Biotech
Wednesday, November 1st, 2023 2:14 pm EDT
Key Points
- Strong Financial Performance: CVS reported its third-quarter adjusted earnings and revenue, exceeding Wall Street’s expectations. The company recorded sales of $89.76 billion, an almost 11% increase compared to the same period last year. Adjusted earnings per share were $2.21, surpassing the expected $2.13.
- Medical Costs Impact: Despite the positive financial results, CVS shares fell by approximately 5% in early trading due to higher-than-expected medical costs in its insurance unit. The insurance segment’s medical benefit ratio increased to 85.7% from 83.4%, affecting profitability.
- Growth Across Business Segments: CVS witnessed growth across its business segments. Its health services division generated $46.89 billion in revenue, primarily driven by specialty pharmacy services and acquisitions of health-care providers like Signify Health and Oak Street Health. The health insurance segment reported $26.30 billion in revenue, while the pharmacy and consumer wellness division booked $28.87 billion in sales, with an 8.8% growth in same-store sales. CVS administered 8 million vaccines during the quarter and expects vaccination rates to peak early in the fourth quarter before declining next year as the COVID-19 situation evolves.
CVS reported its third-quarter earnings, with results surpassing Wall Street expectations. The company recorded sales of $89.76 billion, an increase of nearly 11% compared to the same period last year. Despite these positive figures, CVS shares dipped about 5% due to higher-than-expected medical costs in its insurance unit.
The company’s adjusted earnings per share of $2.21 exceeded analysts’ expectations of $2.13, and revenue of $89.76 billion outperformed the expected $88.25 billion. While CVS lowered its unadjusted earnings forecast for the year, the adjusted basis maintained a range of $8.50 to $8.70 per share for full-year adjusted earnings.
CVS’s financial results emerged amid a nationwide walkout by pharmacy staff from various companies to protest what they perceive as harsh working conditions risking both employees and patients. CVS stated its efforts to address staff concerns directly.
The company’s transformation from a drugstore chain to a healthcare entity has been highlighted by its acquisitions of Signify Health and Oak Street Health. CVS witnessed growth across its business segments, particularly in the health services division, generating $46.89 billion in revenue, largely driven by specialty pharmacy services and recent acquisitions’ impacts.
The health insurance segment of CVS reported $26.30 billion in revenue, marked by a 17% increase from the second quarter of 2022, indicating the company’s expanded health coverage offerings. However, the medical benefit ratio increased to 85.7% from 83.4% a year earlier due to elevated utilization trends in the Medicare Advantage business, affecting profitability.
CVS’s pharmacy and consumer wellness division saw sales of $28.87 billion, where same-store sales grew by 8.8%. While prescription volume slightly increased to 407.1 million, excluding Covid vaccines, same-store prescription volume spiked nearly 3.5%. The company administered 8 million vaccines during the quarter, expecting vaccinations to peak in the early fourth quarter before a subsequent decline next year.
Overall, CVS’s strong financial performance and growth across its segments are juxtaposed against concerns of elevated medical costs in its insurance unit, which impacted investor confidence, leading to a decline in its stock value despite otherwise positive results.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/01/cvs-health-cvs-earnings-q3-2023.html
