By Chelsey Dulaney And Paul Ziobro
CVS Health Corp. posted higher profits in the latest quarter, as
growing sales of prescription drugs offset the impact of a costly
decision to stop selling tobacco.
The company's pharmacy services business, which provides
health-care benefits to clients, continued its strong growth,
processing a higher number of prescription claims during the
period. Sales rose 18% to $23.9 billion, with an increase in
specialty pharmacy sales as well.
The gain offset sluggish growth of just 1.2% in the chain's
retail business, excluding newly opened or closed stores. CVS's
move last fall to stop selling tobacco products to emphasize its
image as a health-care company hurt sales in the front of its
stores, where the company sells everyday products and over-
the-counter medication. They fell 6.1% in the quarter.
As part of its shifting identity, CVS is expanding its walk-in
clinics and its specialty pharmacy business. The company hopes
ending tobacco sales will eventually pay off by having clients
reward it with health-related business. But the move has yet to
fully pay off in dollars and cents.
"We see some tangible benefits that are more qualitative than
quantitative at this point," CVS Chief Executive Larry Merlo said
on Friday's earnings call.
The company reported a profit of $1.22 billion for the first
three months of the year, up from $1.13 billion a year earlier.
Revenue grew 11% to $36.3 billion.
The company's shares were up 1% in midmorning trading at
$100.28.
Mr. Merlo also briefly addressed the destruction and closure of
several CVS locations in Baltimore earlier this week following the
funeral of Freddie Gray, an African-American man who died while in
police custody.
"Despite these acts of violence, we remain committed to these
urban markets," he said.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com and Paul
Ziobro at Paul.Ziobro@wsj.com
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