Why CVS Health Stock Dropped Today
Shares of CVS Health (NYSE: CVS) fell as much as 7% early Wednesday before recovering to trade down around 1% as of 2 p.m. ET. The move came after the company lowered its full-year guidance despite posting solid third-quarter results.
CVS' third-quarter revenue grew 10.6% year over year, to $89.76 billion, translating to net income under generally accepted accounting principles (GAAP) of $1.75 per share and non-GAAP (adjusted) earnings of $2.21 per share (up from adjusted net income of $2.17 per share in the same year-ago period). Analysts, on average, were only expecting adjusted earnings of $2.13 per share on revenue of $88.17 billion.
The company credited its relative earnings outperformance during the quarter to its health services segment; health services revenue grew 8.4% to $46.9 million, and adjusted operating income rose 10.8% to $1.88 billion, thanks largely to improved purchasing economics from the company's group purchasing organization. Meanwhile, the company's healthcare benefits segment saw adjusted operating income decline 6.4% to $1.54 billion even as revenue rose 16.9%, to $26.3 billion. And finally, the company's flagship pharmacy and consumer wellness business saw adjusted operating income decline slightly (to $1.39 billion) despite 6% revenue growth (to $28.87 billion).
Source Fool.com
