Hurricanes take a bite out of CVS Health's Q3 earnings; narrows forecast
CVS Health on Monday reported earnings that beat analysts expectations as strength in its pharmacy services division helped offset falling retail sales.
CVS released its earnings amid rising speculation that is in talks to acquire insurance giant Aetna. On Friday, Reuters reported that the two companies are working towards finalizing a deal for more than $70 billion that could be announced as early as December.
CVS' net income fell to $1.29 billion in the quarter ended September 30, down from $1.54 billion in the year-ago period. Excluding items, the company earned $1.50 per share, edging past Wall Street estimates of $1.48 per share.
On the company's quarterly call, CEO Larry Merlo said that Hurricanes Harvey, Irma and Maria took a $55 million bite out of earnings, mostly in the form of payments in insurance deductibles. Approximately 925 CVS stores were closed at some point due to the storms.
Net revenues increased 3.5% to approximately $46.2 billion, up from $44.6 billion in the year-ago period. Revenues in the retail segment fell 2.7% to approximately $19.6 billion. The decrease was largely driven by a 3.2% decrease in same-store sales, an increase in the generic dispensing rate and continued reimbursement pressure.
Pharmacy same store sales decreased 3.4% in the quarter and were negatively impacted by recent generic introductions. Front-end store-same store sales declined 2.8% amid softer customer traffic and promotional strategies, partially offset by an increase in basket size.
Revenues in CVS' pharmacy services segment (CVS is one of the largest U.S. pharmacy benefits managers) increased 8.1% to approximately $32.9 billion. The increase was primarily driven by growth in pharmacy network claim volume, brand inflation and specialty pharmacy volume.
CVS said that it expects annual adjusted earnings of $5.87 to $5.91 per share, a forecast that counts charges due to hurricanes, down from its previous forecast of $5.83 to $5.93.
As of September 30, 2017, CVS operated 9,751 retail locations, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico and Brazil.
CVS released its earnings amid rising speculation that is in talks to acquire insurance giant Aetna. On Friday, Reuters reported that the two companies are working towards finalizing a deal for more than $70 billion that could be announced as early as December.
CVS' net income fell to $1.29 billion in the quarter ended September 30, down from $1.54 billion in the year-ago period. Excluding items, the company earned $1.50 per share, edging past Wall Street estimates of $1.48 per share.
On the company's quarterly call, CEO Larry Merlo said that Hurricanes Harvey, Irma and Maria took a $55 million bite out of earnings, mostly in the form of payments in insurance deductibles. Approximately 925 CVS stores were closed at some point due to the storms.
Net revenues increased 3.5% to approximately $46.2 billion, up from $44.6 billion in the year-ago period. Revenues in the retail segment fell 2.7% to approximately $19.6 billion. The decrease was largely driven by a 3.2% decrease in same-store sales, an increase in the generic dispensing rate and continued reimbursement pressure.
Pharmacy same store sales decreased 3.4% in the quarter and were negatively impacted by recent generic introductions. Front-end store-same store sales declined 2.8% amid softer customer traffic and promotional strategies, partially offset by an increase in basket size.
Revenues in CVS' pharmacy services segment (CVS is one of the largest U.S. pharmacy benefits managers) increased 8.1% to approximately $32.9 billion. The increase was primarily driven by growth in pharmacy network claim volume, brand inflation and specialty pharmacy volume.
CVS said that it expects annual adjusted earnings of $5.87 to $5.91 per share, a forecast that counts charges due to hurricanes, down from its previous forecast of $5.83 to $5.93.
As of September 30, 2017, CVS operated 9,751 retail locations, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico and Brazil.