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CVS Stock Jumps On Dividend Boost, New $10 Billion Buyback Plan, Solid 2022 Profit Outlook

CVS will boost its dividend to $2.20 per share, while authorizing its first share buyback plan in four years, as new CEO Karen Lynch sets out her 2022 profit goals ahead of her first investor day presentation.

CVS Health  (CVS) - Get CVS Health Corporation Report shares moved higher Thursday after it said it would boost its dividend, and resume share buybacks for the first time in four years, ahead of the group's first investor day even under new CEO Karen Lynch.

CVS said its dividend will increase by 10%, to $2.20 per share, at the next payout date of February 1. It's also authorized a $10 billion share repurchase program -- the first since 2017 -- which will be used to "at least offset share count dilution in 2022."

In terms of new profit forecasts, CVS said adjusted earnings for the 2021 year would likely come in at $8 per share, hitting the higher end of its prior forecast, and issued fresh guidance for 2022 that includes a target range of $8.10 to $8.30 per share and revenues of between $304 billion to $309 billion.

"Now is the time to undertake our next major evolution and capitalize on our role as the leading health solutions company in America," said Lynch. "By leaning into our high-growth foundational businesses and expanding our reach in areas like health services and primary care, we have an opportunity to shift care to be more centered around the consumer while capturing a meaningfully greater portion of health care spend."

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"Ultimately, this plan is only possible with our unique combination of assets which will allow us to lower costs, increase access to quality care and improve health outcomes for consumers, patients and members – while delivering superior results for shareholders," she added.  

CVS shares were marked 2.2% higher in early trading Thursday to change hands at $95.35 each, a move that would extend their year-to-date gain to around 36%. 

CVS Health posted stronger-than-expected third quarter earnings of $1.97 per share last month, up 18.7% from the same period last year, on overall revenues of $73.8 billion.

Pharmacy Services revenues rose 9.4% to $39.05 billion, CVS said, Retail sales rose 10% to $25 billion, "primarily driven by the administration of COVID-19 vaccinations and diagnostic testing, increased prescription and front store volume."

The group's healthcare benefits division saw sales rise 9.5% to $20.5 billion as it added Aetna's operations to its legacy business.