CVS Health Corp. (CVS) posted stronger-than-expected fourth quarter earnings Wednesday, while trimming its full-year profit guidance as it continues to push deeper into the healthcare services market with two recent acquisitions priced at nearly $30 billion.
CVS said adjusted earnings for the three months ended in March were pegged at $2.20 per share, down two cents from the year-earlier period but 11 cents ahead of the Wall Street consensus forecast. Group revenue, CVS said, rose 11% from a year earlier to $85.3 billion, well ahead of analysts' estimates of an $81 billion tally.
Pharmacy & Consumer Wellness sales, which were formerly reported in the Retail segment, were up 7.8% to $27.9 billion, "primarily driven by increased prescription and front store volume, pharmacy drug mix and brand inflation" The group's health-care-benefits division saw sales rise 12.1% to $25.88 billion.
Looking into the current financial year, CVS said it sees profits in the region of $8.50 to $8.70 per share, a 20 cent reduction from its prior forecast that the company said was linked to "acquisition-related transaction and integration costs". CVS also reiterated its forecast for cash flows from its overall business to come in between $12.5 billion to $13.5 billion.
"We delivered another strong quarter while executing on the strategy we outlined in December 2021, leading to the close of the Signify Health acquisition followed quickly by Oak Street Health," said CEO Karen Lynch. "These additions are core to our strategy and will help unlock future growth as we push further into value-based care, which prioritizes keeping people healthy."
CVS shares were marked 3.4% lower in early Wednesday trading immediately following the earnings release to change hands at $70.19 each.
CVS also said it closed its $8 billion acquisition of Signify Health, which it first unveiled in September, as it pushes further into the healthcare services industry, as well as its $10.6 billion purchase of Oak Street Health OSH.
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.
