5 Key Highlights From CVS Health’s Q3 Earnings Update

Linda Rider

CVS Health and fitness (NYSE:CVS) appears to be on a roll. Its shares have soared extra than 30{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} yr to day. And CVS reported solid third-quarter outcomes in advance of the current market opened on Wednesday.

Investors unquestionably preferred the firm’s outcomes, with the healthcare stock jumping far more than 3{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} in intraday buying and selling. In this article are five vital highlights from CVS Health’s Q3 earnings update.

CVS Pharmacy store.

Impression resource: CVS Overall health.

1. Far better-than-anticipated revenue and earnings

The most important thing to know about CVS Health’s 3rd-quarter benefits is that they have been improved than anticipated from best to base. The business announced Q3 revenue of $73.8 billion. This consequence reflected a 10{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} calendar year-above-12 months boost and was well previously mentioned the Wall Street consensus estimate of $70.5 billion.

CVS Health reported diluted earnings for each share (EPS) of $1.20, based mostly on generally approved accounting ideas (GAAP), up 29{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} year in excess of 12 months. It posted modified EPS of $1.97, an raise of 18.7{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} in excess of the prior-12 months interval and better than the ordinary analyst estimate of $1.78. 

2. COVID-19 headwinds and tailwinds

Once once again, COVID-19 ranked as the biggest story in CVS Health’s quarterly update. If very little else, the company’s calendar year-in excess of-calendar year comparisons had been aided by the effects of the pandemic in the 3rd quarter of 2020. Even so, there were being also the two headwinds and tailwinds from COVID-19 in the modern quarter.

CVS Health’s Aetna health-coverage enterprise experienced bigger costs in Q3 relevant to COVID-19. These increased prices had been a important driver behind the unit’s professional medical-positive aspects ratio — the ratio of premiums put in on medical treatment and services — from 84{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} in the prior-year period of time to 85.8{fe463f59fb70c5c01486843be1d66c13e664ed3ae921464fa884afebcc0ffe6c} in the third quarter of 2021.

On the other hand, CVS administered 8.5 million COVID-19 diagnostic checks in Q3. It also gave 11.6 million COVID-19 vaccines. These assessments and vaccinations aided significantly raise pharmacy claims processed.

3. Increased whole-12 months guidance

CVS Health’s sturdy Q3 success led it to raise its assistance for whole-calendar year 2021. The enterprise now expects GAAP diluted EPS between $6.35 and $6.45, when compared to its preceding forecast of GAAP EPS in between $6.13 and $6.23. The revised total-calendar year outlook is for modified EPS to arrive in amongst $7.90 and $8, up from the earlier variety of $7.70 to $7.80.

The health care giant also assignments cash stream from functions for complete-year 2021 will be concerning $13 billion and $13.5 billion. This range is up from the preceding steerage of $12.5 billion to $13 billion.

4. Increasing monetary affliction

It can be at times simple to forget optimistic economic success over and above revenue and earnings. Even so, CVS Health continued to improve its total fiscal condition in the third quarter.

The company repaid $1.1 billion of prolonged-phrase credit card debt in Q3. So considerably this 12 months, CVS has compensated down $6.5 billion in debt. And considering that the close of the Aetna acquisition in 2018, it has repaid a net total of $18.7 billion of long-phrase credit card debt.

Importantly, CVS Wellness realized this credit card debt reduction when nevertheless spending $659 million in dividends in the third quarter. It appears to be in a excellent posture to retain its financial investment-grade ratings and continue on deleveraging in the potential.

5. Expanding geographically and virtually

Quarterly updates generally deliver some hints about a firm’s for a longer period-expression expansion prospective clients. That was the scenario with CVS Health’s Q3 report. The healthcare chief is set to expand both geographically and almost.

CVS claimed that it truly is getting into particular person overall health-insurance coverage trade markets in 8 new states in 2022: Arizona, Florida, Ga, Missouri, Nevada, North Carolina, Texas, and Virginia. The organization stated that it will give its very first Aetna-CVS Health co-branded offerings in seven of individuals states.

In the third quarter, CVS launched its Aetna Virtual Most important Care remedy. Persons can access key care whenever and anywhere. The underlying platform for the answer is run by Teladoc Well being‘s Primary360. Digital primary treatment appears probably to be a progress driver for the two CVS and Teladoc.

This posting signifies the view of the author, who could disagree with the “official” recommendation position of a Motley Idiot premium advisory services. We’re motley! Questioning an investing thesis — even a single of our very own — helps us all imagine critically about investing and make choices that aid us grow to be smarter, happier, and richer.

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