Shares of CVS Health Corp. (CVS, Financial) soared 7.45% to $58.12 at close on Wednesday after announcing second-quarter results before the opening bell.
The U.S. health care plans company posted earnings of $1.49 per share on $63.43 billion in revenue. Earnings per share shifted from the prior-year quarter loss of $2.52, while revenue climbed 35.2% to $63.43 billion.
CVS Health beat earnings estimates by 25 cents and surpassed revenue expectations by $770 million.
By source, Products reported $45.5 billion in revenue, a 0.3% decline versus the prior-year quarter, and Premiums had nearly $15.8 billion in revenue. Services accounted for $1.8 billion in revenue, and net investment income noted $293 million in revenue, reflecting 37% growth.
By segment, Pharmacy Services recorded $34.8 billion in revenue, a 4.8% increase year-over-year due to more pharmacy claims and higher pricing on branded drugs. Retail/LTC noted $21.4 billion in revenue, a 3.7% jump due to more prescriptions and higher pricing on branded drugs. Health Care Benefits had $17.4 billion in revenue. Other revenues dropped 23.3% to $161 million.
The Health Care Benefits segment was purchased by CVS last year on Nov. 28.
“We posted strong second quarter results, with all of our businesses performing at or above expectations. These results demonstrate our ability to execute on our strategic priorities to accelerate enterprise growth as we seek to fundamentally transform the consumer health experience,"CVS President and CEO Larry Merlo said in a statement.
Further, net income was $1.9 billion, a reversal from a year-ago loss of $2.56 billion, and the operating cash flow grew 37.8% to nearly $7.3 billion.
Looking ahead to full 2019, the company narrowed the range of its expectations for earnings to between $4.93 and $5.04 per share, from the previous range of $4.90 to $5.05 per share. Operating cash flow is expected to range between $10.1 billion and $10.6 billion, compared to the previous range of $9.8 billion to $10.3 billion.
For the third quarter, CVS Health targeted earnings per share of $1.16 to $1.20.
The company closed the second quarter of 2019 with cash and short-term securities of $6.53 billion and total debt of $67.4 billion. Total equity was worth $61.6 billion.
Shares of CVS Health Corp. have fallen 15% over the past 12 months through Aug. 7 to significantly below the 200-day simple moving average line. The stock has a market capitalization of $75.5 billion and a 52-week range of $51.72 to $82.15.
On Aug. 2, the company paid a 50-cent cash quarterly dividend per common share. Based on Wednesday’s closing price, the payment generates a forward dividend yield of 3.7% versus the industry median of 1.76% and versus the S&P 500 index’s yield of 1.94%.
Disclosure: I have no positions in any securities mentioned.
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