CVS Profit Grows, But Forecast Soft--Update

By Chelsey Dulaney 

CVS Health Corp. reported higher profit and revenue in its fourth quarter driven by growth in its pharmacy businesses, but the company gave a soft earnings forecast for its current quarter.

CVS said it expects earnings of $1.14 a share to $1.17 a share, excluding special items. Analysts had been expecting adjusted earnings of $1.34 a share, according to Thomson Reuters.

Shares fell 3% to $87 a share in premarket trading.

CVS's reimbursement rates have been under pressure as more drugs are dispensed through federal Medicare and Medicaid programs, which carry lower margins than private insurers. CVS has turned to acquisitions to help add scale. In December, the company completed its acquisition of Target Corp.'s 1,600-plus pharmacies.

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. Excluding special items, per-share earnings rose to $1.53 a share, matching the average forecast of analysts polled by Thomson Reuters.

Quarterly revenue rose 11% to $41.15 billion, after eliminating inter-segment sales. Analysts were forecasting revenue of $41.13 billion in revenue.

Sales in its retail business increased 12.5% to $19.9 billion, with about half of that growth owing to its recent acquisition of Omnicare Inc. Sales at stores, excluding newly opened or closed locations, rose 3.5%, though front-of-store sales edged down 0.5% amid softer traffic.

The front end, where CVS sells over-the-counter drugs, snacks, beauty products and other sundries, has been hurt by its decision to stop selling tobacco products.

But its retail pharmacy sales remained strong. Both pharmacy sales and prescription volumes, on a same-store basis, rose 5%.

Its Caremark and other pharmacy-services businesses posted a 11.1% increase in sales to $26.5 billion, driven by growth in selling specialty drugs and a 7.2% increase in processed claims.

CVS backed its earnings forecasts for the full year.

Write to Chelsey Dulaney at [e-mail]

(END) Dow Jones Newswires

February 09, 2016 08:23 ET (13:23 GMT)

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