CVS Turns Quarterly Profit, Posts Higher Revenue
February 12 2020 - 7:48AM
Dow Jones News
By Dave Sebastian
CVS Health Corp. turned a profit and recorded higher revenue for
the fourth quarter as it capped its first year of integrating Aetna
Inc.'s operations.
The pharmacy operator on Wednesday reported net income of $1.75
billion, or $1.33 a share, compared with a loss of $419 million, or
37 cents a share, in the comparable quarter a year before. Adjusted
earnings were $1.73 a share.
Analysts polled by FactSet were looking for earnings of $1.22 a
share, or $1.68 a share on an adjusted basis.
CVS said its revenue rose 22.9% to $66.89 billion from the same
period the year before as revenue from premiums shot up. Analysts
were targeting $63.93 billion.
The company's health-care-benefits business, which includes
Aetna, posted revenue of $17.15 billion, up nearly threefold from
the prior year. The segment's medical-loss ratio, which represents
the share of premiums paid out in claims, was 85.7% for the
quarter.
Its business that offers pharmacy-benefit services to employers,
health plans and employee groups had $37.07 billion in revenue for
the quarter, up from $34.9 billion in the prior year.
Revenue in its retail segment, which fulfills prescription
medications and sells a range of merchandise, was $22.58 billion,
up from $22.03 billion in the year-ago period. Like competitor
Walgreens Boots Alliance Inc., CVS faces pressure on margins in its
retail-pharmacy business.
For 2020, CVS expects per-share earnings from continuing
operations of $5.47 to $5.60, or $7.04 to $7.17 on an adjusted
basis. It sees operating income of $12.8 billion to $13 billion, or
$15.5 billion to $15.8 billion on an adjusted basis.
Former Aetna Chief Executive Mark Bertolini last week resigned
from the CVS board after CVS said he wouldn't stand for re-election
later this year, in a show of tension underlying one of the biggest
U.S. health-care mergers. Mr. Bertolini, who joined the board after
CVS paid nearly $70 billion to buy the health insurer in 2018, told
The Wall Street Journal he was being pushed out, with the
integration of the two companies still not complete.
The CVS-Aetna deal was always seen as a huge operational
challenge, as the companies would have to pull together vastly
different businesses, ranging from corner drugstores to Aetna's
Medicare and Medicaid coverage.
Investors have also pushed down shares of insurers over
political concerns, as Democratic presidential candidates push for
a revamp of the U.S. health-care system.
CVS shares rose 1.6% in premarket trading.
--Anna Wilde Matthews contributed to this article.
(END) Dow Jones Newswires
February 12, 2020 07:33 ET (12:33 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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