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Pharmacy retailer and services giant CVS Health Corporation (NYSE:CVS) announced its second-quarter financial results before the market opened on Tuesday. Those results appeared to be on track, but shares have dropped more than 4% as of the time of this writing. What happened? Here are the highlights. 

By the numbers
That reactionary fall didn't stem from an earnings miss. CVS posted earnings of $1.27 billion -- up 2.1% year over year. On a GAAP basis, that translated to $1.12 per share. Adjusted earnings for second quarter were $1.22 per share excluding $0.03 of acquisition-related transaction and financing costs. Analysts expected adjusted earnings of $1.20 per share.

CVS Health reported revenue of $37.17 billion in the second quarter. That figure reflected a 7.4% increase over the results from the same quarter last year. It also fell roughly in line with the consensus analysts' expectation of $37.18 billion in revenue.

Larry Merlo, CVS' President and CEO, stated that results for the second quarter "exceeded our expectations." The company also narrowed its full-year 2015 adjusted earnings guidance to a range of $5.11-$5.18 per share, citing the "strong performance this quarter." 

Behind the numbers
An earnings beat. Revenue in line with expectations. A narrowing of the full-year outlook based on a strong second quarter. So what caused CVS' shares to decline?

Let's start with the last item -- full-year outlook. While CVS Health did narrow its earnings guidance and raised the bottom of the projected range, it wasn't all great news. The previous guidance provided was $5.08-$5.19 per share. The company's narrowing lowered the upper end of the range to $5.18 per share. 

Also, CVS' revenue technically missed the consensus analysts' estimate -- albeit by a hair. The company's pharmacy benefits management unit is still performing nicely, with an 11.9% year-over-year jump in revenue thanks in large part to strong specialty pharmacy growth. However, retail pharmacy revenue growth of 2.2% year over year was more sluggish. 

The company's retail unit continues to experience lower volumes of customers shopping in its stores. While that is being offset to some degree by customers buying more, it is still a concern. One key reason behind the softer customer traffic is CVS' removal of tobacco products from all of its stores in the second half of last year.  

But while the market might have focused on nitpicking the negatives from CVS Health's results, more careful parsing of the numbers gives reason for encouragement. The upper end of the company's full-year earnings guidance is still higher than Wall Street's estimate of $5.16 per share. CVS continued its streak of beating earnings estimates. 

Looking ahead
There's plenty to think about regarding the future prospects for CVS Health. The company's proposed acquisitions of Omnicare along with Target's pharmacies and clinics should prove to be smart moves over the long run.

CVS should also continue to benefit from demographic trends in the U.S. Increasing numbers of aging Americans will likely lead to increasing prescription drug usage -- which is a great opportunity for the company's retail stores and PBM business. 

 

Keith Speights owns shares of Target. The Motley Fool recommends CVS Health. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.