CVS Health Corp (NYSE: CVS) stock fell 3% (as of May 2nd, 2018 12:13 PM GMT-4; Source: Google finance). The company had reported the adjusted revenue growth of 2.6 percent to $45.69 billion in the first quarter of FY 18, missing the analysts’ estimates for revenue of $45.77 billion.
The company got a sales bump from the timing of Easter. The net income for the first quarter increased by 4.7%, to $998 million. The increase is primarily due to the $153 million increase in operating profit less a $221 million increase in interest expense primarily due to the net interest expense on the financing associated with the proposed acquisition of Aetna Inc.
Meanwhile, in the first quarter, the consolidated operating profit increased 8.5%, to $1.9 billion. The improvements in operating profit were driven by a $199 million decrease in store rationalization costs as compared to the same quarter in the prior year, offset by an $86 million loss on the divestiture of the RxCrossroads subsidiary, and a $28 million increase in acquisition-related transaction and integration costs.
CVS in the first quarter of FY 18 has reported the adjusted earnings per share of $1.48, beating the analysts’ estimates for the adjusted earnings per share of $1.41 according to Thomson Reuters.
Further, CVS’s total same store sales rose 5.8 percent, while pharmacy same store sales increased by 7.3 percent due to the higher prices of branded drugs and partnerships with other pharmacy benefits managers. The revenue from the company’s retail business has overall rose 5.6 percent to about $20.4 billion. However, the company’s retail business accounts for a shrinking share of its total sales, with most revenue are coming from its pharmacy benefits manager, which serves as a middleman between insurance companies, pharmacies and drugmakers. The net revenue from its pharmacy benefit management business grew 3.2 percent to $32.22 billion, due to the higher claims on costlier drugs among other things.
For 2018, CVS expects the adjusted earnings in the range of $6.87 and $7.08 per share. The analysts were expecting on average, earnings of $6.47 per share as per FactSet. CVS Health had held off making that projection until the company ironed out the financing for over $69 billion purchase of the health insurer Aetna, which is a deal the companies announced in December. The company is still on track to close its deal to buy health insurer Aetna Inc. in the second half of the year.