CVS Health Beats Revenue Estimates on Health Care Growth

Company sees strong Covid-19 testing and vaccination traffic

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May 04, 2021
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Retail pharmacy and health care provider CVS Health Inc. (CVS, Financial) announced revenue and earnings that edged past analyst estimates on Tuesday.

CVS reported total revenue of $69.1 billion, up 3.5% year over year, that beat Refinitiv's estimates of $68.39 billion. Adjust earnings per share rose 6.8% for the company to $2.04 compared to estimates of $1.72 per share.

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"We delivered strong first quarter results and improved our outlook for the year," CVS Health President and CEO Karen S. Lynch said. "We continue to execute on our strategy while simultaneously managing through a pandemic, helping the country on the road to recovery. Our unmatched assets and strength of our brand are driving results as we work toward improving care delivery and driving growth."

CVS's health care benefits segment led the charge for the company with adjusted operating income growing by 19.5% year over year thanks to improved performance in the government services business and the impact of cost savings initiatives. Medical membership for the company grew by 214,000 members to reach a total of 23.6 million members. The segment grew overall revenue by 6.7% compared to the year-ago quarter to $20.48 billion.

Pharmacy services grew total revenue by 3.8% year over year thanks to growth in specialty pharmacy and brand inflation despite a weak cough, cold and flu season. Total pharmacy claims decreased 1% on a 30-day equivalent basis during the quarter, but was partially offset by net new business.

The company's retail segment suffered during the quarter seeing adjusted operating income decrease 26.7% during the quarter compared to last year. The report listed lower front store revenue compared to 2020 as people no longer felt the need to stock up on personal prescriptions and products. Total revenue still managed a 2.3% increase during the quarter compared to 2020 thanks to increased Covid-19 testing and vaccination traffic.

Looking to the rest of 2021, CVS raised its adjusted earnings per share guidance range to $7.56 to $7.68 from $7.39 to $7.55. Confirmed cash flow from operations is expected in the range of $12 billion to $12.5 billion.

On May 4, CVS stock was trading at $81.04 per share, up 4.31%, with a market cap of $106.37 billion. According to the GF Value Line, the shares are trading at a modestly overvalued rating.

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Top gurus invested in CVS include the T Rowe Price Equity Income Fund (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and John Hussman (Trades, Portfolio).

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Disclosure: Author owns no stocks mentioned.

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