On Wednesday, CVS Health disappointed investors with lower expected earnings forecast for the year when the company integrates the health insurance company Aetna and uncertainty over discounts weighing the company's corporate management.
Shares of CVS fell 9 percent Wednesday in market trading.
This is what the company reported compared to what Wall Street expected, based on a survey by Refinitiv analysts:
- Earnings per share: $ 2.14, adjusted, against $ 2.05 expected
- Revenue: $ 54.42 billion against $ 54.58 billion is expected
"2019 becomes a transition year when we integrate Aetna and focus on key arrows in our growth strategy," said CVS CEO Larry Merlo ie n statement.
For the full year 2019, CVS forecasts had adjusted earnings between $ 6.68 and $ 6.88 per share, below analysts at $ 7.41 per share requested by Refinitiv. The company expects revenues of $ 249.86 billion to $ 254.29 billion, according to CVS & # 39; slides from analyst conference. The Street had expected $ 247.61 billion a year.
CVS plans to spend between $ 325 million and $ 350 million on incremental investment spending, wiping out net net synergies of $ 300 million and $ 350 million. CVS expects from the Aetna acquisition, Evercore analysts Ross Muken and Mike Newshel wrote in a note to clients Wednesday.
"This will stoke fear of the [Aetna] agreement was defensive in nature and that the base CVS will continue to reset," they wrote.
CVS said it expects adjusted operating revenues for the business and long-term care business to fall by about 10 percent this year to a range of $ 6.59 billion and $ 671 billion, according to the slides. CVS said about half of the decline will come from investments CVS made following federal tax havens and challenges in its long-term care business. The repayment pressure will also weigh the results, the company says.
Adjusted Revenue for CVS & # 39; Pharmacy Service Unit or Careman Pharmacy Benefit Management Business, is expected to decline in the low-digit percentage to $ 4.83 billion and $ 4.92 billion for the year, according to the slides. CVS quoted lower brand inflation, or drug users do not migrate pricing on prescription drugs as they normally do, as a factor affecting prospects.
CVS also called "ongoing issues around rebates" as a challenge in 2019.
President Donald Trump and senior administration healthcare professionals have promised to change how pharmacy distributors, or PBMs, operate. Currently, PBMs are negotiating discounts, called discounts, with drug companies. The Trump administration wants Congress to pass its proposed ban on these "backdoor juices", a feature that can damage CVS and other PBMs.
Merlo in a statement Wednesday said the company is "fully aware of it", it must address challenges that will affect its financial performance this year.
In the fourth quarter, CVS reported a net loss of $ 421 million, or 37 cents per share, down from a profit of $ 3.29 billion, or $ 3.22 per share, a year earlier. This included a $ 2.22 billion, or a loss of $ 1.99 per share, write-down of goodwill related to CVS's long-term care services.
CVS earned at $ 2.14 per share, over $ 2.05 per share, expected by analysts surveyed by Refinitiv.
Net sales increased by 12 percent to $ 54.42 billion, generated by $ 54.58 billion analysts had expected.
Trading with the same store increased by 5.7 per cent from last year, when they increased by only 0.1 per cent. Pharmacy ran the total gain, with the same store sales up 7.4 percent against weak revenue growth a year ago. Sales dealers, including items such as toilet paper and shampoo, grew 0.5 percent.
Last week, CVS presented its HealthHUBs or concept stores that contain fewer traditional pharmacy products such as greeting cards and multiple health services such as bloodshed and health screenings.