CVS Gets Boost From Prescription-Drug Sales

   (FROM THE WALL STREET JOURNAL 2/10/16) 
   By Chelsey Dulaney and Paul Ziobro 

CVS Health Corp. reported higher profit and sales in its fourth quarter, as rising sales of prescription drugs offset a slight drop in sales in the front end of its stores, where traffic continues to erode.

The quarter was broadly in line with Wall Street expectations, as CVS drugstores and its big pharmacy-benefits management business continued to cover more patients and dispense more drugs.

On Tuesday, CVS shares rose nearly 1% to $90.51.

The results also were boosted by two recent acquisitions that allow CVS to cover more patients: Omnicare Inc., which dispenses drugs to places like nursing homes; and Target Corp.'s pharmacy business, which gives CVS nearly 1,700 more locations. As both those acquisitions become integrated, CVS plans to market them aggressively to help sign up more clients to its network.

Building scale is one part of CVS's answer to falling reimbursement rates as more patients are covered through federal Medicare and Medicaid programs, which carry lower margins than private insurers.

Still, private insurers are trying to squeeze more costs out of their drug plans as well. The health insurer Anthem Inc. last month said it would drop its longtime benefits manager, Express Scripts Holding Co., unless it could deliver more than $3 billion in savings on drug prices. The rare public dispute puts the valuable contract up for grabs. CVS executives declined Tuesday to comment on their plans to pursue it, but did say that Anthem's move hasn't affected negotiations with other clients.

For the period ended Dec. 31, CVS reported a profit of $1.5 billion, or $1.34 a share, up from $1.32 billion, or $1.14 a share, a year earlier.

Quarterly revenue rose 11% to $41.15 billion, after eliminating inter-segment sales.

(END) Dow Jones Newswires

February 10, 2016 02:47 ET (07:47 GMT)

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