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By Manas Mishra and Caroline Humer
(Reuters) – CVS Health Corp. Wednesday announced higher annual earnings and first quarter earnings than Wall Street, due to growth in its Aetna health insurance business and lower drug prices.
Shares rose more than 5% to $ 57.35. They fell by 17% this year, hurt by a poor forecast in February and a reduction in prospects for the rival Walgreen Boots Alliance last month due to lower prices for generic drugs.
Aetna, CVS's health insurance unit, broke analysts' consensus of more than a billion dollars during the quarter, helped by its accounting for lower than expected medical costs in the quarter. fourth trimester.
The company, which bought Aetna for $ 69 billion in November, said that the 2019 savings from this deal were in the high end of its $ 300 to $ 350 million range, and the savings for 2020 would exceed probably its $ 750 million goal.
The company said that a handful of new "HealthHub" pharmacies, inaugurated in Houston this year and offering health services, such as chronic diabetes care management, have attracted more clients than expected. She plans to open other stores of this type in Houston and provide details on the national launch next month.
"Consumerism in healthcare is here to stay," said CVS General Manager Larry Menlo. "We are starting to see this evolution through the HealthHubs.We do not just sell hundreds of products, it's a combination of products and services."
Menlo also said the company would participate in a pilot project announced by the US Center for Medicare and Medicaid Services to extend discount to point-of-sale for patients benefiting from Medicare plans. The government has also proposed a rule that would require health plans to pass on all discounts, but it is unclear whether it will be finalized by 2020.
Sales of its health care unit increased by $ 16.55 billion to $ 17.78 billion with the addition of Aetna to its operations.
Sales of prescription drugs in its pharmacies have been penalized by the fact that the company is paid less for the execution of prescriptions. This was offset by higher volumes and higher prices of the original drugs.
In February, CVS warned that guaranteed customer refunds were larger than those received from drug manufacturers due to lower than expected drug price increases.
"Considering that expectations were low, we see this as the first positive catalyst for restoring investor confidence in this management team," said Ana Gupte, an analyst at SVB Leerink, on first quarter earnings and forecasts. increased for 2019.
CVS said it is now expecting an adjusted annual profit of $ 6.75 to $ 6.90 per share, from $ 6.68 to $ 6.88 previously.
Overall sales of its retail unit, which also sells over-the-counter drugs and consumer health products, increased 3.3% to $ 21.12 billion.
The pharmacy chain manager and pharmacy benefits executive reported having earned $ 1.62 per share without the items, exceeding the average analyst estimate of 12 cents per share, according to Refinitiv's IBES data.
Net income rose 42.4% to $ 1.42 billion in the first quarter. Revenues rose 34.8% to $ 61.65 billion.
(Report by Manas Mishra in Bengaluru and Caroline Humer in New York, edited by Saumyadeb Chakrabarty and Bill Berkrot)
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