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CVS Health (CVS) to Report Q3 Earnings: What's in the Cards?
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CVS Health Corporation (CVS - Free Report) is scheduled to report third-quarter 2023 results on Nov 1, before the opening bell.
In the last reported quarter, the company’s adjusted earnings of $2.21 exceeded the Zacks Consensus Estimate by 4.3%. The company beat estimates in the trailing four quarters, the average surprise being 4.80%.
Let’s look at how things have shaped for CVS Health before this announcement.
Factors at Play
CVS Health’s newly-formed Pharmacy & Consumer Wellness segment (includes all the company’s omnichannel pharmacy capabilities, legacy retail pharmacy, specialty and mail order pharmacy fulfillment and infusion services along with CVS Health’s front store offerings) is likely to have benefited from increased prescription and front store volume, similar to the second quarter of 2023. The company’s efforts to provide a differentiated omnichannel pharmacy experience will likely have aided third-quarter performance.
CVS Health has been making noteworthy progress in expanding access to care through digital and virtual channels. During the second quarter of 2023, CVS Health’s unique digital customers increased to more than 53 million. The company’s digital sales increased 24% versus the prior year, including a meaningful increase of 65% in its over-the-counter health solution offering. We expect these developments to have benefited the company’s third-quarter 2023 revenues significantly.
The company also launched various new MinuteClinic virtual care services to support women's health that will be available 24/7. CVS Health’s continued efforts to expand digital health services and deepen engagement through personalization are expected to have broadened its customer base in the third quarter, thus adding to its top line.
However, challenging market conditions and normalizing COVID trends might have dented growth within the segment in the soon-to-be-reported quarter. Per our model, this segment is expected to report 6.9% year-over-year revenue growth this time around.
The Health Services segment (which includes most of the operations of the company’s legacy Pharmacy Services segment and its healthcare delivery operations) is expected to have recorded robust sales growth, banking on the pharmacy services business. The company's consistent demonstration of its value to consumers and clients by successfully managing drug cost trends and bringing innovative clinical solutions to the market are likely to have benefited CVS Health's third-quarter revenues.
Also, growth in specialty pharmacy and brand inflation is likely to have contributed to the pharmacy services arm. We are also positive about the company’s newly developed comprehensive programs to manage specialty trends, including a formulary exclusion strategy.
Within Health Service, Signify Health and Oak Street Health continue to deliver strong business performance consistent with expectations. These assets bring core capabilities to the multi-payor value-based care platform that drives optimal patient engagement with health services across multiple channels. CVS Health introduced new member engagement programs at a few CVS pharmacies to encourage IET conversion of Aetna Medicare subscribers and CVS pharmacy customers to Signify.
Further, Oak Street is expanding into additional geographies, driving higher patient growth continues to increase. We expect both these acquisitions to benefit CVS Health's performance in Q3.
Our model projects this segment to report a 4.5% year-over-year revenue growth.
The Healthcare Benefits arm is likely to have been driven by sustained membership growth across all product lines. During the second quarter of 2023, medical membership increased by 1.2 million, reflecting improvement across the company’s individual exchange business. We expect this growth momentum to have continued. CVS Health’s competitive cost structure, integrated benefit designs and innovative product portfolio are likely to have aided growth of the healthcare benefits business.
In the second quarter, branded drug revenues increased in part, driven by the GLC1 category. This expensive and fast-growing category presents new choices for the over 70 million adults in the U.S. who are living with obesity and the nearly 37 million people who have Type 2 diabetes. We believe this trend to have continued through third quarter as well, thus adding to the top line.
Our model projects this segment to report 13.7% year-over-year revenue growth in the second quarter.
Key Q3 Estimates
The Zacks Consensus Estimate for third-quarter 2023 adjusted earnings of $2.13 per share, suggesting a 1.9% fall from the year-ago reported figure.
The consensus estimate for revenues is pegged at $88.20 billion, calling for a 1.9% rise from the prior-year reported number.
What Our Model Suggests
Our 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: The company has an Earnings ESP of +0.57%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter.
Insulet has a long-term expected earnings growth rate of 35.7%. PODD has an earnings yield of 1.13% against the industry’s -2.58%.
Acadia Pharmaceuticals (ACAD - Free Report) has an Earnings ESP of +6.76% and a Zacks Rank #2. The company is scheduled to release third-quarter 2023 results on Nov 2.
ACAD has an expected long-term earnings growth rate of 43.4%. In the trailing four quarters, the company delivered an average earnings surprise of 20.33%.
Dentsply Sirona (XRAY - Free Report) currently has an Earnings ESP of +1.85% and a Zacks Rank #2. The company is scheduled to release its third-quarter 2023 results on Nov 2.
Dentsply Sirona has an expected earnings growth rate of 14.7% for the next year. XRAY’s earnings beat estimates in three of the trailing four quarters, the average surprise being 12.51%.
Image: Shutterstock
CVS Health (CVS) to Report Q3 Earnings: What's in the Cards?
CVS Health Corporation (CVS - Free Report) is scheduled to report third-quarter 2023 results on Nov 1, before the opening bell.
In the last reported quarter, the company’s adjusted earnings of $2.21 exceeded the Zacks Consensus Estimate by 4.3%. The company beat estimates in the trailing four quarters, the average surprise being 4.80%.
Let’s look at how things have shaped for CVS Health before this announcement.
Factors at Play
CVS Health’s newly-formed Pharmacy & Consumer Wellness segment (includes all the company’s omnichannel pharmacy capabilities, legacy retail pharmacy, specialty and mail order pharmacy fulfillment and infusion services along with CVS Health’s front store offerings) is likely to have benefited from increased prescription and front store volume, similar to the second quarter of 2023. The company’s efforts to provide a differentiated omnichannel pharmacy experience will likely have aided third-quarter performance.
CVS Health has been making noteworthy progress in expanding access to care through digital and virtual channels. During the second quarter of 2023, CVS Health’s unique digital customers increased to more than 53 million. The company’s digital sales increased 24% versus the prior year, including a meaningful increase of 65% in its over-the-counter health solution offering. We expect these developments to have benefited the company’s third-quarter 2023 revenues significantly.
The company also launched various new MinuteClinic virtual care services to support women's health that will be available 24/7. CVS Health’s continued efforts to expand digital health services and deepen engagement through personalization are expected to have broadened its customer base in the third quarter, thus adding to its top line.
However, challenging market conditions and normalizing COVID trends might have dented growth within the segment in the soon-to-be-reported quarter.
Per our model, this segment is expected to report 6.9% year-over-year revenue growth this time around.
The Health Services segment (which includes most of the operations of the company’s legacy Pharmacy Services segment and its healthcare delivery operations) is expected to have recorded robust sales growth, banking on the pharmacy services business. The company's consistent demonstration of its value to consumers and clients by successfully managing drug cost trends and bringing innovative clinical solutions to the market are likely to have benefited CVS Health's third-quarter revenues.
Also, growth in specialty pharmacy and brand inflation is likely to have contributed to the pharmacy services arm. We are also positive about the company’s newly developed comprehensive programs to manage specialty trends, including a formulary exclusion strategy.
Within Health Service, Signify Health and Oak Street Health continue to deliver strong business performance consistent with expectations. These assets bring core capabilities to the multi-payor value-based care platform that drives optimal patient engagement with health services across multiple channels. CVS Health introduced new member engagement programs at a few CVS pharmacies to encourage IET conversion of Aetna Medicare subscribers and CVS pharmacy customers to Signify.
CVS Health Corporation Price and EPS Surprise
CVS Health Corporation price-eps-surprise | CVS Health Corporation Quote
Further, Oak Street is expanding into additional geographies, driving higher patient growth continues to increase. We expect both these acquisitions to benefit CVS Health's performance in Q3.
Our model projects this segment to report a 4.5% year-over-year revenue growth.
The Healthcare Benefits arm is likely to have been driven by sustained membership growth across all product lines. During the second quarter of 2023, medical membership increased by 1.2 million, reflecting improvement across the company’s individual exchange business. We expect this growth momentum to have continued. CVS Health’s competitive cost structure, integrated benefit designs and innovative product portfolio are likely to have aided growth of the healthcare benefits business.
In the second quarter, branded drug revenues increased in part, driven by the GLC1 category. This expensive and fast-growing category presents new choices for the over 70 million adults in the U.S. who are living with obesity and the nearly 37 million people who have Type 2 diabetes. We believe this trend to have continued through third quarter as well, thus adding to the top line.
Our model projects this segment to report 13.7% year-over-year revenue growth in the second quarter.
Key Q3 Estimates
The Zacks Consensus Estimate for third-quarter 2023 adjusted earnings of $2.13 per share, suggesting a 1.9% fall from the year-ago reported figure.
The consensus estimate for revenues is pegged at $88.20 billion, calling for a 1.9% rise from the prior-year reported number.
What Our Model Suggests
Our 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: The company has an Earnings ESP of +0.57%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter.
Insulet (PODD - Free Report) has an Earnings ESP of +6.61% and a Zacks Rank #2. The company will release third-quarter 2023 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Insulet has a long-term expected earnings growth rate of 35.7%. PODD has an earnings yield of 1.13% against the industry’s -2.58%.
Acadia Pharmaceuticals (ACAD - Free Report) has an Earnings ESP of +6.76% and a Zacks Rank #2. The company is scheduled to release third-quarter 2023 results on Nov 2.
ACAD has an expected long-term earnings growth rate of 43.4%. In the trailing four quarters, the company delivered an average earnings surprise of 20.33%.
Dentsply Sirona (XRAY - Free Report) currently has an Earnings ESP of +1.85% and a Zacks Rank #2. The company is scheduled to release its third-quarter 2023 results on Nov 2.
Dentsply Sirona has an expected earnings growth rate of 14.7% for the next year. XRAY’s earnings beat estimates in three of the trailing four quarters, the average surprise being 12.51%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.