CVS Health tops 2Q forecasts, narrows 2017 guidance

This Monday, May 15, 2017, photo, shows a CVS pharmacy sign at a store in Hialeah, Fla. CVS Health reports earnings, Tuesday, Aug. 8, 2017. (AP Photo/Alan Diaz)

CVS Health beat second-quarter expectations and narrowed its 2017 forecast despite a continued slump in sales from its established drugstores.

The nation's second-largest drugstore chain said Tuesday that sales from stores open at least a year fell 2.6 percent, with a rise in generic drugs hurting the top line of its pharmacies and softer customer traffic affecting the front end, or the rest of the stores.

While generic prescriptions can hurt revenue growth, pharmacies typically make a much higher profit margin selling those drugs than brand-name prescriptions, and generics also lower inventory costs, which helps balance sheets.

CVS Health runs 9,700 retail locations, counting the pharmacy and clinic businesses of retail giant Target Corp. That total is second only to Walgreens. CVS Health also processes more than a billion prescriptions annually as a pharmacy benefits manager, or PBM.

Revenue from the company's PBM side jumped nearly 10 percent to $32.3 billion in the quarter that ended June 30.

Overall, CVS Health's second-quarter earnings of $1.1 billion rose 19 percent compared to last year's quarter, when the company booked a $542 million loss on the early retirement of some debt.

Adjusted results came in at $1.33 per share, with revenue climbing 4 percent to $45.68 billion.

Analysts forecast earnings of $1.31 per share on $45.35 billion in revenue, according to FactSet.

The company also said Tuesday it now expects adjusted earnings of $5.83 to $5.93 per share in 2017, as it raised the lower end of its previous forecast up from $5.77 per share.

Analysts expect, on average, earnings of $5.87 per share in 2017.

Shares of Woonsocket, Rhode Island-based CVS Health Corp. slipped 62 cents to $78.50 in early morning trading, after the company detailed results.

Other News

Asian stocks drift pending fresh news; oil takes a breather

Aug 16, 2016

Asian stock markets drifted sideways on Tuesday as the price of oil took a breather from a three-day rally

UK manufacturers see costs jump in wake of Brexit vote

Aug 16, 2016

Official figures show consumer prices in Britain rose more than expected in July, while the cost of raw materials for manufacturers are mounting as a result of the pound's drop in the wake of the vote to leave the European Union

Insurers continue to abandon ACA exchanges, limiting choice

Aug 16, 2016

Aetna will abandon for next year Affordable Care Act insurance exchanges in more than two-thirds of the counties where it sells coverage, making it the latest major health insurer to cuts choices in many markets

The Budget Report seeks to provide comprehensive coverage and analysis on the current economic, financial issues around the world. First hand finance and economic news all day, every day.

Contact us: sales@thebudgetreport.com