CVS Health’s third quar­ter profit jumps

Daily Local News (West Chester, PA) - - MARKETPLACE - By Linda A. John­son

CVS Health Corp. missed Wall Street’s rev­enue ex­pec­ta­tions in the third quar­ter, de­spite sales jump­ing due to ac­qui­si­tions. The com­pany trimmed its profit forecast for this year on Tues­day, trig­ger­ing a stock sell-off.

The drug­store chain and phar­macy ben­e­fits man­ager also noted sig­nif­i­cant head­winds that forced it to re­duce its 2016 profit forecast by a nickel per share. Those in­clude a soft sea­sonal busi­ness, slow­ing pre­scrip­tion growth in the over­all mar­ket and re­cent phar­macy net­work changes ex­pected to re­duce the num­ber of pre­scrip­tions filled at its phar­ma­cies this year. Those net­work changes will have a big­ger ef­fect in 2017, CVS pre­dicted.

The op­er­a­tor of the sec­ond-largest U.S. drug­store chain re­ported a 23.5 per­cent boost in profit to $1.54 bil­lion, or $1.43 per share. Earn­ings, ad­justed for one­time gains and costs, were $1.64 per share, top­ping Wall Street fore­casts of $1.57 per share.

Quar­terly rev­enue jumped 15.5 per­cent to $44.62 bil­lion, get­ting a lift from a boost in pre­scrip­tion vol­ume and higher re­tail sales at its drug­stores. Still, that missed Street ex­pec­ta­tions for rev­enue of $45.31 bil­lion.

The bulk of the rev­enue boost came from the CVS phar­macy ben­e­fits unit, with an increase of 19.2 per­cent to $4.9 bil­lion. The key driver was a 23.3 per­cent surge in pre­scrip­tion claims pro­cessed, to a to­tal of 282.6 mil­lion.

The re­tail and long-term care unit had a 12.5 per­cent rev­enue boost to $20.1 bil­lion, mainly on op­er­a­tions within Om­ni­care, a provider of phar­macy ser­vices to nurs­ing homes and other clients. CVS Health bought Om­ni­care in 2015. CVS also ben­e­fited from its De­cem­ber 2015 ac­qui­si­tion of the phar­macy busi­ness of re­tailer Tar­get.

For the fourth quar­ter, CVS Health ex­pects its per­share earn­ings to range from $1.64 to $1.70, well be­low the $1.79 an­a­lysts had forecast.

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