CVS Health Corporation CVS posted adjusted earnings per share (EPS) of $1.09 in the third quarter of 2024, down 50.7% year over year. However, the metric topped the Zacks Consensus Estimate by 1.2%. The adjusted EPS figure considers certain asset amortization costs, loss on assets held for sale and other adjustments.
On a reported basis, the company’s GAAP earnings were 7 cents per share compared with $1.75 in the prior-year period.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the announcement, CVS’ shares rose nearly 10% in today’s pre-market trading session.
CVS’ Q3 Revenues
Revenues in the third quarter rose 6.3% year over year to $95.43 billion. The top line surpassed the Zacks Consensus Estimate by 2.8%. This year-over-year upside was driven by growth in the Health Care Benefits and Pharmacy & Consumer Wellness segments.
Detailed Analysis of CVS’ Q3 Earnings Release
Health Services revenues were down 5.9% year over year to $44.13 billion in the reported quarter. This downside was due to the previously announced loss of a large client and continued pharmacy client price improvements. The decline was partially offset by the pharmacy drug mix, increased contributions from the company's healthcare delivery assets and growth in specialty pharmacy.
Total pharmacy claims processed declined 16.5% on a 30-day equivalent basis compared with the prior year, indicating the previously announced loss of a large client.
CVS Health Corporation Price, Consensus and EPS Surprise
CVS Health Corporation price-consensus-eps-surprise-chart | CVS Health Corporation Quote
Revenues in Health’s Pharmacy & Consumer Wellness segment were up 12.3% year over year to $32.42 billion. The upside was primarily driven by increased prescription volume, including improved contributions from vaccinations and pharmacy drug mix.
Within the Health Care Benefits segment, the company registered revenues worth $33 billion in the third quarter, up 25.5% year over year. This upside was driven by growth in the Medicare and Commercial product lines.
CVS’ Margin Performance
The total cost of sold products fell 3.2% to $52.95 billion in the third quarter. The gross profit rose 21% to $42.48 billion. The gross margin expanded 540 basis points (bps) to 45.2%.
The adjusted operating margin in the quarter under review expanded 542 bps to 44.5%, despite a 6.9% rise in operating expenses to $10.34 billion.
CVS’ Restructuring Program
During the quarter, the company finalized an enterprise-wide restructuring plan intended to streamline and simplify the organization, improve efficiency and reduce costs. During the three months ended Sept. 30, 2024, CVS Health recorded restructuring charges of approximately $1.2 billion.
CVS’ Liquidity Position
CVS Health exited the third quarter of 2024 with cash and cash equivalents of $6.88 billion compared with $12.51 billion at the end of the second quarter. The long-term debt was $59.82 billion compared with $62.64 billion at the end of the second quarter.
The cumulative net cash provided by operating activities at the end of the third quarter of 2024 was $7.25 billion compared with $16.06 billion in the year-ago period.
Our Take on CVS
CVS Health exited the third quarter of 2024 with both earnings and revenues surpassing expectations. The results reflect strong performance in the Health Services and Pharmacy & Consumer Wellness segments. The company’s integrated model accelerates its ability to deliver lower cost of care, a simpler experience and better outcomes. In addition, the expansion of both the margins in the quarter is highly encouraging.
Meanwhile, the bottom line recorded a decrease compared with the prior-year quarter. The performance also highlights the continued need to work across the enterprise and address the macro challenges impacting the Health Care Benefits segment.
CVS’ Zacks Rank and Key Picks
CVS Health currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Quest Diagnostics DGX, Intuitive Surgical ISRG and Boston Scientific Corporation BSX.
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%. DGX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DGX’s 2024 earnings are expected to surge 2.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.3%.
Intuitive Surgical, currently carrying a Zacks Rank #2, posted a third-quarter 2024 EPS of $1.84, beating the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.
ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.9%.
Boston Scientific Corporation, currently carrying a Zacks Rank #2, reported third-quarter 2024 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion beat the Zacks Consensus Estimate by 4.5%.
BSX has an estimated 2024 earnings growth rate of 17.6% compared with the industry’s 11.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.2%.
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