CVS Health Corp. said it’s making progress in the regulatory review of its $68 billion deal to buy health insurer Aetna Inc. after first-quarter earnings came in higher than analysts anticipated.
Both CVS and rival Express Scripts Holding Co. are trying to get their mega mergers approved by regulators, as drug middlemen combine with large insurers in the U.S. to offer a larger suite of medical services under one roof. The two deals are being reviewed by the Justice Department.
“We are moving forward on both the regulatory and integration planning fronts in support of a close in the second half of this year and a smooth, efficient integration of operations,” CVS CEO Larry Merlo said in a statement Wednesday.
CVS reported a $998 million profit for the quarter, compared to a $952 million profit one year prior. Revenue in the first quarter was $45.7 billion, up from its $44.5 billion quarterly revenue last year.
Diluted earnings per share were 98 cents.
Earnings were were $1.48 a share, excluding some items, CVS said, compared with the $1.41 average of 20 analysts’ predictions compiled by Bloomberg. Revenues rose 2.6 percent to $45.7 billion, in line with the $45.8 billion average of estimates.
The shares gained 2.1 percent to $69.40 in premarket trading.
CVS’s proposed takeover of Aetna would bring together around 10,000 CVS stores and the health insurer’s 22 million customers. A central plank of the deal is transforming the stores into health hubs where consumers can get care, pick up their drugs, buy some cosmetics, and stay out of the hospital. In a sign of its ambition, last month, CVS hired a senior executive from a startup that specializes in primary care clinics to oversee expanded health-care services across the company.
Aetna reported first-quarter earnings that surpassed estimates Tuesday.
“Aetna is firing on all cylinders, validating that CVS would gain pristine health insurance assets should the deal go through,” wrote Jason McGorman, an analyst at Bloomberg Intelligence.
Concerns that Amazon.com Inc. may start directly competing with CVS by selling prescription drugs have receded recently, following a CNBC report in April that the Internet retailer had shelved plans too sell drugs to hospitals and other businesses.
Robert Langreth is a reporter for Bloomberg News.