A month has gone by since the last earnings report for CVS Health (CVS Quick QuoteCVS - Free Report) . Shares have lost about 0.5% 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 Q1 Earnings Top Estimates, ’22 EPS View Up

CVS Health Corporation's first-quarter 2022 adjusted earnings per share of $2.22 rose 8.8% year over year and exceeded the Zacks Consensus Estimate by 3.7%. The adjusted earnings per share figure considers certain asset amortization costs, acquisition-related integration costs and other adjustments.

On a reported basis, the company’s GAAP earnings per share of $1.74 rose 3.6% year over year.

Total revenues in the first quarter rose 11.2% year over year to $76.83 billion. The top line also beat the Zacks Consensus Estimate by 1.7%.

Quarter in Detail

Pharmacy Services revenues were up 8.6% to $39.46 billion in the reported quarter. The upside was primarily driven by increased pharmacy claims volume, growth in specialty pharmacy and brand inflation, partially offset by continued client price improvements.

Total pharmacy claims processed rose 5.8% on a 30-day equivalent basis, attributable to strong net new business, greater utilization, and a weaker cough, cold, and flu season in the prior year. Without considering the COVID-19 vaccinations, total pharmacy claims processed increased 5.5% on a 30-day equivalent basis.

Revenues from CVS Health’s Retail/LTC segment were up 9.2% year over year to $25.42 billion. The impressive growth was driven by increased prescription and front store volume, including the sale of COVID-19 OTC test kits and the impact of a weaker cough, cold and flu season in the prior year as well as pharmacy brand inflation. However, this growth was partially offset by the impact of recent generic introductions, persistent pharmacy reimbursement pressure and a decline in COVID-19 diagnostic testing.

Within the Health Care Benefits segment, the company registered revenues worth $23.11 billion in the first quarter, up 12.8% year over year. The improvement was primarily driven by growth across all product lines. The segment also benefited from favorable development of the prior years’ health care cost estimates in its Government Services and Commercial businesses.

Margin

Total cost (including Benefit Cost) rose 12.1% to $63.46 billion in the first quarter. Gross profit rose 6.9% to $13.37 billion. Gross margin contracted 69 basis points (bps) to 17.4%. Operating margin in the quarter under review contracted 63 bps to 4.5%, with a 2.4% plunge in operating profit to $3.49 billion.

2022 Guidance

CVS Health has updated its EPS guidance for full-year 2022.

The company currently expects adjusted EPS in the band of $8.20-$8.40 (up from the earlier projected $8.10-$8.30). The Zacks Consensus Estimate for 2022 earnings is pegged at $8.23.

The company has reaffirmed full-year operating cash flow projection at the range of $12.0-$13.0 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 strong Growth Score of A, though it is lagging a lot 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 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.