Drug store chain and pharmacy benefits manager CVS Health (NYSE: CVS – $76.36) reported better-than-expected earnings in its fourth quarter, helped by growth in its pharmacy services segment. Over all CVS reported adjusted profits rose to $1.71 a share from $1.53 a year ago. Revenue jumped 12% to $ 45.97 billion. The company also forecast adjusted first-quarter earnings of $1.07 to $1.13 a share, in line with analysts’ expectations of $1.11. For the quarter, sales in the pharmacy services segment increased 18% to $31.3 billion, driven by a 24% jump in pharmacy network claims. Sales in CVS’s retail segment, meanwhile, rose 4.7% to $20.8 billion, which included the company’s Target outlets. Reduced traffic caused same-store sales, however, to decline 0.7% compared with a year earlier, while pharmacy same-store sales rose 0.2%, partially offset by recent generic drug introductions hurting sales. Same-store sales for front-of-store, which includes over-the-counter drugs and sundries, were negatively affected by softer traffic.
CVS forecast weak growth for 2017 in November, saying it expected to lose more than 40 million retail prescriptions to other pharmacy chains. The company also confirmed its earnings forecast for the full year at $5.77-$5.93 per share vs. an average estimate by analysts of $5.86. I am maintaining my position in CVS Health for long-term recovery.