“Last year was defined by outperformance in our core businesses,” said Chief Executive Officer Karen Lynch.
CVS Health Corporation. (cvs) – Get a free reportPosted stronger-than-expected fourth-quarter earnings on Wednesday, buoyed by outsized sales gains in its health care benefits division and strong retail pharmacy revenue.
CVS said adjusted earnings for the three months ending in December were pegged at $1.99 a share, a penny higher than the same period last year and 7 cents above the Street consensus forecast. Group revenue, CVS said, rose 9.5% from last year to $83.8 billion, well above analyst estimates of $76.2 billion.
Same pain sales were up 7.7% from last year, CVS said, while drugstore sales were up 9.1%.
Retail sales increased 4% “increased store and prescription volume, including the impact of a heightened cough, cold and flu season compared to the prior year.” The group’s healthcare benefits division saw sales increase 11.3% to $23.03 billion.
Looking at the current financial statement for the year, CVS said it sees earnings in the region of $8.70 to $8.90 per share, and cash flows from its general business are expected to be between $12.5 billion and $13.5 billion.
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“Last year was characterized by outperformance in our core businesses, strong cash flow from operations and significant progress against our value-based delivery strategy,” said Chief Executive Officer Karen Lynch. “2022 was a year of progress, and we continue to build on that momentum with bold moves that will improve the healthcare experience.”
CVS shares rose 1.9% in premarket trading immediately after the earnings release to signal an opening bell price of $87.63 apiece.
Earlier Wednesday, CVS Health confirmed it would buy Oak Street Health OSH for $10.6 billion, including debt, ending weeks of speculation about the fate of the Chicago-based primary care center operator.
CVS said it will pay $39 for Oak Street Health in an all-cash transaction that it expects to close later this year. The deal has been approved by the boards of both companies, CVS said, and Oak Street will continue to be led by current CEO Mike Pykosz once the transaction is complete.
CVS may also face potential recoveries from the US Department of Health and Human Services as it seeks to recover about $4.7 billion in funds that may have paid out to companies in the Medicare Advantage system.
HHS said that payments made to various Medicare Advantage organizations that were based on a submitted diagnosis that was not supported by the beneficiary’s medical records would be audited, and so-called risk adjustment overpayments, which have not been collected since 2007, it would recover over the next ten years under the so-called RADV final rule.
