What to Expect from CVS Health’s First-Quarter Results



Earnings likely to remain pressured

CVS Health (CVS) plans to announce its first-quarter results on Wednesday, May 1. Analysts’ estimates indicate that CVS Health’s top line is likely to mark strong double-digit growth. However, the earnings growth rate is projected to mark steep deceleration on a sequential basis.

CVS Health’s top line is projected to gain significantly from the addition of Aetna. Meanwhile, an increase in pharmacy network claims and higher prescription volumes are expected to support sales in the first quarter of 2019.

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We expect benefits from the Aetna deal, improved purchasing, and cost savings to cushion the first quarter earnings. However, continued reimbursement pressure is expected to drag CVS Health’s EPS down in the coming quarters. Also, the higher outstanding share count is likely to hurt the earnings growth rate.

In comparison, Walgreens Boot Alliance’s (WBA) bottom line is also taking a hit from reimbursement pressure and deflation in generics. Walgreens Boots Alliance missed analysts’ earnings estimate in the last reported quarter and lowered its full-year EPS guidance, citing increased pressure on earnings from reimbursement.

Analysts’ estimate

Analysts expect CVS Health to post revenues of $60.5 billion in the first quarter of 2019, which implies YoY growth of 32.3%. The addition of Aetna and higher pharmacy network claims are likely to drive its top line.

Meanwhile, analysts expect CVS to post adjusted earnings of $1.50 per share, which implies YoY growth of 1.4%. Analysts’ projection indicates a steep deceleration in the EPS growth rate on a sequential basis. CVS Health’s bottom line registered an increase of 11.5% in the fourth quarter of 2018.


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