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CVS Health (CVS) to Report Q1 Earnings: What's in the Cards?
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CVS Health Corporation (CVS - Free Report) is scheduled to report first-quarter 2024 results on May 1 before the opening bell.
In the last reported quarter, the company’s adjusted earnings of $2.12 exceeded the Zacks Consensus Estimate by 5.47%. CVS Health beat estimates in each of the trailing four quarters, the average surprise being 4.94%.
Let’s look at how things have shaped up for CVS Health before this announcement.
Factors at Play
Health Care Benefits
The segment is likely to have delivered robust revenue growth, driven by strong performances across all product lines, particularly in the individual exchange and Medicare businesses. While Medicaid redeterminations may have led to a reduction in medical membership numbers in the first quarter of 2024, we assume that the growth in the individual exchange business helped partially offset this impact.
Medicare Advantage remains a key strategic growth area for CVS Health’s operations. Similar to the previous quarters, the company is likely to have continued to navigate elevated utilization trends within the Medicare Advantage business.
Following a highly successful 2024 annual enrollment period, CVS expects to add at least 800,000 new members this year. The targeted investments strengthened by CVS Health assets have enabled the company to facilitate differentiated value for its members. We assume these positive developments to have been favorably reflected in CVS’ top line as well in the to-be-reported quarter.
Going by the Zacks Consensus Estimate, CVS’ Health Care Benefits arm revenues are likely to have improved 18.8% year over year in the first quarter of 2024.
Health Services
The company rebranded its Health Services segment as CVS Healthspire, which includes CVS Caremark, MinuteClinic, Oak Street Health, Signify Health and Cordavis. In the to-be-reported quarter, the segment’s strong revenues are likely to have been driven by the pharmacy drug mix, growth in specialty pharmacy, brand inflation and the addition of Signify and Oak Street.
Caremark’s market leadership may have further solidified, backed by the company’s ability to consistently deliver exceptional customer-member experience. Additionally, the introduction of TrueCost, the latest model innovation from CVS Caremark that offers pricing reflecting the true net cost of prescription drugs with continued client visibility into administrative fees, is likely to have boosted CVS’ overall revenue growth in the to-be-reported quarter.
Furthermore, the company is expected to have made tremendous progress with its two healthcare delivery assets. Signify Health may have continued to demonstrate the value of its in-home capabilities for all of CVS’ multi-payer Medicare Advantage partners. By leveraging Signify Health’s robust capabilities and other products, CVS may have expanded its addressable market for Aetna customers. The addition of more Oak Street centers is likely to have positively influenced the company’s overall growth in the to-be-reported quarter.
We also expect CVS to continue to promote the greater adoption of biosimilars and increase the affordability of these critical specialty drugs for its clients and their members. Cordavis is likely to have played a crucial role in reducing drug costs and ensuring a consistent supply of affordable, high-quality biosimilars for patients. All these trends are likely to have favored the company’s top line in the first quarter of 2024. However, similar to Q4 2023, the effects of continued client price improvements may have dampened the segment’s growth.
The Zacks Consensus Estimate for the Health Services arm’s revenues indicates a 7.5% year-over-year decline in the first quarter of 2024.
Pharmacy & Consumer Wellness
In the to-be-reported quarter, the segment’s performance is expected to have been driven by strong operational execution. CVS may have continued to provide access to critical immunizations in the communities it serves and delivered on pharmacy performance measures for health plan partners. Both same-store sales and same-store prescription volumes are expected to have increased year over year in the first quarter of 2024, benefiting CVS’ top line.
We also expect the company to make notable progress with the new CVS CostVantage model, which promises greater transparency and simplicity and represents a significant shift from the traditional pharmacy reimbursement model. CVS had earlier reached a preliminary agreement with multiple cash discount card administrators, who are likely to have begun using CVS CostVantage since Apr 1.
Meanwhile, the company is likely to have progressed in its store closure initiative, with plans to close 900 stores by the end of this year. The decrease in store counts, along with the impact of recent generic introductions and continued reimbursement pressure, may have dented the segment’s improvement rate in the to-be-reported quarter, thus affecting CVS’ operational performance.
The Zacks Consensus Estimate for the Pharmacy & Consumer Wellness segment calls for a 7.1% year-over-year improvement in the first quarter of 2024.
Key Q1 Estimates
The Zacks Consensus Estimate for first-quarter 2024 adjusted earnings of $1.69 per share suggests a 23.2% fall from the year-ago reported figure.
The consensus estimate for revenues is pegged at $89.23 billion, which calls for a 4.6% rise from the prior-year reported number.
What Our Model Suggests
Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates, which is not the case here:
Earnings ESP: CVS Health has an Earnings ESP of +8.03%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
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:
TransMedics has an expected earnings growth rate of 81.8% for 2024. TMDX surpassed earnings in each of the trailing four quarters, the average being 107.83%.
Inspire Medical Systems (INSP - Free Report) has an Earnings ESP of +18.04% and a Zacks Rank #1. The company is set to release first-quarter 2024 results on May 7.
INSP has an expected long-term earnings growth rate of 51.4% compared to the S&P 500’s 17.1%. The company surpassed earnings in each of the trailing four quarters, the average being 353.55%.
Insulet (PODD - Free Report) currently has an Earnings ESP of +11.11% and a Zacks Rank #2. The company is set to release its first-quarter 2024 results on May 9.
PODD has an expected long-term earnings growth rate of 18.1% compared to the industry’s 11.4%. The company surpassed earnings in each of the trailing four quarters, the average being 100.09%.
Image: Bigstock
CVS Health (CVS) to Report Q1 Earnings: What's in the Cards?
CVS Health Corporation (CVS - Free Report) is scheduled to report first-quarter 2024 results on May 1 before the opening bell.
In the last reported quarter, the company’s adjusted earnings of $2.12 exceeded the Zacks Consensus Estimate by 5.47%. CVS Health beat estimates in each of the trailing four quarters, the average surprise being 4.94%.
Let’s look at how things have shaped up for CVS Health before this announcement.
Factors at Play
Health Care Benefits
The segment is likely to have delivered robust revenue growth, driven by strong performances across all product lines, particularly in the individual exchange and Medicare businesses. While Medicaid redeterminations may have led to a reduction in medical membership numbers in the first quarter of 2024, we assume that the growth in the individual exchange business helped partially offset this impact.
Medicare Advantage remains a key strategic growth area for CVS Health’s operations. Similar to the previous quarters, the company is likely to have continued to navigate elevated utilization trends within the Medicare Advantage business.
Following a highly successful 2024 annual enrollment period, CVS expects to add at least 800,000 new members this year. The targeted investments strengthened by CVS Health assets have enabled the company to facilitate differentiated value for its members. We assume these positive developments to have been favorably reflected in CVS’ top line as well in the to-be-reported quarter.
Going by the Zacks Consensus Estimate, CVS’ Health Care Benefits arm revenues are likely to have improved 18.8% year over year in the first quarter of 2024.
Health Services
The company rebranded its Health Services segment as CVS Healthspire, which includes CVS Caremark, MinuteClinic, Oak Street Health, Signify Health and Cordavis. In the to-be-reported quarter, the segment’s strong revenues are likely to have been driven by the pharmacy drug mix, growth in specialty pharmacy, brand inflation and the addition of Signify and Oak Street.
CVS Health Corporation Price and EPS Surprise
CVS Health Corporation price-eps-surprise | CVS Health Corporation Quote
Caremark’s market leadership may have further solidified, backed by the company’s ability to consistently deliver exceptional customer-member experience. Additionally, the introduction of TrueCost, the latest model innovation from CVS Caremark that offers pricing reflecting the true net cost of prescription drugs with continued client visibility into administrative fees, is likely to have boosted CVS’ overall revenue growth in the to-be-reported quarter.
Furthermore, the company is expected to have made tremendous progress with its two healthcare delivery assets. Signify Health may have continued to demonstrate the value of its in-home capabilities for all of CVS’ multi-payer Medicare Advantage partners. By leveraging Signify Health’s robust capabilities and other products, CVS may have expanded its addressable market for Aetna customers. The addition of more Oak Street centers is likely to have positively influenced the company’s overall growth in the to-be-reported quarter.
We also expect CVS to continue to promote the greater adoption of biosimilars and increase the affordability of these critical specialty drugs for its clients and their members. Cordavis is likely to have played a crucial role in reducing drug costs and ensuring a consistent supply of affordable, high-quality biosimilars for patients. All these trends are likely to have favored the company’s top line in the first quarter of 2024. However, similar to Q4 2023, the effects of continued client price improvements may have dampened the segment’s growth.
The Zacks Consensus Estimate for the Health Services arm’s revenues indicates a 7.5% year-over-year decline in the first quarter of 2024.
Pharmacy & Consumer Wellness
In the to-be-reported quarter, the segment’s performance is expected to have been driven by strong operational execution. CVS may have continued to provide access to critical immunizations in the communities it serves and delivered on pharmacy performance measures for health plan partners. Both same-store sales and same-store prescription volumes are expected to have increased year over year in the first quarter of 2024, benefiting CVS’ top line.
We also expect the company to make notable progress with the new CVS CostVantage model, which promises greater transparency and simplicity and represents a significant shift from the traditional pharmacy reimbursement model. CVS had earlier reached a preliminary agreement with multiple cash discount card administrators, who are likely to have begun using CVS CostVantage since Apr 1.
Meanwhile, the company is likely to have progressed in its store closure initiative, with plans to close 900 stores by the end of this year. The decrease in store counts, along with the impact of recent generic introductions and continued reimbursement pressure, may have dented the segment’s improvement rate in the to-be-reported quarter, thus affecting CVS’ operational performance.
The Zacks Consensus Estimate for the Pharmacy & Consumer Wellness segment calls for a 7.1% year-over-year improvement in the first quarter of 2024.
Key Q1 Estimates
The Zacks Consensus Estimate for first-quarter 2024 adjusted earnings of $1.69 per share suggests a 23.2% fall from the year-ago reported figure.
The consensus estimate for revenues is pegged at $89.23 billion, which calls for a 4.6% rise from the prior-year reported number.
What Our Model Suggests
Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates, which is not the case here:
Earnings ESP: CVS Health has an Earnings ESP of +8.03%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
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:
TransMedics Group (TMDX - Free Report) has an Earnings ESP of +240.00% and a Zacks Rank #1. The company is expected to release first-quarter 2024 results on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedics has an expected earnings growth rate of 81.8% for 2024. TMDX surpassed earnings in each of the trailing four quarters, the average being 107.83%.
Inspire Medical Systems (INSP - Free Report) has an Earnings ESP of +18.04% and a Zacks Rank #1. The company is set to release first-quarter 2024 results on May 7.
INSP has an expected long-term earnings growth rate of 51.4% compared to the S&P 500’s 17.1%. The company surpassed earnings in each of the trailing four quarters, the average being 353.55%.
Insulet (PODD - Free Report) currently has an Earnings ESP of +11.11% and a Zacks Rank #2. The company is set to release its first-quarter 2024 results on May 9.
PODD has an expected long-term earnings growth rate of 18.1% compared to the industry’s 11.4%. The company surpassed earnings in each of the trailing four quarters, the average being 100.09%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.