By Chelsey Dulaney
CVS Health Corp. reported better-than-expected results for the
first three months of the year, as growth in the company's
drug-services business continued to outpace its retail stores.
Shares of CVS, up 36% over the past 12 months, rose 1.2% in
premarket trading. The company also bumped up the low end of its
2015 earnings guidance on Friday.
CVS has gotten a boost recently from its Medicaid business,
which has helped to offset retail sales declines in the wake of the
company's decision to stop selling cigarettes.
In the latest quarter, the pharmacy services business logged an
18% increase in revenue to $3.7 billion, driven by specialty
pharmacy and pharmacy network claims.
Pharmacy network claims grew 11%, due in part to growth in its
Medicaid program and public exchanges.
Overall, sales excluding newly opened or closed stores increased
1.2%, as a 4.2% gain in pharmacy sales helped to counter a 6.1%
decline in sales at the front of the store, where cigarettes had
been sold before the company discontinued their sale in
September.
CVS has been embracing a broader health-care identity. In
addition to its antismoking moves, the company is expanding its
walk-in medical clinics and specialty-pharmacy services. The
company changed its name to CVS Health from CVS Caremark last
year.
For the year, CVS now expects to deliver earnings of $5.08 to
$5.19 a share, compared with its previous guidance for $5.05 to
$5.19 a share in earnings.
For the current second quarter, CVS forecast earnings of $1.17
to $1.20 a share. Analysts polled by Thomson Reuters had forecast
$1.25 a share in earnings.
Overall, for the first three months of the year, CVS reported a
profit of $1.22 billion, or $1.07 a share, up from $1.13 billion,
or 95 cents a share, a year earlier.
Excluding items, per-share earnings were $1.14 a share. The
company had forecast $1.06 to $1.09 a share in adjusted per-share
earnings.
Revenue grew 11% to $36.3 billion, topping the $35.9 billion
analysts had forecast.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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