CVS Health on Wednesday frustrated investors with a profit forecast lower than expected for a year, as the company integrates Aetna with a health insurer and the uncertainty about discounts weighs on the pharmacy of the company managing the business.
CVS stocks fell 9% on Wednesday during a premarket trade.
Here's what the company said compared to what Wall Street expects, based on a survey by Refinitiv analysts:
- Earnings per share: $ 2.14, adjusted, compared to $ 2.05 expected
- Revenue: $ 54.42 Billion against $ 54.58 billion Expected
"2019 will be the year of transition when we integrate Aetna and focus on key pillars of our growth strategy," CVS CEO Larry Merlow said.
For the full year 2019, CVS predicted adjusting earnings between $ 6.68 and $ 6.88 per share, lower than analysts expected $ 7.41 per share, polled by Refini The company expects revenues in the range of $ 249.86 billion and $ 254.29 billion, according to a CVS conference with analysts. The street expects $ 247.61 billion a year.
CVS plans to spend from $ 325 million to $ 350 million. for additional investment costs that substantially eliminate pure synergies of $ 300 million and $ 350 million CVS. Ros Mücken and Mike Newell wrote in a note to clients on Wednesday.
"This will lead to fears that the [Aetna] agreement was defensive in nature, and that the CVS base will continue to decline," they wrote. It is expected that adjusted operating income for its retail and long-term care business will drop by about 10 percent this year to $ 6.59 billion and $ 6.71 billion. CVS reported that about half of the reduction would be due to CVS investments made after federal tax remediation and problems in long-term care business.
It is expected that adjusted operating income for the pharmacy services department of CVS, or its Pharmacy Pharmacy Company for pharmacies Caremark, will decrease by one percent from one digit to 4.83 billion dollars. $ 4.92 billion a year, according to slides. CVS reported low brand inflation, or drug producers who do not travel at the prices of prescription drugs, as usually done, as a factor affecting his outlook.
CVS also called "current issues around discounts" a call in 2019.
President Donald Trump and chief health officials have promised to change how pharmacy managers or PBMs work. At present, PBM is negotiating discounts, which are called discounts, with pharmaceutical companies. The Trump administration wants the Congress to accept the proposed prohibition on these "back-end agreements," a step that could be detrimental to CVS and other PBMs. In the fourth quarter, CVS reported a net loss of $ 421 million, or 37 cents a share, compared to a profit of $ 3.29 billion, or $ 3.22 per share, a year earlier. This includes 2.22 billion dollars. US $ 1.99 or $ 1.99 loss For a share, impairment loss is associated with a long-term CVS business.
On an adjusted basis, CVS earned $ 2.14 per share, exceeding $ 2.05 per share, expected by analysts surveyed
Net sales increased by 12% to $ 54.42 billion that overshadowed 54.58 billion dollars of analysts expecting
Sales from one store increased by 5.7% compared to the previous quarter, when they increased by only 0.1%. The pharmacy has increased overall growth, while sales in stores grew by 7.4 percent against the weak sales growth a year ago. Sales of stores that include such items as toilet paper and shampoos have grown by 0.5 percent.
Last week, CVS unveiled its HealthHUBs or concept stores that contain fewer traditional pharmacy products, such as greeting cards and more health services such as blood and health show.