A lady walks previous a CVS Pharmacy in Washington, D.C., on Nov. 2, 2022.
Brendan Smialowski | AFP | Getty Images
CVS on Wednesday reported third-quarter adjusted earnings and revenue that topped Wall Street’s expectations, lifted partially by strong revenue from the corporate’s health services enterprise.
CVS booked gross sales of $89.76 billion for the quarter, up practically 11% from the identical interval a yr in the past.
The firm reported web revenue of $2.27 billion, or $1.75 per share, for the third quarter. That compares with a web lack of $3.40 billion, or $2.59 per share, for a similar interval a yr in the past. Excluding sure objects, comparable to amortization of intangible belongings and capital losses, adjusted earnings per share have been $2.21 for the quarter.
Here’s what CVS reported for the third quarter in comparison with what Wall Street was anticipating, based mostly on a survey of analysts by LSEG, previously often known as Refinitiv:
- Earnings per share: $2.21 adjusted vs. $2.13 anticipated
- Revenue: $89.76 billion vs. $88.25 billion anticipated
CVS lowered its full-year unadjusted earnings forecast to a spread of $6.37 to $6.61, down from a previous vary of $6.53 to $6.75. However, it maintained its forecast on an adjusted foundation, guiding to full-year adjusted earnings of $8.50 to $8.70 per share.
The results come on the final day of a nationwide walkout by pharmacy employees from CVS, Walgreens and Rite Aid to protest what they name harsh working circumstances that put each workers and sufferers in danger. CVS informed CNBC final week that the corporate is partaking with employees to straight tackle any considerations that they may have.
They additionally come one quarter after CVS launched a sweeping cost-cutting program as a part of its push to rework from a significant drugstore chain to a big health-care firm. The firm deepened that push earlier this yr with its practically $8 billion acquisition of health-care supplier Signify Health and $10.6 billion deal to purchase Oak Street Health, which operates major care clinics for seniors.
Shares of CVS have been down practically 26% for the yr via Monday’s shut, placing the corporate’s market worth at round $88 billion.
Growth throughout enterprise segments
The firm’s health services section generated $46.89 billion in revenue for the quarter, a virtually 8% improve in contrast with the identical quarter in 2022. The division consists of CVS Caremark, which negotiates drug reductions with producers on behalf of insurance coverage, in addition to health-care services delivered in medical clinics, via telehealth and at dwelling.
Analysts had anticipated the division to herald $45.19 billion in gross sales, in line with estimates compiled by StreetAccount.
CVS mentioned the rise was pushed partially by development in specialty pharmacy services, which assist sufferers who’re affected by advanced problems and require specialised therapies. The firm’s current acquisitions of Oak Street Health and Signify Health additionally boosted the section results, in line with CVS.
The division processed 579.6 million pharmacy claims throughout the quarter, a slight lower from the year-ago interval as a consequence of a drop in Covid vaccinations and a Medicaid buyer contract change.
The firm’s pharmacy and shopper wellness division booked $28.87 billion in gross sales for the quarter, up 6% from the year-ago interval. That section dispenses prescriptions in CVS’s retail pharmacies and gives different pharmacy services, comparable to diagnostic testing and vaccination.
Analysts had anticipated the division to herald $28.81 billion in gross sales, in line with estimates compiled by StreetAccount.
Same-store gross sales grew 8.8% throughout the three-month interval in contrast with the identical time a yr earlier, however not equally throughout the shop. Same-store gross sales jumped 11.9% within the pharmacy division, however have been down by 2.2% within the entrance of the shop, partially as prospects reduce on shopping for over-the-counter Covid exams.
CVS mentioned a slight improve in prescription quantity contributed to the section’s revenue development. The division stuffed 407.1 million prescriptions throughout the quarter, fractionally up from the identical interval a yr in the past. But same-store prescription quantity jumped practically 3.5%, excluding Covid vaccines.
The firm counts 9,000 brick-and-mortar drugstores throughout the U.S.
CVS’s health insurance coverage section generated $26.30 billion throughout the quarter, a virtually 17% improve from the second quarter of 2022. That division consists of plans by CVS-owned health insurer Aetna for the Affordable Care Act, Medicare Advantage, Medicaid, and dental and imaginative and prescient.
The insurance coverage section’s medical profit ratio— a measure of whole medical bills paid relative to premiums collected — elevated to 85.7% from 83.4% a yr earlier. A decrease ratio usually signifies that the corporate collected extra in premiums than it paid out in advantages, leading to larger profitability.
Analysts had anticipated that ratio to be 84.7%, in line with StreetAccount estimates.
CVS will maintain an earnings call with traders at 8 a.m. ET.