CVS Health’s third quarter profit jumps
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.