CVS Growth Driven by Acquisitions, Pharmacy Services
February 09 2016 - 8:25AM
Dow Jones News
By Chelsey Dulaney
CVS Health Corp. reported higher profit and revenue in its
fourth quarter, as recent acquisitions and strength in its
pharmacy-services business continue to drive growth.
CVS's reimbursement rates have been under pressure as more drugs
are dispensed through federal Medicare and Medicaid programs, which
carry lower margins than private insurers. CVS has turned to
acquisitions to help add scale. In December, the company completed
its acquisition of Target Corp.'s 1,600-plus pharmacies.
For the period ended Dec. 31, CVS reported a profit of $1.5
billion, or $1.34 a share, up from $1.32 billion, or $1.14 a share,
a year earlier. Excluding special items, per-share earnings rose to
$1.53 a share, matching the average forecast of analysts polled by
Thomson Reuters.
Quarterly revenue rose 11% to $41.15 billion, after eliminating
inter-segment sales. Analysts were forecasting revenue of $41.13
billion in revenue.
Sales in its retail business increased 12.5% to $19.9 billion,
with about half of that growth owing to its recent acquisition of
Omnicare Inc. Sales at stores, excluding newly opened or closed
locations, rose 3.5%, though front-of-store sales edged down 0.5%
amid softer traffic.
The so-called front end, where CVS sells over-the-counter drugs,
snacks, beauty products and other sundries, has been hurt by its
decision to stop selling tobacco products.
Its Caremark and other pharmacy-services businesses posted a
11.1% increase in sales to $26.5 billion, driven by growth in
selling specialty drugs and a 7.2% increase in processed
claims.
CVS backed its earnings forecasts for the full year.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
February 09, 2016 08:10 ET (13:10 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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