CVS Health Corp. (NYSE: CVS) reported on Tuesday higher revenue in the third quarter, as the retail pharmacy chain grew its network and got a boost from an increase in same-store prescription volumes. The Company also said it anticipates its acquisition of health insurer Aetna Inc. (NYSE: AET) to close before Thanksgiving.
CVS reported fiscal third-quarter net income of USD 1.39 Billion, or USD 1.36 per share, up from USD 1.29 Billion, or USD 1.26 per share a year earlier. Excluding items, CVS earned USD 1.73 per share, above the USD 1.71 as expected by analysts.
Revenue rose 2.4% to USD 47.3 Billion, surpassing expectations of USD 47.2 Billion. For the business unit that includes CVS’ retail pharmacy operations, revenue increased to USD 20.86 Billion, up nearly 7% from the USD 19.59 Billion in the same quarter a year ago, driven by 8.4% surge in pharmacy revenue.
Same-store sales grew 6.7%, beating the FactSet estimate of a 5.4% increase. Pharmacy same-store sales increased 8.7% and same-store prescription volume grew 9.2%.
"While this is a shallow gain, it is most definitely a step in the right direction," said Neil Saunders, managing director of GlobalData Retail. "However, our outlook on the retail side remains cautious, and we are split as to whether this represents the start of a new upside for CVS' retail operation, or whether it is just an anomaly."
For 2018, CVS reaffirmed its guidance for adjusted earnings per share of USD 6.98 to USD 7.08. Shares, which are up 10.3% in the past 12 months, rose 2.6% to USD 75.58 in premarket trading Tuesday.
Last month, the Justice Department antitrust enforcers cleared CVS’s acquisition of Aetna after the companies took steps to ease regulators’ concerns, moving the nearly USD 70 Billion deal a step closer. CVS recorded USD 208 Million in costs in the latest quarter in connection with the Aetna deal.
The CVS-Aetna merger needs the approval from five more states to complete the deal. So far, CVS said it has received regulatory approval from 23 of the 28 states needed. The transaction is expected to close before Thanksgiving.