CVS Health Corp (NYSE:CVS) on Wednesday reported better-than-expected third-quarter earnings and raised its annual guidance.
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The company reported sales of $102.87 billion, beating the consensus of $98.84 billion. Total revenues increased 7.8% year-over-year, driven by revenue growth across all segments.
Adjusted earnings of $1.60 per share also beat the analyst estimate of $1.37. Third quarter GAAP diluted loss per share of $3.13, which included $5.7 billion goodwill impairment charge related to the Health Care Delivery reporting unit.
Adjusted operating income increased 35.8% to $3.46 billion, driven by an increase in the Health Care Benefits segment, partially offset by declines in the Health Services and Pharmacy & Consumer Wellness segments.
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Revenues in the Health Care Benefits segment increased 9.1% to $35.99 billion, primarily driven by increases in the Government business, mainly due to the impact of the Inflation Reduction Act on the Medicare Part D program.
Metrics
The Medical benefit ratio decreased to 92.8% from 95.2%, driven by the favorable year-over-year impact of premium deficiency reserves recorded as health care costs, higher favorable prior period development, and improved underlying performance in the Government business.
Medical membership was at 26.7 million.
Health Services segment (offering pharmacy benefit management) sales increased 11.6% to $49.27 billion, primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements.
The Pharmacy & Consumer Wellness segment's sales increased 11.7% to $36.21 billion, primarily driven by pharmacy drug mix and increased prescription volume, including incremental volume resulting from the company's Rite Aid prescription file acquisitions, partially offset by continued pharmacy reimbursement pressure.
Prescriptions filled increased by 6.9% to 461.4 million, driven by increased utilization and incremental volume from Rite Aid prescription file acquisitions.
Guidance
CVS Health raised its fiscal 2025 adjusted earnings from $6.30-$6.40 to $6.55-$6.65 compared to the consensus of $6.38.
The company updated its cash flow from operations guidance to $7.5 billion to $8.0 billion, from at least $7.5 billion.
CVS Health updated its GAAP diluted earnings (loss) per share guidance range to $(0.34) to $(0.24), down from $3.84 to $3.94.
In August, CVS Health said it would not add Gilead Sciences Inc.'s (NASDAQ:GILD) new HIV prevention drug Yeztugo to its commercial plans.
The company also confirmed the drug will not be included in its Affordable Care Act formularies, since its preventive program follows mandates from the U.S. Department of Health and Human Services.
CVS based the decision on clinical, financial, and regulatory factors.
CVS Price Action: CVS Health shares were up 2.14% at $83.96 at the time of publication on Wednesday. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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