CVS Profit Declines in First Quarter of 'Rebuilding Year'
May 02 2017 - 8:32AM
Dow Jones News
By Anne Steele
CVS Health Corp. reported lower profit in the first quarter of
what its chief executive has called a "rebuilding year," as fewer
customers visited its stores and it was pressured by more generic
drugs.
The pharmacy operator also said profit for its current quarter
could land on the low end of Wall Street's expectations, coming in
at $1.29 to $1.33 a share excluding certain items. Analysts are
expecting $1.33.
Chief Executive Larry Merlo said he expects 2017 to be a
rebuilding year and that while the company is pleased with its
performance, "we won't be satisfied until the company returns to
sustainable, healthy earnings growth."
Sales in the pharmacy services segment strengthened, increasing
8.5% to $31.2 billion, in part driven by an 11% jump in pharmacy
network claims. Brand inflation and growth in specialty pharmacy
also helped, partly offset by more generics, leading to lower
prices.
Sales in CVS's retail segment, meanwhile, slipped 3.8% to $19.3
billion, dragged by a decline in same-store sales, as well as
pressure from reimbursements and generics.
Softer traffic and changes to promotions contributed to a 4.9%
decline in same-store sales at the front of the store, where CVS
sells everyday nonpharmacy items. Pharmacy same-store sales fell
4.7%, hurt by recent generic drug introductions.
CVS said the generic dispensing rate increased 140 basis points
to 87% in the pharmacy services segment and rose 180 basis points
to 87.5% in the retail segment, compared with a year ago.
Over all CVS reported a profit of $952 million, or 92 cents a
share, down from $1.15 billion, or $1.04, a year earlier. Excluding
items such as acquisition-related costs, earnings fell a penny to
$1.17 a share. The company had forecast $1.07 to $1.13 a share.
Revenue rose 3% to $44.5 billion, above expectations for $44.2
billion, according to analysts polled by Thomson Reuters.
The company backed its 2017 guidance.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 02, 2017 08:17 ET (12:17 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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