CVS Health reported fourth-quarter results that topped estimates before Wednesday's open, while standing by 2022 guidance. However, that guidance range implies a slight earnings decline vs. 2021. CVS stock, a top performer in recent months, slipped in Wednesday's stock market action.
"We're engaging millions of customers across our businesses and in our community health destinations, becoming an even bigger part of their everyday health," CEO Karen Lynch said in a statement. "That's clearly reflected in our performance, but more importantly in our potential."
CVS has turned the corner on its reinvention, including the acquisition of managed-care player Aetna and the broadening of retail outlets into health care destinations. The latter effort gained momentum with the pandemic response, as CVS administered more than 32 million Covid tests and 59 million vaccines last year.
After taking on debt to buy Aetna, CVS has deleveraged more quickly than expected and is throwing off enough cash to allow for a 10% boost in its quarterly dividend in December, a $10 billion stock buyback authorization and a new focus on strategic acquisitions of primary care clinics and home health. Those efforts should produce 10%-12% annual EPS growth over the long term, starting in 2024, CVS said at its Dec. 9 investor day. CVS also has said it will optimize its retail footprint with 900 store closures from 2022-2024.
CVS Earnings
Estimates: Analysts expected CVS to earn $1.94 per share in Q4, up 49% from a year ago, on 9.3% revenue growth to $76.01 billion, according to Zacks Investment Research.
Results: CVS earnings per share jumped 52% to $1.98 on revenue of $76.60 billion.
Medical membership rose to 23.8 million, up 151,000 vs. Q3. CVS's retail segment led the earnings strength vs. a year ago, as revenue grew 12.7%. The number of prescriptions filled rose 11.6% from a year ago, or 6.1% excluding vaccinations.
Outlook: CVS stuck by its December guidance range for 2022 EPS of $8.10-$8.30 per share. The $8.20 midpoint is below the consensus of $8.24.
CVS Stock
CVS stock fell fell 5.45% to 104.79. Wednesday. On Tuesday, CVS stock rose 1.3% to 110.83, reaching its highest point since August 2015.
CVS stock is still well extended from the 90.71 buy point that it first cleared on Nov. 1. The stock has been acting well since then, having bounced off its 50-day moving average a couple of times in recent months. CVS stock's relative strength line, tracking its progress vs. the S&P 500 is right near a multiyear high.
Another test of its 50-day line could offer investors an early entry point.
Some other managed-care stocks also have been on a roll recently. On Tuesday, the elite IBD Leaderboard portfolio added Anthem after ANTM stock cleared an early entry point of 461.64. Centene rose 6% on Tuesday, following its Q4 report, closing just above an 85.54 buy point.
