WOONSOCKET – CVS Health Corp. issued its initial outlook for 2018 Thursday, saying it expects the new tax bill to increase its cash flow by $1.2 billion.
The company indicated that its effective tax rate will be 27 percent in 2018. In 2017, the company’s effective tax rate was approximately 39 pecent, according to a company spokeswoman.
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CVS said that it anticipates using the money saved from the new tax bill to make “strategic investments in future areas of growth,” particularly if the proposed acquisition of Aetna Inc. is finalized.
The company expects consolidated net revenue growth of 0.75 percent to 2.5 percent for the full year.
CVS also said it expects is the Aetna deal to close during the second half of 2018. Because the deal is pending, all acquisition-related transaction, integration and bridge financing costs were excluded from the company’s adjusted figures.
The company’s retail/LTC segment’s revenue is projected to grow 2.5 to 4 percent for the year. Same-store sales are expected to grow from 2 to 3.5 percent, while same-store adjusted scripts are expected to grow from 6 to 7 percent.
CVS’ Pharmacy services segment expects yearly revenue growth of 1.5 to 3.5 percent.
The company also said it expects profit to be adversely affected by costs associated with the implementation of its contract with Anthem Inc.
CVS expects to spend $150 million in 2018 on capital and operating expenses to implement Anthem business. Anthem and CVS announced a 5-year partnership in October, with CVS managing services for Anthem’s new pharmacy benefits management unit, IngenioRx, including claims processing and prescription fulfillment.
The company also reported that it recorded $4.4 billion in share repurchases, $600 million short of the $5 billion anticipated in 2017. The company expects the difference to be offset by a better than expected effective tax rate during the fourth quarter of 2017.
Chris Bergenheim is the PBN web editor.
