CVS Health Corp. (CVS) - Get CVS Health Corporation Report posted stronger-than-expected third quarter earnings Friday, and lifted its full-year profit outlook, as healthcare benefits sales and improving store traffic, boosted its top and bottom lines.
The group also said the longtime CEO Larry Merlo, who has lead the group since 2011, will retire in February of next year and will be replaced by Karen Lynch, who currently runs the group's Aetna Healthcare unit.
CVS said adjusted earnings for the three months ending in September were pegged at $1.66 per share, down nearly 10% from the same period last year but firmly ahead of the Street consensus forecast of $1.33 per share. Group revenues, CVS said, rose 3.5% to $67.1 billion, against beating analysts' estimates of a $66.57 billion tally. Same-store sales, the company said, rose 5.7% from last year, more than double the Street consensus forecast.
Looking into the final months of the year, CVS said it sees adjusted earnings in the region of $7.335 to $7.45 per share, up from a prior forecast of $7.14 to $7.27 per share, and operational cash flow in the region of $11 billion to $12.75 billion to $13.25 billion.
"Our strong third quarter results demonstrate continued execution of our long-term strategic plan that is transforming the way health care is delivered," said Merlo. "As an integrated health services provider, we're developing holistic and innovative solutions that meet the needs of our customers in the community, in the home or in the palm of their hand."
"Our comprehensive pandemic response shows the power of a diverse and agile enterprise. We've opened more than 4,000 COVID-19 test sites across the country since March, and have administered over six million tests," he added. "We're helping businesses and universities safely reopen and we were recently selected to administer COVID-19 vaccinations in long-term care facilities. We'll continue to play a vital role in our nation's recovery thanks to the tireless efforts of our nearly 300,000 employees."
CVS shares were marked 3.1% higher in early trading immediately following the earnings release to change hands at $63.48 each, pushing the stock's six-month gain to around 5.5%.
Pharmacy Services revenues slipped 0.85% to $35.7 billion, CVS said, as "driven by previously disclosed client losses and continued price compression, partially offset by growth in specialty pharmacy and brand inflation."
Retail sales rose 5.9% to $22.725 billion, as same-store sales accelerated 5.7%. The group's healthcare benefits division saw sales rise 8.8% to $18.7 billion as it added Aetna's operations to its legacy business.