CVS Profit in Line With Estimates as Pharmacy Sales Increaseby
Drugstores chain reaffirms earnings forecast for 2016
Fourth-quarter revenue growth driven by Omnicare deal
CVS Health Corp. earnings matched analysts’ earnings estimates in the fourth quarter, after the August acquisition of nursing-home pharmacy Omnicare helped drive sales growth at its drugstores.
Earnings were $1.53 a share excluding one-time items, the Woonsocket, Rhode Island-based company said in a statement, reiterating its 2016 earnings forecast. Fourth-quarter sales in the retail-pharmacies division rose 12 percent, with about half of the increase coming from the long-term care business bought as part of Omnicare. That deal also boosted revenue at the pharmacy benefit management business, which contracts with health insurers and employers.
Fourth-quarter net income rose to $1.5 billion, or $1.34 a share, from $1.32 billion, or $1.14, a year earlier. Revenue increased 11 percent to $41.1 billion.
CVS has been bulking up through acquisitions. Last year it bought Omnicare for $12.9 billion and the pharmacy locations inside Target Corp. stores for $1.9 billion. Competitors are growing, too. UnitedHealth Group Inc.’s pharmacy arm, OptumRX, bought benefit-management company Catamaran Corp. in July 2015. In addition, Walgreens Boots Alliance Inc.’s agreement last year to purchase Rite Aid Corp. could threaten CVS’s market share in the retail-pharmacy market.
The company also said:
- Same-store sales increased 3.5 percent.
- Pharmacy-services revenue increased 11 percent, primarily driven by growth in specialty pharmacy, including the impact of Omnicare.
- 2016 adjusted EPS forecast of $5.73 to $5.88 is unchanged.