Drugstore giant CVS Health Corp NYSE: CVS posted a higher-than-expected first-quarter profit, but reported a decline in sales due to weak traffic.
Revenue increased by 3% to $44.5 billion, beating estimates of $44.2 billion. But the company filled fewer prescriptions and sold more generic drugs, which drove sales down 4.7% in the first quarter.
In the first quarter, the generic dispensing rate at the company’s Pharmacy Services Segment increased by 140 basis points to 87% compared to the previous year. The rate increased 180 basis points to 87.5% in the company’s Retail/LTC Segment.
The drugstore chain posted a profit of $952 million, or 92 cents per share. Excluding items, CVS posted a profit of $1.17 billion, or $1.04 per share, in the same period last year. Analysts were expecting $1.10 per share and revenue of $44.20 billion.
CVS Health Corp NYSE: CVS Enjoying Reduced Costs
The company also reported a $46 million decrease in acquisition-related costs for the first quarter.
CVS Health Corp NYSE: CV forecasted profit of $1.07 to $1.13 per share.
Same-store sales of snacks, beauty products and over-the-counter drugs also declined by 4.9%. CVS has posted a decline in front-end of store sales for the last year due to weak traffic.
Interest expense fell 11% to $2.52 million. The company also received $19 million in tax benefits due to its adoption of accounting guidance for share-based compensation.
Sales in the company’s pharmacy sector rose by 8.5% to $31.2 billion on higher demand for specialty pharmacy services and an uptick in claims across its network. The company’s specialty pharmacy services provides more costly drugs to patients with chronic illnesses.
CVS forecasts adjusted earnings per share of between $1.29 and $1.33 for the current quarter. The company expects full-year adjusted earnings to come in between $5.77 and $5.93 per share.
CVS reaffirmed its previous cash flow and earnings per share guidance for full-year 2017.
Anthony Young
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