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CVS Health shares rise after company beats estimates
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CVS Health shares rise after company beats estimates

Key recommendations

  • CVS Health reported better-than-expected quarterly results, and the new CEO made executive changes. The news lifted the stock on Wednesday.
  • Revenues were boosted by sales increases in the company’s Pharmacy & Wellness and Health Care Benefits segments.
  • CVS also shook up its executive lineup, adding former UnitedHealth Group chief executive Steve Nelson to lead Aetna’s insurance division.

CVS Health (CVS) shares rose after the drugstore chain and healthcare company posted better-than-expected results and new CEO David Joyner made leadership changes as he moves to shake up the struggling firm.

On Wednesday, CVS reported its third quarter earnings per share (EPS) of $1.09, with revenue up 6.3% to $95.4 billion. Both revenue and EPS beat estimates.

Despite today’s gains of about 10%, CVS Health shares have lost about a fifth of their value this year.

Revenue was boosted by the Pharmacy & Wellness division, which saw sales rise 12% to $32.4 billion, helped by higher prescription volume.

The company said its health services unit’s revenue fell 5.9 percent, primarily due to the loss of a large customer and continued price improvements to pharmacy customers. Reuters in January reported that Tyson Foods (TSN) replaced CVS Health with Rightway to manage employee drug benefits.

Joyner took over as CEO last month. CVS in a separate statement said the former UnitedHealth Group (UNH) chief executive Steve Nelson will become head of its Aetna insurance arm, and Prem Shah, the current chief pharmacy officer and president of the Pharmacy & Consumer Wellness division, will become group president.

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