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CVS Health earnings top Street on strong Rx growth

CVS Health on Wednesday reported solid earnings for its first quarter and affirmed its 2018 guidance as the close of its acquisition of Aetna comes into sight.

The company also released a 2018 earnings forecast that was higher than analysts expected. CVS Health predicts 2018 adjusted earnings of between $6.87 and $7.08 per share. Analysts had forecast, on average, earnings of $6.47 per share.

CVS Health reported a profit of $998 million in the first quarter, ended March 31, with adjusted earnings of $1.48 per share. Analysts had expected earnings of $1.41 a share.

Total net revenue rose 2.6% to $45.7 billion, in line with estimates. Same-store prescription volume growth in the company’s retail/long-term care segment grew 8.5% year-over-year, driving a 5.6% increase in segment revenues, which totaled $20.4 billion for the quarter. The company attributed script growth to partnerships with health plans and pharmacy benefits managers, inclusion in Medicare Part D plans and brand price inflation.

Same-store sales grew 5.8%. Pharmacy same-store sales increased 7.3% in the quarter. Front-end store same-store sales rose 1.6%, helped by the shift in the timing of Easter into the first quarter this year and a bad cold and flu season.

The company’s pharmacy services segment saw revenue increase 3.2% to $32.2 billion, which it largely attributed to increased pharmacy network and specialty claim volume, as well as brand inflation.

“We generated solid results in the quarter, benefiting from higher prescription volumes within our retail pharmacy business and a lower effective income tax rate,” said CVS Health president and CEO Larry Merlo. “At the same time, we continue to focus on long-term growth initiatives and to invest in process improvements and technology enhancements that will position us well to expand our reach in providing access to high-quality and more affordable care.”

CVS Health said it expects its Aetna acquisition to close in the second half of the year.

“Looking forward, the Aetna transaction will provide us the means to further lower health care costs for consumers and payers,” said Merlo. “In March, the transaction was approved by shareholders of both companies,” Merlo said. “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.”

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