CVS Health Corp. predicts an ugly 2019 after closing $68 billion Aetna deal
CVS Health Corp. said its results would be dragged down by rising costs and poor results from a 2015 takeover of a pharmacy company, all while trying to integrate its $68 billion purchase of insurer Aetna last year.
Adjusted earnings this year will be $6.68 to $6.88 a share, CVS said last week, compared with the $7.36 average of Wall Street estimates. Its shares were off on the news.
“2019 will be a year of transition as we integrate Aetna and focus on key pillars of our growth strategy,” CVS Chief Executive Officer Larry Merlo said in a statement announcing the Woonsocket, R.I.-based company’s financial results. “We are fully aware of the need to address the impact of certain headwinds that are having a disproportionate impact in 2019.”
The drugstore and pharmacy benefits company’s future now depends on how its deal for health insurer Aetna turns out. CVS has said it will use the takeover, which closed in November, to create a vertically integrated health-care company that can better coordinate care and offer more services to customers.
But it may also come under more scrutiny from investors. The 2019 guidance was a “major disappointment,” said Evercore ISI analyst Ross Muken. It “will stoke fears the Aetna deal was defensive in nature.”
The company announced a $2.2 billion writedown on its 2015 takeover of Omnicare, a $12.9 billion deal that was meant to build the company’s business serving patients in nursing homes and long-term medical-care facilities.