How CVS Fell Short Despite Solid Q4 Results

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When CVS Health Corp. (NYSE: CVS) reported its fourth-quarter financial results early Wednesday, the company said that it had $2.14 in earnings per share (EPS) on $54.42 billion in revenue. That compares to consensus estimates from Thomson Reuters that called for $2.05 in EPS on revenue of $54.58 billion. In the same period of last year, the drug store operator posted EPS of $1.92 and $48.38 billion in revenue.

Revenues in the Pharmacy Services Segment increased 2.2% to approximately $34.89 billion. Pharmacy network claims processed increased 5.6% on a 30-day equivalent basis, to 484.6 million, compared to 458.7 million in the prior year. Revenues in the Retail/LTC Segment increased 5.4% to $22.03 billion.

In terms of guidance for the 2019 full year, CVS expects to see EPS in the range of $6.68 to $6.88. However, the consensus estimates call for $7.41 in EPS and $247.61 billion in revenue for the year.

On the books, CVS cash, cash equivalents and short-term investments totaled $6.58 billion at the end of the quarter, up from $1.81 billion at the end of the previous fiscal year.

The major highlight in this quarter was the completion of the $70 billion Aetna acquisition, which President and CEO Larry Merlo addressed:

With the completion of the Aetna acquisition, we have set the stage for CVS Health to excel in a market that is rapidly transforming. We strongly believe in the long-term value that the full breadth of our capabilities can provide. Our unique combination will drive above-market growth going forward across all of the enterprise. Maintaining our focus on community-level products and services will drive meaningful value for both consumers and payors, while improving our bottom line and the value we return to shareholders. Ultimately, our open platform model allows us to meet the needs of all payors with newly created products and services. We’re more excited than ever about the opportunities that lie ahead.

Shares of CVS Health closed Tuesday at $69.88, in a 52-week range of $60.14 to $82.15. The stock has a consensus price target of $88.57. Following the announcement, the stock was down 7.5% at $64.65 in early trading indications Wednesday.

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