3 key takeaways from CVS Health’s Q1 earnings report

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 4, 2021
  • CVS Health's profit and revenue tops Wall Street estimates in fiscal Q1.
  • The healthcare firm forecasts up to £5.54 of adjusted EPS this year.
  • CVS Health stock is currently at a record high since November 2018.

CVS Health Corp. (NYSE: CVS) said on Tuesday that its profit and sales came in better than expected in the fiscal first quarter as all of its business segments showed resilience in recent months. On the back of hawkish quarterly performance, the company raised its guidance for the full financial year.

1. Financial performance

CVS Health said that its net income in the first quarter printed at £1.60 billion that translates to £1.21 per share. In the comparable quarter of last year, its net income was capped at a lower £1.45 billion, or £1.10 per share.

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Adjusted for one-time items, the healthcare company earned £1.47 per share in Q1 versus the year-ago figure of £1.38 per share. CVS generated £49.82 billion of revenue in the recent quarter that represents a 3.5% annualised growth.

According to FactSet, experts had forecast the company to post £49.28 billion of revenue in the first quarter. Their estimate for adjusted per-share earnings stood at a lower £1.25. In the prior quarter (Q4), CVS Health had recorded £698.82 million of net income.

2. Revenue from individual business segments

Other notable figures in CVS Health’s earnings report on Tuesday include a 3.8% increase in revenue from pharmacy services, a 2.3% growth in revenue from retail and long-term care, and a 6.7% increase in revenue from the health care benefits segment in Q1.

Revenue from all segments, as per the Woonsocket-based company, topped the FactSet consensus in the first quarter. CVS announced news initiatives this week to support women’s health and wellness.

3. Full-year guidance and CEO’s remarks

For the full financial year, CVS Health is now calling for up to £5.54 of adjusted earnings per share. It expects cash flow to fall in the range of £8.65 billion to £9.01 billion this year. Commenting on the earnings report, CEO Karen Lynch said:

“We continue to execute on our strategy while simultaneously managing through a pandemic, helping the country on the road to recovery. Our unmatched assets and strength of our brand are driving results as we work toward improving care delivery and driving growth.”

Impact on the share price

CVS Health Corp shares are currently trading at £57.50 – the highest price since November 2018. The stock is up roughly 14% year-to-date after a 7% decline in 2020. At the time of writing, the U.S. firm is valued at £73.52 billion and has a price to earnings ratio of 14.20.

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