CVS Q3 beat Street; to test new type of stores
CVS Health on Tuesday reported sales and earnings that beat Street estimates and said its acquisition of Aetna is expected to close by Thanksgiving.
Also on Tuesday, CVS CEO Larry Merlo told Wall Street analysts that the company plans to test concept stores with medical services to learn which are most effective and can be scaled across CVS’ locations, reported CNBC. Some of the services to be piloted include managing common chronic conditions, such as diabetes and hypertension, and combining Aetna’s clinical programs with CVS’ stores to help guide patients when they’re discharged.
“We’re making the consumer experience, which will be in an increasingly important competitive differentiator, and we are hard at work creating a plan to differentiate CVS Health in these patient journeys with the goal of making them simpler and more personalized while making care more accessible,” Merlo said in the report.
CVS’ net income for the quarter rose to $1.4 billion, or $1.36 per share, up from $1.3 billion, or $1.26 per share in the year-ago quarter.
Revenue rose 2.4%, to $47.3 billion, beating estimates of $47.18 billion, fueled by a 6.4% increase in CVS’ retail/long-term care segment. Same-store sales increased 6.7%, with pharmacy same-store sales up 8.7%. Front-end sales inched up 0.8%.
“Strong revenue and adjusted EPS, along with significant cash flow year-to-date, demonstrate our success in driving value,” Merlo said in a statement. “Our year-to-date results continue to validate our confidence in the strength of our model. As we approach the closing of our transformative acquisition of Aetna, our integration teams are making great progress to assure that once final approvals are obtained, we can begin to execute on our integration plans.”
Since the close of Q3, CVS Health received the Department of Justice’s conditional approval of the Aetna acquisition, dependent on the divestment of Aetna’s standalone Medicare Part D prescription drug plans. The company is selling those assets to a subsidiary of WellCare Health plans, with the close subject to the close of the merger. The company now is waiting on five state approvals, with the transaction expected to close by Thanksgiving.
“While CVS and Aetna remain separate companies today, the performance of both companies highlights the very solid financial foundation on which we’ll build our revolutionary new model that will transform the health care experience for consumers and, in the process, deliver substantial value for our shareholders,” Merlo said.
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