CVS Unveils Its Fourth Quarter Earnings

All thanks to new acquisitions, the biotech giant has declared high profit and bolstering sales

CVS Health has declared its fourth quarter earnings. The results carried high profits and sales for the biotech giant. Although the company’s front-end stores’ sales fell down a bit however the soaring sales of prescription drugs balanced the downfall.

The quarterly earnings were significantly in line with Street’s expectations. The biotech titan’s PBM (Pharmacy Benefits Management) business and drugstores performed phenomenally during the quarter and covered a lot number of patients.

Woonsocket based organization’ recent acquisition of Omnicare Inc. and Target Corporation were catalysts in bolstering the revenue of the company. Target Corp’s pharmacy business provided the organization around 1,700 new locations to expand its business while through Omnicare Inc.’s business of distributing drugs to nursing homes and the likes, the biotech giant was able to cover a lot more patients.   

For the period ended as at Dec 31, the $96 billion organization posted the profit of $1.5 billion going up from last year’s $1.32 and an EPS of $1.34 stronger than the last year’s $1.14. Against the analysts’ forecasted revenue of $41.13 billion, the company posted the quarterly revenue of $41.15 billion growing up by 11%. Retail business sales grew to $19.9 billion up by 12.5%. Although front-end sales declined by 0.5% however the overall stores sales increased by 3.5%.

Maintaining sustainable profit is quite challenging for the company as many consumers (patients) are covered through federal Medicare and Medicaid programs. Such federally administered programs carry lower reimbursement rates so the company is subjected to sell the product on lower margins than the private insurers.

However, private insurers too are trying to reduce the exorbitant costs from their drug plans. According to Wall Street Journal, last month, Indiana based health insuring firm, Anthem Inc. declared that it will drop its longtime benefits manager, Express Scripts Holding Co., a St. Louis, Missouri based firm if it wouldn’t deliver the savings of more than $3 billion on drug prices.  

This dispute has opened the way for CVS to grab the golden opportunity however the company chose to remain silent when asked about its plan to pursue the valuable contract. The only comment which was given on the matter was head of CVS’s Caremark business, Jonathan Roberts’, which went like: “We’re not really seeing any repercussions or halo to pricing in the marketplace from that event, but I think it continues to be competitive.”   

According to Journal, the sales of retail pharmacy rose by 5% on same-store basis. The retail pharmacy sales include both pharmacy sales and prescription volumes. Other pharmacy-services businesses reported an increase of around 11% in sales and reached at $26.5 billion.

Talking about this year’s guidance, the company has projected the earnings for first quarter around $1.14 per share to $1.17 per share. The projected earnings fall a bit lower than the Thomson Reuters’ analysts’ expectations of $1.18 per share.

As at the market which closed on Tuesday, CVS Health Corp. stock stood at a price of $90.50. Earlier, during Tuesday trading, the stock traded up by 2%.