CVS Stock Is Tumbling. Lowered Range for Cash-Flow Guidance Unnerved Investors.

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CVS Health

stock was falling after lowered cash-flow guidance overshadowed better-than-expected fourth-quarter earnings Wednesday.

The pharmacy chain reported fourth-quarter revenue of $76.6 billion, beating the FactSet consensus of $75.6 billion. Adjusted earnings per share were $1.98, which topped the FactSet consensus of $1.83.

But CVS trimmed the 2022 guidance for cash flow from operations to $12.0 billion-$13.0 billion from $12.5 billion to $13.0 billion. The company confirmed 2022 guidance for adjusted EPS of $8.10 to $8.30, and revenue guidance for $304 billion to $309 billion.

CVS told Barron’s in an email that it trimmed the low end of cash-flow guidance for 2022 “due to faster collection and some pull-forward of receivables” in 2021.

Shares are down 4.3% to $106.07 in Wednesday morning trading on a strong day for the broader market: the

S&P 500 index is up 1.2%.

In fact, the stock was the worst performer in the index Wednesday, and was on pace for largest percent decrease since Feb. 16, 2021, when it fell 4.96%, according to Dow Jones Market Data.

Fourth-quarter same-store sales in the pharmacy segment were up 8.8% from last year and same-store retail sales rose 12.3%. Both were bolstered by the company’s administration of 11 million Covid-19 vaccinations and 8 million tests over the three-month period. 

For the full year 2021, CVS administered more than 32 million COVID-19 tests and more than 59 million vaccines. Over 35% of COVID-19 vaccines in 2021 were administered during the fourth quarter, the company said on an earnings call with investors Wednesday morning.

The company said it plans to combine its segments including drugstores, its insurance business, Aetna, and pharmacy benefits provider Caremark to expand into more affordable health care-related opportunities for consumers.

CEO Karen Lynch said that the company’s wide-ranging vaccine administration led to new customers seeking a range of other health services at CVS.

CFO Shawn Guertin said services that extend the care sector, particularly for Medicare customers, would make the most sense and would be high on the list for the company’s expansion priorities. Details were not given on numbers or plans regarding the opportunities.

CVS was also no stranger to the tight labor market in recent quarters. In August, the company said that it will be raising its wages to $15 an hour by July 2022.

“We did have significant hiring throughout the year, and as you might imagine, we weren’t immune to some of the Omicron issues,” Lynch said. “I think the minimum wage that we mentioned that we put in place has helped us. Keep in mind that I continue to evaluate that minimum wage to see if there’s more that we could or should be doing as we continue to address labor shortages in the country.”

Write to Logan Moore at [email protected]