CVS Gets Boost From Prescription-Drug Sales
February 10 2016 - 3:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 2/10/16)
By Chelsey Dulaney and Paul Ziobro
CVS Health Corp. reported higher profit and sales in its fourth
quarter, as rising sales of prescription drugs offset a slight drop
in sales in the front end of its stores, where traffic continues to
erode.
The quarter was broadly in line with Wall Street expectations,
as CVS drugstores and its big pharmacy-benefits management business
continued to cover more patients and dispense more drugs.
On Tuesday, CVS shares rose nearly 1% to $90.51.
The results also were boosted by two recent acquisitions that
allow CVS to cover more patients: Omnicare Inc., which dispenses
drugs to places like nursing homes; and Target Corp.'s pharmacy
business, which gives CVS nearly 1,700 more locations. As both
those acquisitions become integrated, CVS plans to market them
aggressively to help sign up more clients to its network.
Building scale is one part of CVS's answer to falling
reimbursement rates as more patients are covered through federal
Medicare and Medicaid programs, which carry lower margins than
private insurers.
Still, private insurers are trying to squeeze more costs out of
their drug plans as well. The health insurer Anthem Inc. last month
said it would drop its longtime benefits manager, Express Scripts
Holding Co., unless it could deliver more than $3 billion in
savings on drug prices. The rare public dispute puts the valuable
contract up for grabs. CVS executives declined Tuesday to comment
on their plans to pursue it, but did say that Anthem's move hasn't
affected negotiations with other clients.
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.
Quarterly revenue rose 11% to $41.15 billion, after eliminating
inter-segment sales.
(END) Dow Jones Newswires
February 10, 2016 02:47 ET (07:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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