CVS Health raises outlook amid strong Q3
CVS Health reported strong third-quarter sales and earnings that easily topped expectations, and raised its full-year outlook for the second consecutive quarter.
The pharmacy giant also reported a $5.2 billion charge in the third quarter for a settlement to end lawsuits related to the U.S. opioid crisis. The settlement would cover all claims relating to the retailers’ contribution to the opioid epidemic. (Walgreens Boots Alliance agreed to a similar deal.)
[Read More: Walgreens, CVS Health to pay $10 billion to end nationwide opioid suits]
CVS’ adjusted earnings came in at $2.09 per share for the quarter ended Sept.30, topping analysts estimates of $1.99 per share.
Total revenues increased 10% to $81.2 billion, driven by growth across all segments. Total revenues in the retail and long-term care segment increased 6.9% compared to the prior year primarily driven by increased prescription and front store volume, including the sale of COVID-19 over-the-counter test kits, pharmacy drug mix and brand inflation.
The increases were partially offset by decreased COVID-19 diagnostic testing and vaccinations, the impact of recent generic introductions and continued pharmacy reimbursement pressure.
CVS incurred an operating loss of $3.9 billion during the quarter, compared to $3.1 billion of operating income in the prior year. The difference was primarily driven by the opioid litigation charges and a $2.5 billion loss on assets held for sale to write-down the company’s long-term care business in the current year, partially offset by the absence of a $431 million goodwill impairment charge on the remaining goodwill of the LTC reporting unit recorded in the prior year.
It was a busy quarter for the company. On September 2, 2022, CVS entered into a definitive agreement to acquire Signify Health for $30.50 per share in cash, representing a total transaction value of approximately $8 billion. The transaction is expected to close in the first half of 2023.
“We delivered another outstanding quarter, and have raised full-year guidance as a result,” stated Karen S. Lynch, CVS Health president and CEO. “We continue to execute on our strategy with a focus on expanding capabilities in health care delivery, and the announced acquisition of Signify Health will further strengthen our engagement with consumers.”
CVS raised its full-year outlook for the second consecutive quarter. The company now company expects an adjusted earnings per share for the full year of between $8.55 and $8.65, up from the previous range of $8.40 to $8.60 that it announced in August. The company has also raised its full-year operating cash flow projection to the range of $13.5 billion to $14.5 billion, up from the prior projection of $12.5 billion to $13.5 billion.