CVS Q4 Earnings: What To Expect

by Trefis Team
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CVS Health (NYSE:CVS) is slated to announce its fourth quarter and full year results on Thursday, February 9th before the markets open. We expect the company to see an uptick in revenues – aided by strong volumes and growth in Medicare Part D Plans – as well as margins, aided by volume growth. The addition of Omnicare and Target pharmacies is likely to augment the company’s growth.

In the upcoming results for the quarter ended December 31st, the consensus expectation is for CVS to report revenues of $46.56 billion, implying growth of 13% over the same period last year. On the EPS front, the company is expected to generate EPS of $1.67, which would imply growth of almost 9% over Q4 FY’15.

Screen Shot 2017-02-07 at 14.19.59

Following its third quarter earnings, the company released a weak outlook for the fourth quarter, in which it expected revenues to grow in the range of 12.5% to 14% over the same period last year, primarily on the back of strong PBM performance. However, per the company’s guidance, Retail Pharmacy revenues are expected to underperform over the prior year quarter, primarily due to weak same store sales, which are expected to be flat to down 1.75%.  The slowdown is likely to negatively impact the segment’s operating margins as well, which are expected to decrease in the quarter. The growth in Pharmacy Services is likely to positively impact the company’s operating margin, which is expected to increase in the range of 2% to 5.5% over the last year quarter.

Lastly, we expect CVS to shed some light on its future plans, which are likely to be impacted by the new administration. CVS derives a significant portion of its revenues from its PBM offerings. The new government is expected to look into the rising drug prices, and any development on that front is likely to impact the company.


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