Yahoo Finance CVS Health (CVS) to Report Q4 Earnings: What's in the Cards?
CVS Health Corporation CVS is scheduled to report fourth-quarter 2022 results on Feb 8, before the opening bell.
In the last reported quarter, the company’s adjusted earnings of $2.09 exceeded the Zacks Consensus Estimate by 5%. The company beat estimates in the trailing four quarters, the average surprise being 5.49%.
Let’s look at how things have shaped up prior to this announcement.
Factors at Play
CVS Health’s retail/long-term care (LTC) segment is likely to have benefited from the enhanced pharmacy and front-store sales growth, similar to the third quarter. With economies reopening and infectious diseases still existing, the segment is likely to have witnessed continued sales of COVID-19 OTC test kits in the to-be-reported quarter. The company’s efforts to optimize the retail portfolio, which now consists of three models, including advanced primary care clinics, enhanced health hub locations and traditional CVS pharmacy locations, are likely to have been advantageous for upcoming Q4 results.
CVS Health has been making noteworthy progress in expanding access to care through digital and virtual channels. Per the November 2022 update, the company added nearly one million digital customers. During the third quarter, CVS Health launched a new functionality that drives more choice and convenience for patients filling prescriptions. The company’s digital capabilities for health interactions, prescription services and sales of health and wellness products sales are anticipated to have enhanced consumer engagement across all CVS Health businesses. These developments are likely to have benefited the company in the to-be-reported quarter.
CVS Health Corporation Price and EPS Surprise
CVS Health Corporation price-eps-surprise | CVS Health Corporation Quote
The company also launched a variety of new MinuteClinic virtual care services to support women's health that will be available 24/7. CVS Health’s contained efforts to expand digital health services and deepen engagement through personalization are expected to have broadened its customer base in Q4, thus adding to its top line.
Our model suggests retail/LTC revenues of $24.59 billion for the fourth quarter, suggesting 33.5% year-over-year growth.
The pharmacy services segment is expected to have recorded robust sales growth, banking on increased pharmacy sales and prescriptions filled, especially with the growing uptake of cough and cold and beauty and personal care products. Also, growth in specialty pharmacy and brand inflation is also likely to have been contributing factors in the pharmacy services arm. We are also positive about the company’s newly developed comprehensive set of programs to manage specialty trends, which includes a formulary exclusion strategy.
Moreover, we also expect drug price inflation, new product launch, higher utilization and new PBM clients to fuel growth. This would simplify and accelerate the process of filling prescriptions, benefitting the business performance in Q4.
Our model projects pharmacy services revenues of $38.37 billion for the fourth quarter, suggesting 52.3% year-over-year growth.
The healthcare benefits arm is likely to have been driven by sustained membership growth across all product lines. The Medicare franchise, particularly, has been delivering strong results for the company in the past years. The company has achieved a key milestone in the third quarter with more than 2 million members enrolled in its integrated Aetna and Caremark products. We expect this growth momentum to continue, driving growth in the to-be-reported quarter. Further, CVS Health’s competitive cost structure, integrated benefit designs and innovative product portfolio position the healthcare benefits business for further growth.
Per our model, the healthcare benefits segment is likely to deliver Q4 sales of $21.17 billion, suggesting 28.8% year-over-year growth.
Key Q4 Estimates
The Zacks Consensus Estimate for fourth-quarter adjusted earnings of $1.91 per share implies a 3.5% fall from the year-ago reported figure. Our model projects Q4 adjusted earnings $1.90 per share.
The Zacks Consensus Estimate for revenues is pegged at $74.93 billion, suggesting 2.2% fall from the prior-year reported number. Our model projects revenues of $73.42 billion for Q4.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chance of beating estimates. However, this is not the case here, as you can see:
Earnings ESP: The company has an Earnings ESP of 0.82%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter.
Cardinal Health CAH has an Earnings ESP of +5.75% and a Zacks Rank of #2. The company will release fourth-quarter 2022 results on Feb 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health has a long-term expected earnings growth rate of 11.7%. Cardinal Health’s earnings yield of 6.87% compares favorably with the industry’s 4.34%.
McKesson Corporation MCK has an Earnings ESP of +0.84% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter fiscal 2023 results on Feb 1.
MCK’s long-term historical earnings growth rate is estimated at 10.1%. MCK’s earnings yield of 6.49% compares favorably with the industry’s 4.34%.
Laboratory Corporation of America Holdings or LabCorp LH currently has an Earnings ESP of +2.67% and a Zacks Rank of #2. LabCorp is expected to release fourth-quarter 2022 results on Feb 16.
LabCorp’s long-term historical earnings growth rate is estimated at 26.1%. LabCorp’s earnings yield of 7.02% compares favorably with the industry’s 4.34%.
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Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
