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CVS Health Q1 Results Top Estimates

cvchealth may06 lt

CVS Health Corp. (CVS) reported a profit for the first quarter that increased 41.0 percent from last year, reflecting higher operating income and lower interest expense, partially offset by higher income tax expense. Total revenues grew 8.3 percent, primarily driven by strong underlying core growth across all segments.

Both adjusted earnings per share and quarterly revenues topped analysts' expectations.

Looking ahead for 2020, the company still expects earnings per share to be in the range of $5.47 to $5.60, and adjusted earnings per share of $7.04 to $7.17 per share. Analysts expect annual earnings of $7.04 per share.

The company has withdrawn all other previously issued 2020 additional detailed guidance.

The company reported that its net income attributable to the company for the first-quarter rose 41.0 percent to $2.01 billion from last year's $1.42 billion, with earnings per share improving to $1.53 from $1.09 in the prior year.

Operating income increased 28.6 percent from last year, primarily due to the increase in adjusted operating income, the absence of the $135 million store rationalization charge recorded in the prior year and a decrease in acquisition-related integration costs of $79 million in the latest-quarter.

Adjusted operating income increased 14.4 percent from the previous year. The increase in adjusted operating income was primarily due to increased volume across all segments, improved purchasing economics in the Pharmacy Services segment and the favorable impact of cost savings initiatives. The increases were partially offset by a decline in operating income in the Health Care Benefits segment, continued reimbursement pressure in the Retail/LTC segment and continued price compression in the Pharmacy Services segment.

Adjusted income attributable to the company for the first-quarter was $2.50 billion or $1.91 per share, compared to $2.11 billion or $1.62 per share in the prior year. Analysts polled by Thomson Reuters expected the company to report earnings of $1.63 per share for the first-quarter. Analysts' estimates typically exclude special items.

Total revenues for the first-quarter grew 8.3 percent to $66.76 billion from $61.65 billion in the prior year, primarily driven by strong underlying core growth across all segments. Analysts expected revenues of $64.06 billion for the quarter.

Revenues in the Retail/LTC and Pharmacy Services segments in the three months ended March 31, 2020 also increased as a result of the COVID-19 pandemic, which resulted in greater use of 90-day prescriptions and early refills of maintenance medications, as well as increased front store volume in the Retail/LTC segment.

In pharmacy Services Segment, total revenues increased 4.2 percent from primarily due to growth in specialty pharmacy, brand inflation and increased total pharmacy claims volume, including greater use of 90-day prescriptions and early refills of maintenance medications as consumers prepared for the COVID-19 pandemic.

In Health Care Benefits Segment, total revenues increased 7.4 percent from the prior year primarily driven by membership growth in the Health Care Benefits segment's Government products and the favorable impact of the reinstatement of the HIF for 2020.

In Wednesday pre-market trade, CVS is trading at $63.65, up $2.54 or 4.16 percent.

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