CVS Health Corp. (CVS) posted stronger-than-expected fourth quarter earnings Wednesday, powered by outsized sales gains in its health-care-benefits division and solid retail pharmacy revenue.
CVS said adjusted earnings for the three months ended in December were pegged at $1.99 per share, up a penny from the year-earlier period and 7 cents ahead of the Wall Street consensus forecast. Group revenue, CVS said, rose 9.5% from a year earlier to $83.8 billion, well ahead of analysts' estimates of a $76.2 billion tally.
Same-store sales were up 7.7% from a year earlier, CVS said, while pharmacy store sales rose 9.1%.
Retail sales were up 4%, reflecting "increased prescription and front store volume, including the impact of an elevated cough, cold and flu season compared to the prior year." The group's health-care-benefits division saw sales rise 11.3% to $23.03 billion.
Looking into the current financial year, CVS said it sees profits in the region of $8.70 to $8.90 per share, with cash flows from its overall business expected to come in between $12.5 billion to $13.5 billion.
"Last year was defined by outperformance across our foundational businesses, robust cash flow from operations and meaningful progress against our value-based care delivery strategy," said CEO Karen Lynch. "2022 was a year of progress, and we continue to build on that momentum with bold moves that will improve the health care experience."
CVS shares were marked 4.1% higher in early trading following the earnings release to change hands at $89.52 each.
Earlier Wednesday, CVS Health confirmed it would buy Oak Street Health (OSH) for $10.6 billion, including debt, ending weeks of speculation over the fate of the Chicago-based primary-care-center operator.
CVS said it would pay $39 a share for Oak Street Health in an all-cash transaction that it expects to close later this year. The deal has been approved by the boards of both companies, CVS said, and Oak Street will continue to be led by current CEO Mike Pykosz once the transaction is completed.
CVS may also face potential clawbacks from the U.S. Department of Health and Human Services as it looks to recoup around $4.7 billion in funds that may have paid to companies in the Medicare Advantage system.
The HHS said payments made to various Medicare Advantage Organizations that were based on a submitted diagnosis that wasn't backed-up by the beneficiary's medical records would be audited. And the so-called risk adjustment overpayments -- which haven't been collected since 2007 -- would be recovered over the next ten years under the so-called RADV final rule.
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