CVS raises forecast as pharmacy acquisitions pad revenue

CVS Health Corp. beat analysts’ earnings estimates in the second quarter and raised its full-year forecast.
CVS Health Corp. beat analysts’ earnings estimates in the second quarter and raised its full-year forecast.

(Updated 9:16 a.m.)
WOONSOCKET – CVS Health Corp. reported a decline in profit, but increase in revenue in the second quarter that ended June 30.
The drugstore and pharmacy benefit management company said on Tuesday that profit declined 27.3 percent, to $924 million, or 86 cents per diluted share, from $1.3 billion, or $1.12 per diluted share, a year earlier.
The company said the decrease was primarily driven by a loss on early extinguishment of debt of $542 million, an increase in interest expense of $114 million and $81 million of acquisition-related integration costs, partially offset by an increase in operating profit.
Revenue grew 17.6 percent, to $43.7 billion from $37.2 billion.
The company beat analysts’ earnings estimates in the second quarter and raised its full-year forecast, as recent deals to add pharmacies helped grow revenue.
Earnings this year, excluding one-time items, will be $5.81 to $5.89 a share, up from the company’s earlier forecast of $5.73 to $5.88 a share. In the second quarter, adjusted earnings were $1.32 a share, CVS said in a statement, compared with the $1.30 average of analysts’ estimates compiled by Bloomberg.
Larry Merlo, CVS’ president and CEO, said he was pleased with the second quarter results.
“Operating profit in the Retail/LTC Segment was in line with expectations while operating profit in the Pharmacy Services Segment exceeded expectations. At the same time, we have generated substantial free cash flow year-to-date and continued to return significant value to our shareholders through dividends and share repurchases,” Merlo said in a statement. “With our differentiated value proposition, we see 2017 shaping up to be another very successful PBM selling season, with substantial gross and net new business to date. Given our outperformance in the second quarter and confidence in our expectations for the back half of this year, we are raising and narrowing our adjusted EPS guidance and also raising our free cash flow guidance for 2016.”
In the second quarter, CVS opened 20 new retail stores, two onsite pharmacies and closed 10 retail stores. It also relocated nine retail stores. As of June 30, the company operated 9,652 retail stores, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico and Brazil.
Bloomberg News contributed to this report.

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