter revenues with new business wins banking on integrated offerings. Improvements in purchasing economics and the ongoing benefit from several generic launches are also expected to have fueled growth.
In recent times, the company has been experiencing growth in Specialty Pharmacy and brand inflation. The specialty pharmacy capabilities are expected to have witnessed continued growth, led by the company’s new investment in Coram infusion professionals and Novologix. The company’s newly developed comprehensive set of programs to effectively manage specialty trends, including the formulary exclusion strategy, is also expected to have fueled growth in the to-be-reported quarter.
Within healthcare benefits, the company earlier noted that medical cost utilization largely returned to normal levels. This trend is likely to have continued through the fourth quarter. Further, this segment is expected to have gained from sustained growth in the Government Services business. However, the repeal of the health insurance fee might have impeded growth in the to-be-reported quarter.
The Estimate Picture
The Zacks Consensus Estimate for fourth-quarter adjusted earnings of $1.85 suggests a 42.3% rise from the year-ago quarter reported figure. The consensus estimate for revenues is currently pegged at $75.87 billion, indicating 9.8% growth from the year-earlier reported number.
What the Quantitative Model Predicts
Our proven model predicts an earnings beat for CVS Health this time around. The combination of a positive
Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. Earnings ESP: CVS Health has an Earnings ESP of +4.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Zacks Rank: CVS Health carries a Zacks Rank #3. Other Stocks Worth a Look
Here are a few medical stocks that have the right combination of elements to beat on earnings this reporting cycle.
Cara Therapeutics ( CARA Quick Quote CARA - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank of 1. Cara Therapeutics is slated to release fourth-quarter 2021 results on Feb 24.
CARA’s earnings yield of 4.2% compares favorably with the industry’s 1.7%. You can see
the complete list of today’s Zacks #1 Rank stocks here. Henry Schein, Inc. ( HSIC Quick Quote HSIC - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank of 2. Henry Schein is slated to release fourth-quarter 2021 results on Feb 15.
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.9% compares favorably with the industry’s 4.1%.
Guardant Health ( GH Quick Quote GH - Free Report) has an Earnings ESP of +9.45% and is a Zacks #2 Ranked stock.
Guardant Healthis slated to release fourth-quarter 2021 results on Feb 23. Guardant Health’s long-term earnings growth rate is estimated at 10.8%.
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