CVS Investors Cheer Earnings and New CEO Appointee
CVS reported better than expected quarterly results before the opening bell on Friday and named its incoming chief executive.
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When CVS Health Corp. (NYSE: CVS | CVS Price Prediction) reported its third-quarter financial results before the markets opened on Wednesday, the pharmacy chain posted $1.66 in earnings per share (EPS) and $67.1 billion in revenue. That exceeded the consensus estimates of $1.33 in EPS and $66.66 billion in revenue. In the same period of last year, CVS said it had $1.84 in EPS on revenue of $64.81 billion.
Separately, the company announced that its board of directors appointed Karen Lynch, currently Executive Vice President, CVS Health and President, Aetna, as the company’s next president and chief executive officer, effective February 1, 2021. Lynch also will join the board at that time. She will be taking over the role from Larry Merlo, who will continue to serve on the board through May 2021.
Note that revenue growth this past quarter was driven primarily by growth in the Health Care Benefits and Retail/LTC segments.
In terms of its segments, CVS reported as follows:
- Pharmacy Services revenue decreased 0.9% year over year to $35.71 billion, with operating income of $1.56 billion.
- Retail/LTC revenues increased 5.9% to $22.73 billion, with operating income of $1.28 billion.
- Health Care Benefits revenue increased by 8.8% to $18.70 billion. Operating income for the segment is $949 million.
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On the books, CVS Health cash, cash equivalents and investments totaled $12.1 billion at the end of the quarter, up from $8.1 billion at the end of the previous fiscal year.
Looking ahead to the 2020 full year, the company expects to see EPS in the range of $7.35 to $7.45. Consensus estimates are calling for $7.24 in EPS and $267.14 billion in revenue for the year.
CVS Health stock traded up 2.7% early Friday, at $63.05, in a 52-week range of $52.04 to $77.03. The consensus price target is $78.68.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
