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10th May 2022

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CVS's Earnings Beat Forecasts Despite Slide for Retail

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Revenues rose 3.8% for the company’s pharmacy services segment.

Bryan Bedder/Getty Images for CVS Pharmacy

CVS Health

shares are climbing in response to news that both earnings and revenues were better than expected in the latest quarter.

The company reported adjusted earnings of $2.04 per share, beating the FactSet analyst consensus estimate of $1.73 per share. CVS (ticker: CVS) said total revenues were $69.1 billion, up 3.5% compared to the same quarter last year, beating the Wall Street consensus call of $68.4 billion.

At the same time, management raised its forecast of earnings for the full 2021 fiscal year, saying it now expects adjusted profits of between $7.56 and $7.68 a share, up from its previous estimate of between $7.39 and $7.55. Before the updated forecast came out, the consensus call on Wall Street was that CVS would earn $7.54 a share.

“We continue to execute on our strategy while simultaneously managing through a pandemic, helping the country on the road to recovery,” said the company’s CEO,
Karen Lynch,
who took on the role in February. “Our unmatched assets and strength of our brand are driving results as we work toward improving care delivery and driving growth.”

Revenues from the company’s healthcare benefits segment, which includes the health insurer Aetna, were up 6.7% compared with the same period last year, while adjusted operating income was up 19.5%. For the company’s pharmacy services segment, revenues were up 3.8%, while adjusted operating income was up 27.6%.

The results were less rosy for the company’s retail and long-term care segment. While total revenues were up 2.3%, adjusted operating income was down by 26.7%.

“CVS reported strong results in its Pharmacy Services (PBM) and Health Care Benefits (MCO) segments, which more than offset the sizable [year over year] decline in the Retail business,” wrote Guggenheim analyst Glen Santangelo in a note out early Tuesday. “While much of the weakness in the Retail/LTC segment can be attributed to difficult [year over year] comparison and a weak cold, cough, and flu season, reimbursement pressure continues to be an issue that bears watching.”

In a separate note, BMO Equity Research analyst Matt Borsch wrote that he expected a positive stock reaction to the results, calling it an encouraging start to the year.

CVS shares trade at 10.1 times the per-share earnings expected for the next 12 months, slightly below the 5-year average of 10.5 times earnings. Of the 27 analysts who cover the stock, 20 rate it at Buy or Overweight, while seven rate it at Hold.

Write to Josh Nathan-Kazis at

2021-05-04 14:27:00

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By admin