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CVS CVS Health Corporation

55.41
0.26 (0.47%)
Pre Market
Last Updated: 12:21:42
Delayed by 15 minutes
Share Name Share Symbol Market Type
CVS Health Corporation NYSE:CVS NYSE Common Stock
  Price Change % Change Share Price High Price Low Price Open Price Shares Traded Last Trade
  0.26 0.47% 55.41 19,154 12:21:42

CVS Shares Drop as Guidance is Cut, Retail Prescriptions Leave Its Network

08/11/2016 1:12pm

Dow Jones News


CVS Health (NYSE:CVS)
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By Austen Hufford 

CVS Health Inc. warned that fewer people will fulfill retail prescriptions at its pharmacies, as its integrated model is being challenged by competitors including Walgreens Boots Alliance Inc.

Shares dropped 11% to $73.94 in premarket trading as the company also slashed its annual expectations and gave downbeat projections for the coming fiscal year.

CVS Health's model of operating both a chain of retail store-pharmacies and a pharmacy benefit manager has been pressured by other pharmacy-benefit managers who have struck deals with competitors. In August, Walgreens struck a deal with Prime Therapeutics to become its preferred pharmacy.

Chief Executive Larry Merlo said recent pharmacy network changes have caused some retail prescriptions to move out of its network in the quarter.

He also cited slowing prescription growth in the market overall. The drug industry has recently shown signs that it is slowing the pace of price increases after years of hefty hikes, after pressure from politicians, consumers and employers.

CVS also cut its guidance. It now expects full-year adjusted earnings per share to be between $5.77 and $5.83, down from $5.81 to $5.89 previously. Analysts polled by Thomson Reuters had expected earnings per share of $5.85. For 2017 it expects adjusted earnings per share of $5.77 to $5.93. Analysts had expected $6.52.

Pharmacy-benefits managers, which include companies like Express Scripts Holding Co. and CVS Health's Caremark, operate as middlemen between insurance companies, corporations that pay for health coverage, drugmakers, and pharmacies. They help process claims for prescriptions drugs while also negotiating with drugmakers and insurance companies over the price of medications.

The Woonsocket, R.I.-based drugstore giant has increasingly relied on its pharmacy benefits management division for growth.

In all for the quarter, CVS reported a profit of $1.54 billion, or $1.43 a share, up from $1.25 billion, or $1.11 a share, a year earlier. Excluding certain items, per-share profit rose to $1.64 from $1.28.

Revenue increased 15% to $44.62 billion.

Analysts predicted $1.57 in adjusted earnings a share and $45.29 billion in revenue, according to Thomson Reuters.

Write to Austen Hufford at austen.hufford@wsj.com

 

(END) Dow Jones Newswires

November 08, 2016 07:57 ET (12:57 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.

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