Khan is a professional trader and business writer with over 7 years of experience in several financial markets. Khan takes pride in sharing insightful articles with his readers that help them improve their investment portfolios.

2022-02-09 13:14

CVS Health Corp on Wednesday said its Q4 profit and revenue topped Wall Street estimates. Shares of the pharmacy company still slid 4.0% as its future guidance wasn’t very confidence inspiring.
Fourth-quarter financial results
CVS reported $1.31 billion in net income. On a per-share basis, its earnings were 98 cents for the quarter. In Q4 of last year, it had earned $973 million or 74 cents if calculated per share. The health services firm earned $1.98 per share adjusted in the recent quarter.

According to CVS, its revenue jumped 10.1% in the fourth quarter to $76.60 billion. In comparison, experts had predicted the U.S. firm to post $1.83 of adjusted EPS and $75.66 billion in revenue. The earnings press release disclosed:

“In 2021, CVS was named to the DJSI North American Index for the 9th consecutive year and the DJSI World Index for the 3rd consecutive year. CVS Health was also one of the first seven companies globally to have science-based net-zero GHG emissions targets validated by the Science-Based Targets initiative. CVS also announced a 10% increase to the annual shareholder dividend, and the authorization of a $10 billion share repurchase program.”

CVS administered over 20 million doses of COVID-19 vaccines in Q4 and over 8 million tests. Revenue from health care benefits was up 8.4% on a year-over-year basis, while pharmacy services and retail/LTC noted an 8.2% and a 12.7% increase in quarterly revenue, respectively.

Full-year outlook and CEO Lynch’s comments
For the full financial 2022, CVS forecasts its per-share earnings to fall between $8.10 and $8.30, which is in line with the consensus estimate of $8.27. The NYSE-listed company, however, said its cash flow is likely to print in the range of $12 billion to $13 billion. This compared to analysts at $12.5 billion to $13 billion. In the earnings press release, CEO Karen Lynch said:

“We’re engaging millions of customers across our businesses and in our community health destinations, becoming an even bigger part of their everyday health. That’s clearly reflected in our performance, but more importantly in our potential.”

In fiscal 2021, CVS noted an annualised growth of 8.7% in total revenue on $8.40 of adjusted per-share earnings. The American healthcare firm generated $18.3 million in cash flow from operations and repaid $8.8 million worth of its long-term debt.

Last month, CVS partnered with EQRx to fashion cost savings and enhance access for patients to innovative medicines. Following the price action this morning, the stock is now trading near the same price at which it started the year 2022. Last year, however, was a solid one for CVS that ended with the stock up nearly 50%. The $139 billion company now trades at a PE multiple of 18.38.