Investment in CVS (NYSE:CVS) Health shares has been a great experience for its shareholders. Beating its record for the last two quarters, CVS (NYSE:CVS) shares have gone up by 50%. These shares have particularly benefited the pharmacy marketers and managers. On Tuesday, CVS (NYSE:CVS) Health announced its current earning, and here are some of the high points of their report.
CVS (NYSE:CVS) Health revenue in the fourth quarter of 2014 increased considerably as compared to the earnings of fourth quarter of last year. The net revenue reached its highest i.e. $37.1 billion, which is 12.9% more than that of 2013. However, this figure did not surprise the analysts who had predicted the revenue to be around $36.08 billion which is pretty close to the reported figure.
The company also announced a GAAP earning of $1.3 billion for the fourth quarter. This breaks down to $1.14/diluted share which shows an increase of 4.5% as compared to the figures for the same time last year. The adjusted earnings were also single-handedly able to beat the analysts’ mean estimate which was about $1.20/share and came at $1.21 for each share.
With the adjusted earnings of $4.22/share and the GAAP earnings of 3.96/ diluted share -both earnings reflective of premature retirement of debt loss of $0.27/share- the company announced a net revenue of $139.4 billion which shows a 9.9% year-over-year (YOY) increase and thus, sets a new record for the company. Pharmacy Services Segment of the company greatly helped in giving rise to such strong revenue.
The revenue generated by this division of the company increased to $23.9 billion in the fourth quarter which shows a YOY increase of 21.7%. This increase was made possible due to expansion in specialty pharmacy and increase in the company’s pharmacy network claims. Credit for the growth of company’s specialty pharmacy goes to Coram which bought the company in early 2014.
The pharmacy network claims primarily increased due to the new business and expansion in Managed Medicaid. In the meantime, another division of the company showed a relatively slower progress. Retail Pharmacy Segment of the company generated revenue of $17.7 billion and increased at a YOY rate of 2.9%. A variety of factors influenced the growth of the retail pharmacy.
For the fourth quarter, the customer traffic was comparatively low. Besides this, the introduction of generic drugs also brought down the revenue of the company. The shift of the company to Pharmacy Services Segment from the usual retail pharmacy also left a heavy impact on this part of the company’s business. Nevertheless, the highest drop in sales came from the CVS (NYSE:CVS) Health’s decision to pull out all tobacco goods from its stores; however, the benefits of this decision to the management business were more as compared to loss it brought.
Analysts have again predicted a great future for the company this year. CVS (NYSE:CVS) Health itself estimates that for the first-quarter of 2015, the adjusted EPS would be around $1.06 – $1.09. While the average analysts’ roughly calculate the earnings per share to be around $5.15, the company gives an estimated figure range of $5.05- $5.19 EPS. Bearing this financial performance of the company in view, the future looks promising and the shareholder should have nothing to worry about for a long time.