Investing.com -- CVS Health (NYSE:CVS) has reported higher-than-anticipated earnings and revenue in the third quarter, as the health care group was boosted by strength at its pharmacy benefit management and consumer wellness segments.
The company posted total sales of $89.76 billion during the three months ended on Sept. 30, a more than 10% increase compared to the same period last year and above Bloomberg consensus expectations of $88.28B. Adjusted earnings per share of $2.21 also beat average estimates of $2.13 a share.
Rhode Island-based CVS operates one of the U.S.'s biggest pharmacy benefit mangement (PBM) divisions, or businesses that negotiate drug discounts between insurers and treatment makers.
CVS's health services unit, which operates the PBM, saw revenues jump by 8% to $46.89B during the third quarter. The group said the uptick was driven by growth in specialty pharmacy, a provider of drugs for conditions like cancer and arthritis, as well as brand inflation. The acquisitions of Oak Street Health and Signify Health earlier this year, which have factored into a push by CVS to transform itself from a drug store chain into a large health care company, also helped lift revenue.
Elevated drug prices and increased prescription volumes spurred on a 6% rise in CVS's pharmacy and consumer wellness division, which dispenses prescriptions at CVS's retail locations and sells a wide range of health products. Growth at the business was limited in part by a reduction in store count and decreased sales of over-the-counter COVID-19 test kits.
Meanwhile, CVS's insurance offering saw its key medical benefit ratio -- or health care costs as a percentage of premiums collected -- tick up to 85.7% from 83.4% in the prior year. CVS said this was due to more utilization of outpatient and supplemental benefits under its government-supported plans for older adults.
CVS slashed its annual unadjusted income per share guidance range to $6.37 to $6.61 from $6.53 to $6.75, but confirmed its full-year projection on an adjusted basis. Its expectations for cash flow from operations of $12.5B to $13.5B this year were also reiterated.
Shares in CVS were slightly lower in premarket U.S. trading on Wednesday.