CVS Health disappointed investors Wednesday with lower-than-expected earnings forecast against a background of integrating Aetna health insurer and uncertainty about rebates weighing its business to manage the benefits of pharmacies. CVS completed the $ 70 billion acquisition of Aetna in November, CVS announced the transaction as a way to turn the way Americans receive healthcare and reduce their costs , and to strengthen CVS business
The forecast CVS gave on Wednesday of the year suggests that there may be more challenges – and costs – in performing the joint work, and also stresses the pressure on the core business activities of CVS
CVS shares fell 9% on Wednesday
Here's what o reported the company compared to what Wall Street expected, based on a survey by Refinitiv analysts:
- Earnings per share: $ 2.1
- Revenue: $ 54. 42 billion vs. expected 54 , $ 58 billion
"2019 will be a year of transition as we integrate Aetna and focus on the key pillars of our growth strategy," CVS CEO Larry Merlo said in a statement. 2019, CVS predicts a revenue adjustment of $ 6.68 to $ 6.88 per share, below analysts that analysts at Refinitiv expected from $ 7.41 per share. The company expects revenues in the range of $ 249.86 billion and $ 254.29 billion, according to slides from the CVS conference with analysts. The street expected $ 247.61 billion For the year
CVS plans to spend $ 325 million to $ 350 million for additional investment costs that essentially destroy the net savings of $ 300 million, up to $ 350 million, CVS expects the acquisition of Aetna, analysts at Evercore. Ross Mücke and Mike Newschule write in a note to their customers on Wednesday.
"This will stir the fears that the [Aetna] deal is defensive in nature and that the CVS base will continue to restart," they write. The total cost for this year is $ 550 million, Eva Borato said during a conversation with analysts.
CVS said it expects adjusted operating revenues for its retail and long-term care businesses to fall by about 10 percent this year to $ 6.59 billion to $ 6.71 billion. It says about half of the decline will come from CVS's investments made since the federal tax reform and the challenges of the long-term care business.
The adjusted operating income of CVS's pharmacy office or Caremark pharmacies management company is expected to decline in percentages with a low single-digit margin of $ 4.83. billion to $ 4.92 billion a year, CVS said. It mentions the lower brand inflation – drug manufacturers who are not singing prescription medication prices as they usually do – as a factor influencing its prospects.
President Donald Trump and Health Care Officers administration have promised to change the way the pharmacies managers work. Currently, PBM negotiates concessions called discounts with pharmaceutical companies. The Trump administration wants Congress to ban these "debt transactions", a move that could harm CVS and other PBMs.
"We fully support the administration's goals of lowering drug prices and consumer spending," Merlo said in an interview with analysts on Wednesday. "Unfortunately, we see that the discount rule takes us back and not ahead."
In the fourth quarter, CVS reported a net loss of $ 421 million, or 37 cents per share, compared to a profit of $ 3.29 billion, or $ 3.22 a share a year earlier. This includes a $ 2.22bn ($ 1.99 per share) loss of goodwill associated with CVS's long-term care.
On a revised basis, CVS earned $ 2.14 per share, above analysts' expectations of $ 2.05 per share. Net sales rose 12% to 54.42 billion dollars, frightening of the estimated 54.58 billion dollars analysts.
Sales in the same store rose by 5.7% compared to the previous quarter when they grew by only 0.1%. The pharmacy's total profit increased with the same sales from stores to 7.4% against the weak sales growth a year ago. Front-line sales, which include products like toilet paper and shampoo, rose 0.5%.
Last week, CVS introduced its HealthHUBs or conceptual stores that contain fewer traditional pharmacies such as greeting cards and more health services such as blood and health cuts.