CVS Health Corp. raised its 2019 profit forecast after the reporting strong results across its pharmacy services, health insurance and drugstore segments for the third quarter.
After beating analysts’ estimates, CVS said its 2019 adjusted earnings will be to US$6.97 to US$7.05 a share, up from US$6.89 to US$7.00.
Key Insights
Despite ongoing pressure from politicians and consumers on drug prices in the U.S., including the role of companies like CVS that manage patients’ pharmacy benefits, the PBM unit is performing well. Revenue at the business, called Caremark, was up 6.4 per cent, and adjusted operating income rose 5.7 per cent to US$1.44 billion.
At the company’s brick-and-mortar pharmacies, retail sales rose -- good news in an industry that’s been beset by pressure from online competitors. Front-of-store revenue was up from a year ago, thanks to sales of beauty products and over-the-counter cold and cough medicine.
The health-insurance business CVS acquired with its takeover of Aetna last year is proving highly profitable: it reported better margins than the retail and pharmacy benefits segments.
Know More
- The shares gained 3.2 per cent in trading before the markets opened in New York. Woonsocket, Rhode Island-based CVS is up almost three per cent this year. That’s far better than the 10 per cent decline by its biggest drugstore rival, Walgreens Boots Alliance Inc., which Bloomberg reported Tuesday is reviewing a possible leveraged buyout with private equity firms.
- CVS has been transforming some of its stores into “health hubs,” transitioning retail floor space into areas where customers can get medical and other health services. The move is a part of CVS’s shift from a retail drugstore chain to focus more on integrated health-care services in the wake of its acquisition Aetna.
- Net income in the third quarter was US$1.53 billion, up from US$1.39 billion a year prior.
Advertisement