CVS Beats Q3 Earning Estimates: How Did It Do It?

With the acquisition of Aetna on the horizon, CVS Health Corporation (CVS) has come out swinging, beating analyst estimates for earnings and revenue for Q3. The company has made great strides to improve its pharmacy and retail business, giving it a healthy boost in share prices.

Earnings moved from the anticipated $1.71 per share to $1.73 per share, according to a Refinitiv survey of Wall Street analysts. Revenue was also up for the company based on the expectations that were set at $47.2 billion versus the actual $47.3 billion CVS reported.

The company also saw a net income of $1.39 billion which was up from the $1.29 billion reported Q3 last year. The CVS retail pharmacy business also surged forward nearly 7 percent up from the $19.59 billion in Q3 2017 to $20.86 billion this quarter. The increase was due to 8.4 percent growth in pharmacy revenue spurred by a growth of the company’s pharmacy network and mail choice claim volume as well as inflation of the brand, according to the company.

Retails sales for CVS also rose 2 percent over last year from the sale of everyday products.

“Strong revenue and adjusted EPS, along with significant cash flow year-to-date, demonstrate our success in driving value,” Larry Merlo, President and Chief Executive Officer at CVS Health, said in a statement released by the company. “Our year-to-date results continue to validate our confidence in the strength of our model. As we approach the closing of our transformative acquisition of Aetna, our integration teams are making great progress to assure that once final approvals are obtained, we can begin to execute on our integration plans.”

CVS also hopes to move its business forward even more with the acquisition of Aetna (AET.N), a health insurance provider. The company plans to purchase Aetna for approximately $69 billion and has already received preliminary approval from the U.S. Department of Justice.

“Given CVS Health’s performance year-to-date and our confidence in our expectations for the remainder of this year, we are confirming our stand-alone consolidated operating profit, adjusted EPS and free cash flow guidance for 2018,” Merlo said in the same statement. “While CVS and Aetna remain separate companies today, the performance of both companies highlights the very solid financial foundation on which we’ll build our revolutionary new model that will transform the health care experience for consumers and, in the process, deliver substantial value for our shareholders.”

While CVS said that it expects the deal with Aetna to close before Thanksgiving Day, there are still some stumbling blocks for the company to clear. It still needs approval from five states including New York, where state officials may block parts of the deal, according to CNBC.

As of Friday morning, the stock price for CVS was up over 4 percent.