CVS Health's Results Top Views--Update
May 03 2016 - 8:28AM
Dow Jones News
By Lisa Beilfuss
CVS Health Corp. logged better-than-expected results for its
first quarter, as recent acquisitions helped push prescription
volumes higher.
The drugstore chain made two acquisitions last year, looking to
bring in more patients to counter the effect of falling
reimbursement rates. Such rates are under pressure as more drugs
are dispensed through the federal Medicare and Medicaid programs,
which carry lower margins than private insurers. The company has
folded in Omnicare Inc., which dispenses drugs to places like
nursing homes, in addition to Target Corp.'s pharmacy business.
In the first quarter, CVS said sales at stores open at least a
year rose 4.2%, below the 5.3% clip analysts expected but up from
3.5% in the fourth quarter. The increase came as front-of-store
sales -- makeup, food and over-the-counter medicine -- rose 0.7%, a
result Chief Executive Larry Merlo said was in-line with
expectations. While eroding traffic continues to hurt sales at the
front of the store, an extra day from leap year helped offset that
impact in the first quarter.
Meanwhile, retail pharmacy sales remained strong, with pharmacy
sales and prescription volumes climbing 5.5% and 5.9%,
respectively, on a same-store basis. The leap year effect countered
the negative impact of recent generic drug introductions, the
company said.
Over all, CVS reported a profit of $1.15 billion, or $1.04 a
share, down from $1.22 billion, or $1.07 a share, a year earlier.
Excluding acquisition-related costs, among other items, per-share
profit rose to $1.18 from $1.14.
Revenue rose 19% to $43.22 billion. Analysts projected $1.16 on
$43.00 billion in sales.
Still, the company also said it expects a second-quarter
adjusted profit of $1.28 to $1.31 a share, below Wall Street's
expectations of $1.35. For the year, CVS backed its earnings view,
still estimating adjusted earnings of between $5.73 and $5.88 a
share.
Shares in the company, up 3.8% since the start of the year, were
inactive during premarket trading.
Corrections & Amplifications
CVS's front-of-store sales rose 0.7% in the first quarter. An
earlier version of this article said those sales fell by 0.7%.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
May 03, 2016 08:13 ET (12:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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