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CVS Health (CVS) Q4 Earnings Top Estimates, 2024 EPS View Down
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CVS Health Corporation's (CVS - Free Report) fourth-quarter 2023 adjusted earnings per share (EPS) of $2.12 rose 3.9% year over year and exceeded the Zacks Consensus Estimate by 5.5%. The adjusted EPS figure considers certain asset amortization costs, loss on assets held for sale and other adjustments.
On a reported basis, the company’s GAAP earnings were $1.58 per share compared with the year-ago GAAP EPS of $1.77, down 10.7%.
For the full year, adjusted earnings were $8.74 per share, down 3.2% from the year-ago period’s levels. It surpassed the Zacks Consensus Estimate by 1.4%.
Revenues
Revenues in the fourth quarter rose 11.9% year over year to $93.8 billion. The top line also beat the Zacks Consensus Estimate by 3.3%.
Total revenues for 2023 were $357.78 billion, up 10.9% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.9%.
Quarter in Detail
Effective from the first quarter of 2023, CVS Health realigned the composition of its segments. It created the Health Services segment (comprising the company’s pharmacy benefit management operations, health care services and provider enablement solutions) and the Pharmacy & Consumer Wellness segment (comprising enterprise pharmacy fulfillment and retail front store operations).
Health Services revenues were up 12.3% to $49.15 billion in the reported quarter. The upside was primarily driven by pharmacy drug mix, growth in specialty pharmacy, brand inflation and the acquisitions of Oak Street Health and Signify Health, partially offset by continued client price improvements.
CVS Health Corporation Price, Consensus and EPS Surprise
Total pharmacy claims processed inched up 0.09% on a 30-day equivalent basis, driven by net new business and increased utilization. This increase was offset by the impact of a Medicaid customer contract change that occurred during the second quarter of 2023 and a decline in COVID-19 vaccinations.
Revenues from CVS Health’s Pharmacy & Consumer Wellness segment were up 8.6% year over year to $31.18 billion. The upside was driven by increased prescription and front store volume, pharmacy drug mix and brand inflation and increased contributions from vaccinations. However, the upside was partially offset by increased prescription volume, improved generic drug purchasing and lower operating expenses.
Within the Health Care Benefits segment, the company registered revenues worth $26.73 billion in the fourth quarter, up 16.1% year over year, driven by growth across all product lines.
Margin
Total cost (including Benefit Costs) rose 11% to $57.42 billion in the fourth quarter. Gross profit rose 13.3% to $36.39 billion. The gross margin expanded 48-basis points (bps) to 38.8%.
The adjusted operating margin in the quarter under review contracted 174 bps to 14.8% on a 23.3% rise in operating expenses to $22.52 billion.
2024 Guidance
CVS Health updated EPS guidance due to elevated medical cost trends in 2024.
Edwards Lifesciences expects adjusted EPS guidance for full-year 2024 to be at least $8.30 (down from the previous guidance of at least $8.50). The Zacks Consensus Estimate for 2024 earnings is pegged at $8.60.
Our Take
CVS Health’s fourth-quarter 2023 earnings and revenues beat the Zacks Consensus Estimate. Robust sales growth across all three operating segments drove the top-line results. Within the Health Service segment, pharmacy drug mix, growth in specialty pharmacy and brand inflation drove year-over-year growth. During the reported quarter, CVS Health introduced CVS Caremark TrueCost, a model innovation that offers client pricing reflecting the true net cost of prescription drugs, with visibility into administrative fees.
The company lowered its EPS guidance for 2024, which is discouraging. Persistent pharmacy reimbursement headwinds also continued to impact business performance in the quarter under review.
Zacks Rank and Key Picks
CVS Health currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Haemonetics (HAE - Free Report) and McKesson (MCK - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 10.9% for 2025. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Haemonetics, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted EPS of 99 cents, which beat the Zacks Consensus Estimate by 5.3%. For the third quarter, revenues are expected to increase 5.6% year over year.
HAE has an estimated fiscal 2024 earnings growth rate of 28.4% compared with the industry’s 17.3% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 16.1%.
Mckesson reported third-quarter fiscal 2023 adjusted earnings of $6.90, beating the Zacks Consensus Estimate by 8.8%. For the fourth quarter, revenues are expected to increase 9.9% year over year. It currently carries a Zacks Rank #2.
MCK has an estimated earnings growth rate of 14% for fiscal 2025 compared with the industry’s 13.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.9%.
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CVS Health (CVS) Q4 Earnings Top Estimates, 2024 EPS View Down
CVS Health Corporation's (CVS - Free Report) fourth-quarter 2023 adjusted earnings per share (EPS) of $2.12 rose 3.9% year over year and exceeded the Zacks Consensus Estimate by 5.5%. The adjusted EPS figure considers certain asset amortization costs, loss on assets held for sale and other adjustments.
On a reported basis, the company’s GAAP earnings were $1.58 per share compared with the year-ago GAAP EPS of $1.77, down 10.7%.
For the full year, adjusted earnings were $8.74 per share, down 3.2% from the year-ago period’s levels. It surpassed the Zacks Consensus Estimate by 1.4%.
Revenues
Revenues in the fourth quarter rose 11.9% year over year to $93.8 billion. The top line also beat the Zacks Consensus Estimate by 3.3%.
Total revenues for 2023 were $357.78 billion, up 10.9% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.9%.
Quarter in Detail
Effective from the first quarter of 2023, CVS Health realigned the composition of its segments. It created the Health Services segment (comprising the company’s pharmacy benefit management operations, health care services and provider enablement solutions) and the Pharmacy & Consumer Wellness segment (comprising enterprise pharmacy fulfillment and retail front store operations).
Health Services revenues were up 12.3% to $49.15 billion in the reported quarter. The upside was primarily driven by pharmacy drug mix, growth in specialty pharmacy, brand inflation and the acquisitions of Oak Street Health and Signify Health, partially offset by continued client price improvements.
CVS Health Corporation Price, Consensus and EPS Surprise
CVS Health Corporation price-consensus-eps-surprise-chart | CVS Health Corporation Quote
Total pharmacy claims processed inched up 0.09% on a 30-day equivalent basis, driven by net new business and increased utilization. This increase was offset by the impact of a Medicaid customer contract change that occurred during the second quarter of 2023 and a decline in COVID-19 vaccinations.
Revenues from CVS Health’s Pharmacy & Consumer Wellness segment were up 8.6% year over year to $31.18 billion. The upside was driven by increased prescription and front store volume, pharmacy drug mix and brand inflation and increased contributions from vaccinations. However, the upside was partially offset by increased prescription volume, improved generic drug purchasing and lower operating expenses.
Within the Health Care Benefits segment, the company registered revenues worth $26.73 billion in the fourth quarter, up 16.1% year over year, driven by growth across all product lines.
Margin
Total cost (including Benefit Costs) rose 11% to $57.42 billion in the fourth quarter. Gross profit rose 13.3% to $36.39 billion. The gross margin expanded 48-basis points (bps) to 38.8%.
The adjusted operating margin in the quarter under review contracted 174 bps to 14.8% on a 23.3% rise in operating expenses to $22.52 billion.
2024 Guidance
CVS Health updated EPS guidance due to elevated medical cost trends in 2024.
Edwards Lifesciences expects adjusted EPS guidance for full-year 2024 to be at least $8.30 (down from the previous guidance of at least $8.50). The Zacks Consensus Estimate for 2024 earnings is pegged at $8.60.
Our Take
CVS Health’s fourth-quarter 2023 earnings and revenues beat the Zacks Consensus Estimate. Robust sales growth across all three operating segments drove the top-line results. Within the Health Service segment, pharmacy drug mix, growth in specialty pharmacy and brand inflation drove year-over-year growth. During the reported quarter, CVS Health introduced CVS Caremark TrueCost, a model innovation that offers client pricing reflecting the true net cost of prescription drugs, with visibility into administrative fees.
The company lowered its EPS guidance for 2024, which is discouraging. Persistent pharmacy reimbursement headwinds also continued to impact business performance in the quarter under review.
Zacks Rank and Key Picks
CVS Health currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Haemonetics (HAE - Free Report) and McKesson (MCK - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 10.9% for 2025. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Haemonetics, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted EPS of 99 cents, which beat the Zacks Consensus Estimate by 5.3%. For the third quarter, revenues are expected to increase 5.6% year over year.
HAE has an estimated fiscal 2024 earnings growth rate of 28.4% compared with the industry’s 17.3% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 16.1%.
Mckesson reported third-quarter fiscal 2023 adjusted earnings of $6.90, beating the Zacks Consensus Estimate by 8.8%. For the fourth quarter, revenues are expected to increase 9.9% year over year. It currently carries a Zacks Rank #2.
MCK has an estimated earnings growth rate of 14% for fiscal 2025 compared with the industry’s 13.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.9%.