CVS Health Corporation CVS posted adjusted earnings per share (EPS) of $1.19 in the fourth quarter of 2024, down 43.9% year over year. However, the metric topped the Zacks Consensus Estimate by 33.7%. The adjusted EPS figure considers certain asset amortization costs, loss on assets held for sale and other adjustments.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
On a reported basis, the company’s GAAP earnings were $1.30 per share compared with $1.58 in the prior-year period.
For the full year, adjusted earnings were $5.42 per share, down 37.9% from the year-ago period’s levels. It surpassed the Zacks Consensus Estimate by 5.4%.
Revenues in the fourth quarter rose 4.2% year over year to $97.71 billion. The top line surpassed the Zacks Consensus Estimate by 0.6%. This year-over-year upside was driven by growth in the Health Care Benefits and Pharmacy & Consumer Wellness segments.
Total revenues for 2024 were $372.81 billion, up 4.2% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.2%.
Following the announcement, CVS shares rose nearly 9.4% in the pre-market trading session today.
Detailed Analysis of CVS’ Q4 Earnings Release
Health Services revenues were down 4.3% year over year to $47.02 billion in the reported quarter. This downside was due to the previously announced loss of a large client and continued pharmacy client price improvements. The decline was partially offset by the pharmacy drug mix, increased contributions from the company's healthcare delivery assets and growth in specialty pharmacy.
Total pharmacy claims processed declined 16.9% on a 30-day equivalent basis compared with the prior year, indicating the previously announced loss of a large client.
CVS Health Corporation Price, Consensus and EPS Surprise
CVS Health Corporation Price, Consensus and EPS Surprise
CVS Health Corporation price-consensus-eps-surprise-chart | CVS Health Corporation Quote
Revenues in the Pharmacy & Consumer Wellness segment were up 7.5% year over year to $33.51 billion. The upside was primarily driven by the pharmacy drug mix and increased prescription volume.
Within the Health Care Benefits segment, the company registered revenues worth $32.96 billion in the fourth quarter, up 23.3% year over year. This upside was driven by growth in the Medicare and individual exchange product lines.
CVS’ Q4 Margin Performance
The total cost of sold products fell 3.8% to $55.27 billion in the fourth quarter. The gross profit rose 16.6% to $42.44 billion. The gross margin expanded 464 basis points (bps) to 43.4%.
The adjusted operating margin in the quarter under review expanded 507 bps to 32.7% despite a 23.3% rise in operating expenses to $31.92 billion.
CVS’ Liquidity Position
CVS Health exited the fourth quarter of 2024 with cash and cash equivalents of $8.59 billion compared with $8.20 billion at the end of 2023. The long-term debt was $60.53 billion compared with $58.64 billion at the end of 2023.
The cumulative net cash provided by operating activities at the end of the fourth quarter of 2024 was $9.11 billion compared with $13.43 billion in the year-ago period.
Our Take on CVS
CVS Health exited the fourth quarter of 2024 with better-than-expected earnings and revenues. The company continued to see growth in key areas of the business, including the Pharmacy and Consumer Wellness segment. The expansion of both margins in the quarter is highly promising as well. However, the bottom line recorded a decrease on a year-over-year basis. CVS Health continues to address the industry-wide challenges that have impacted its Health Care Benefits segment.
CVS’ Zacks Rank and Key Picks
CVS Health currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the broader medical space are ResMed RMD, Cardinal Health CAH and Bio-RadLaboratories BIO.
ResMed reported second-quarter fiscal 2025 adjusted EPS of $2.43, which topped the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion exceeded the Zacks Consensus Estimate by 1.6%. RMD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.
Cardinal Health, carrying a Zacks Rank #2, posted second-quarter fiscal 2025 adjusted EPS of $1.93, topping the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion exceeded the Zacks Consensus Estimate by 0.7%.
CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.
Bio-Rad Laboratories, carrying a Zacks Rank #2, posted a third-quarter 2024 adjusted EPS of $2.01, topping the Zacks Consensus Estimate by 57%. Revenues of $649.7 million exceeded the Zacks Consensus Estimate by 2%.
BIO has an earnings yield of 3.3% compared with the industry’s 0.6% yield. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 30.5%.
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