CVS reports increases in profit, revenue in 3Q

CVS Health Corp. reported a 23.6 percent jump in net income in the third quarter to $1.5 billion, or $1.43 per diluted share.
CVS Health Corp. reported a 23.6 percent jump in net income in the third quarter to $1.5 billion, or $1.43 per diluted share.

WOONSOCKET – CVS Health Corp. reported a 23.6 percent jump in net income, and a 15.5 percent hike in revenue, in its third-quarter earnings report released Tuesday.
CVS said net income was $1.5 billion, or $1.43 per diluted share, compared with net income of $1.2 billion, or $1.11 per diluted share, in the 2015 third quarter.
Revenue reached $44.6 billion, versus $38.6 billion a year ago, and was driven mostly by growth in increased pharmacy network claim volume and growth in specialty pharmacy.
Larry J. Merlo, CVS president and CEO, said the company posted a “solid third quarter” with pharmacy benefit management exceeding expectations, but with retail at the lower end of expectations.
Recent pharmacy network changes are expected to cause more than 40 million retail prescriptions to leave the company’s pharmacies this quarter due to new retail pharmacy networks excluding CVS Pharmacy drugstores, the company said.

He said CVS also is experiencing “slowing prescription growth in the overall market as well as a soft seasonal business.”

As a result, he said the company is reducing its full-year outlook to earnings per share of $4.84 and $4.90 from previous guidance of $4.92 to $5.
Just last week, the company announced it was laying off 600 employees nationwide, including 250 in Rhode Island, citing an increasingly competitive environment.

“While we expect a healthy increase in PBM operating profit growth in 2017, we expect a decrease in retail operating profit growth,” Merlo said. “We remain confident in our model, and we are targeting 10 percent growth in adjusted EPS for the longer term, as we continue to introduce new and innovative ways to drive value for patients, payors and providers.”

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The company opened 48 retail stores and closed six retail stores in the third quarter. It also relocated 11 stores.

As of Sept. 30, the company operated 9,694 retail stores, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico and Brazil.

Looking ahead, CVS expects earnings per share between $5.16 and $5.33 in 2017.

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