CVS Health reports mixed Q4 results; stock falls over 7%

CVS Health Corporation (CVS) reported better-than-expected earnings for the fourth quarter of 2018 but revenue fell short of estimates, sending the stock falling 7.3% in premarket hours on Wednesday.

Net revenues grew 12.5% year-over-year to $54.4 billion, helped by increases in pharmacy network claims and prescription volumes in the Pharmacy Services and Retail/LTC segments, as well as the addition of Aetna.

Net loss attributable to CVS Health was $419 million, or $0.37 per share, in the quarter compared to a net income of $3.28 billion, or $3.22 per share, in the prior-year period. Adjusted EPS totaled $2.14, beating consensus estimates.

Revenues in the Pharmacy Services segment rose 2.2% year-over-year helped by higher pharmacy claims volume. Total pharmacy claims processed were up 5.6%, on a 30-day equivalent basis, mainly due to net new business and the continued adoption of Maintenance Choice offerings.

Also see: CVS Health Q4 2018 Earnings Conference Call Transcript

In the Retail/LTC segment, revenues grew 5.4%, helped by an 8.6% growth in prescription volume along with branded drug price inflation. The LTC business has been facing industry-wide challenges, including lower occupancy rates in skilled nursing facilities and customer bankruptcies, which have affected its growth. These challenges are expected to continue in 2019.

In November, CVS completed its $70 billion acquisition of Aetna, and created a new segment named Health Care Benefits, which is equivalent to the former Aetna Health Care segment. Revenues in the Health Care Benefits segment for the period from November 28 to December 31, 2018 were $5.54 billion.

For the full year of 2019, the company expects GAAP EPS from continuing operations of $4.88 to $5.08 and adjusted EPS of $6.68 to $6.88.

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