CVS Health Corp. reported stronger-than-expected third-quarter earnings and revenues amid growth across all its divisions, particularly health services.
Net income totaled $2.265 billion, or $1.75 a share, for the quarter ended Sept. 30, compared to a loss of $3.399 billion, or $2.59 a share, in the year-ago period. Adjusted per-share earnings came to $2.21, beating analysts estimates of of $2.13 per share.
Total revenues rose 10.6% to $89.764 billion from $81.159 billion, topping estimates of $88.287 billion. CVS said the increase was driven by growth across all its segments.
In the health services segment, which includes pharmacy benefit management solutions and health care services delivery in medical clinics, at home and virtually, total revenues increased 8.4% to $46.891 billion. The increase was primarily driven by pharmacy drug mix, growth in specialty pharmacy, brand inflation and the acquisitions of Oak Street Health and Signify Health. (Oak Street operates primary care centers that service people with Medicare Advantage plans. Signify provides technology to help with in-home patient care and also has a network of clinicians across all 50 states.)
In the company’s pharmacy and health wellness segment, total revenues increased 6.0% to $28.872 billion, primarily driven by pharmacy drug mix, increased prescription volume and brand inflation. The increases were partially offset by continued pharmacy reimbursement pressure, the impact of recent generic introductions, a decrease in store count and decreased sales of COVID-19 OTC test kits. Same-store sales increased 8.8%in the division, rising 11.9% in pharmacy, but falling 2.2% in the front of the store, partially driven by the decline of COVID test kits sales.
In the health care benefits (health insurance) segment, total revenues increased 16.9% to $26.296 billion.
CVS’ strong results come after the company launched a cost-cutting program as part on its ongoing push to transform itself from a drug store retailer into a major health care player. The company has said it expects the plan to be “substantially completed” in 2023.
“Our colleagues helped us deliver another quarter of positive results across our business areas,” stated Karen S. Lynch, president and CEO. “Despite a challenging business environment, we continue adapting to the changing needs of our consumers by connecting our care delivery capabilities in communities across the country, broadening access to care and lowering costs."
CVS lowered its full-year earnings per share to $6.37 to $6.61, down from its prior guidance of $6.53 to $6.75. Adjusted earnings still per share is still expected at $8.50 to $8.70.
CVS operates approximately 9,000 stores nationwide.