CVS profit beats estimates in first full tobacco-free quarter

 CVS HEALTH Corp. posted fourth-quarter earnings that beat analyst estimates as demand for drugs outweighed the drop in revenue from a decision to stop selling tobacco products.
CVS HEALTH Corp. posted fourth-quarter earnings that beat analyst estimates as demand for drugs outweighed the drop in revenue from a decision to stop selling tobacco products.

WOONSOCKET – CVS Health Corp., the largest provider of prescription drugs in the U.S., posted fourth-quarter earnings that beat analyst estimates as demand for drugs outweighed the drop in revenue from a decision to stop selling tobacco products.

Profit of $1.21 a share, excluding one-time items, 1 cent more than the average of analysts’ estimates compiled by Bloomberg. Sales rose 13 percent to $37.1 billion, the company said in a statement Tuesday. Analysts had projected $36 billion on average.

The emergence of a severe flu season, coupled with a mismatched vaccine that failed to provide strong protection against infection, increased the number of visitors to the company’s 7,800 drugstores. CVS stopped selling cigarettes in September, making the fourth quarter the first full financial period without any tobacco-related revenue. CVS previously generated about $2 billion annually in tobacco sales.

The company reiterated its forecast for 2015 earnings of $5.05 to $5.19 a share, compared with the average estimate of $5.15.

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Growth in prescription drug sales, driven by new health insurance available to millions of previously uninsured Americans through the Affordable Care Act, is helping the company weather the loss of tobacco revenue. Pharmacy services revenue climbed 22 percent to $23.9 billion, the company said.

Front-of-store sales for locations that have been open at least a year dropped 7.2 percent, reflecting the absence of tobacco products.

For the year, the company said revenue increased 9.9 percent to a record $139.4 billion from $126.8 billion in 2013, and net income increased 1.2 percent to $4.6 billion, or an adjusted $4.22 per share, compared with $4.59 billion, or an adjusted $4 per share, the prior year.

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