Post Earnings Coverage as CVS Health Net Income Jumps 23.6% and Revenues Up 15.5%

Upcoming AWS Coverage on Anthem Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 16, 2016 / Active Wall St. announces its post-earnings coverage on CVS Health Corp. (NYSE: CVS) (“CVS”). The company posted its financial results for the third quarter fiscal 2016 on November 08, 2016. The biggest U.S. drugstore chain lowered and narrowed its full-year guidance and missed on revenue. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of CVS Health’s competitors within the Health Care Plans space, Anthem, Inc. (NYSE: ANTM), reported on November 02, 2016, its third quarter 2016 results. AWS will be initiating a research report on Anthem in the coming days.

Today, AWS is promoting its earnings coverage on CVS; touching on ANTM. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=CVS

http://www.activewallst.com/registration-3/?symbol=ANTM

Earnings Reviewed

CVS’ net revenues for the three months ended September 30, 2016, increased 15.5%, or $6.0 billion, to $44.6 billion compared to the three months ended September 30, 2015, revenue of $38.64 billion. Revenue missed analysts’ estimate of $45.3 billion. For Q3 2016, the company’s net income surged 23.6% to $1.54 billion from $1.25 billion in the year ago period. On a per share basis, the company earned $1.43 per share from the prior year’s figure of $1.10 per share. The increase in net income was attributed to the $486 million increase in operating profit, which was partially offset by a $101 million loss on early extinguishment of debt. Net income also benefited by approximately $0.05 per share from a lower income tax rate. On an adjusted basis, the company earned $1.64 per share from the prior year’s number of $1.28, beating the $1.57 per share analysts projected.

Segment Results

During Q3 2016, CVS’s Pharmacy Services segment reported a 19.2%, or $4.9 billion, rise in revenue to $30.4 billion primarily driven by increased pharmacy network claim volume and growth in specialty pharmacy. Pharmacy network claims processed during the reported quarter surged 23.3% to 282.6 million compared to 229.1 million in the prior year. The volume increase was primarily due to the growth in net new business. CVS reported that Mail choice claims processed during Q3 2016 increased 2.5% to 22.4 million compared to 21.9 million in the prior year.

For Q3 2016, CVS’s revenues from the Retail/LTC segment grew 12.5%, or $2.2 billion, to approximately $20.1 billion. The increase was primarily driven by the addition of the long-term care (“LTC”) pharmacy operations acquired as part of the acquisition of Omnicare, Inc., the addition of the pharmacies and clinics of Target Corp, acquired in December 2015, and pharmacy same store sales growth. The company’s same store sales increased 2.3% versus Q3 2015. Pharmacy same store sales rose 3.4% and pharmacy same store prescription volumes rose 3.0% on a 30-day equivalent basis. Pharmacy same store sales were negatively affected by approximately 340 basis points from recent generic drug introductions. For Q3 2016, the generic dispensing rate increased approximately 160 basis points to 85.4% in the Pharmacy Services Segment and increased approximately 100 basis points to 85.8% in the Retail/LTC Segment.

Share Repurchase

CVS’s board of directors approved a new share repurchase program for up to $15 billion of its outstanding common stock. Combined with the approximately $3.7 billion that remains from the 2014 program, the Company has approximately $18.7 billion available for share repurchases. During Q3 2016, the Company opened 48 new retail stores and closed 6 retail stores. Furthermore, the Company relocated 11 retail stores. As of September 30, 2016, CVS operated 9,694 retail stores, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico, and Brazil.

Outlook

CVS lowered and narrowed its FY16 GAAP diluted EPS target to the range of $4.84 to $4.90 from $4.92 to $5.00. The Company lowered and narrowed full year adjusted EPS to range of $5.77 to $5.83 from $5.81 to $5.89. In Q4 2016, CVS expects to deliver GAAP diluted EPS of $1.52 to $1.58. The Company raised cash flow guidance for FY16 and now expects to deliver cash flow from operations of $9.3 billion to $9.5 billion and 2016 free cash flow of $6.8 billion to $7.0 billion.

CVS also provided preliminary outlook for FY17. GAAP diluted EPS is expected to be in the range of $5.16 to $5.33 and adjusted EPS is expected to be in the range of $5.77 to $5.93.

Stock Performance

At the close of trading session on November 15, 2016, CVS Health’s stock price fell 1.26% to end the day at $75.04. A total volume of 10.26 million shares were exchanged during the session, which was above the 3-month average volume of 6.98 million shares. The stock currently has a market cap of $80.14 billion. The company’s shares are trading at a PE ratio of 16.01 and have a dividend yield of 2.27%.

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