CVS Health Gives Soft Outlook

CVS Health Corp. on Tuesday gave a soft earnings outlook for its current quarter, while growing sales of prescription drugs continued to offset weakness in its retail business for the second quarter.

For the current quarter, CVS forecast earnings of $1.27 to $1.30 a share. Analysts polled by Thomson Reuters had forecast $1.37 a share in earnings.

For the year, CVS narrowed its earnings guidance to $5.11 to $5.18 a share from $5.08 to $5.19 a share.

In the latest quarter, the company's pharmacy services business, which provides health-care benefits to clients, continued to log strong growth. Sales rose 12% to $24.4 billion, driven by growth in specialty pharmacy and pharmacy network claims.

That came as sales in the chain's retail business grew just 2.2% to $17.2 billion, or increased 0.5% excluding newly opened or closed stores. CVS's move last fall to stop selling tobacco products to emphasize its image as a health-care company hurt sales in the front of its stores, where the company sells everyday products and over-the-counter medication. They fell 7.8% in the quarter on a same-store basis.

As part of its shifting identity, CVS is expanding its walk-in clinics and its specialty pharmacy business. The company hopes ending tobacco sales will eventually pay off by having clients reward it with health-related business.

Overall, CVS reported a profit of $1.27 billion, or $1.12 a share, up from $1.25 billion, or $1.06 a share, a year earlier.

Excluding acquisition costs and other special items, per-share earnings were $1.22. The company had forecast $1.17 to $1.20 in adjusted per-share earnings.

Revenue grew 7.4% to $37.17 billion. Analysts polled by Thomson Reuters had forecast $37.18 billion.

Write to Chelsey Dulaney at [e-mail]

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