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How Aetna and Strong Volumes Drove CVS Earnings Beat

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CVS reported a solid fourth quarter 2019, driven by a strong revenue stream from newly acquired Aetna and high sales volumes.

Couple that with a raise of 2020 guidance, and the stock rose as much as 2% Wednesday.

Here were the results:

Revenue came in at $66.9 billion, beating analyst estimates of $63.97 billion and growing 23% year-over-year. Earnings per share was $1.73, beating Wall Street estimates of $1.68. Same-store-sales grew 3.2%.

Management raised its earnings per share guidance for 2020 to a range between $7.04 and $7.14, trailing estimates of $7.15, although guidance was expected to remain slightly behind Wall Street forecasts.

Here were the key factors driving the strong revenue result for the quarter:

Aetna revenue took the CVS Health Benefits segment to a $17 billion one for the quarter, compared to the $6 billion the segment took in for the same quarter last year.

Strong sales volumes were also a theme, amid price pressure in some segments, especially Pharmacy Services.

“Revenue growth was primarily due to the impact of the acquisition of Aetna, as well as the increased volume and brand inflation in both the Pharmacy Services and Retail/LTC segments,” management said on the earnings release.

CVS experienced “price compression,” the company said, in its Pharmacy Services business. But strong volumes saw that business through to a 4.1% same-store-sales increase and a $37.073 billion result. 

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