Earnings

Pedestrians pass in front of a CVS location in New York.

Scott Mlyn | CNBC

CVS Health on Wednesday crushed first-quarter expectations and raised its full-year forecast as the company’s newly acquired health insurance business boosted results and its pharmacies filled more expensive prescription drugs.

Its stock price jumped 5.7% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on average analysts’ estimates compiled by Refinitiv:

  • Adjusted earnings per share: $1.62 vs. $1.50 expected
  • Revenue: $61.65 billion vs. $60.39 billion expected

This was the first full quarter since CVS closed its $70 billion acquisition of health insurer Aetna in November. Revenue for CVS’ health-care benefits segment, which also includes CVS’ SilverScript business, topped expectations at $17.87 billion.

CVS’ retail business also performed better than the Street expected, with same-store sales increasing 3.8%. CVS attributed higher sales in the front of the store to focusing more on health products. In the pharmacy, CVS said selling more expensive branded prescription drugs helped offset more generic drugs and lower payments from insurers.

CVS and rival Walgreens Boots Alliance have said pressure to lower prescription drug costs is threatening their profits. Companies across the prescription drug supply chain are feeling heat from lawmakers, some of whom are calling to overhaul how drugs are paid for.

On an unadjusted basis, CVS’ fiscal first-quarter net income rose to $1.42 billion, or $1.09 per share, up from $998 million, or 98 cents per share a year earlier. When excluding the costs of integrating Aetna, store closures and some other items, CVS earned $1.62 per share, above the $1.50 per share expected by analysts surveyed by Refinitiv.

Revenue rose 35% to $61.65 billion — largely driven by the new Aetna business — beating expectations of $60.39 billion.

“Following the close of our Aetna acquisition in late November, our first full quarter of combined operations was a success in many ways,” CVS CEO Larry Merlo said in a statement.

CVS raised its 2019 earnings forecast to between $6.75 and $6.90 per share, up from the previously guided range of $6.68 to $6.88 per share.

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