CVS Health (NYSE: CVS – $66.01) reported earnings and guidance that topped Street forecasts while revenue missed. The drugstore chain and pharmacy benefits manager said first-quarter adjusted earnings were $1.48 per share, up from $1.17 a year earlier and above consensus for $1.40. CVS said revenue in the quarter came in at $45.7 billion, up from $44.5 billion during the same quarter a year earlier, but just below the Street view of $45.8 billion. Revenues in the Pharmacy Services Segment increased 3.2% to approximately $32.2 billion and in the Retail/LTC Segment revenue increased 5.6% to about $20.4 billion. Same store sales increased 5.8%, with pharmacy same store sales up 7.3% and front store same store sales higher by 1.6%
The Company expects full year adjusted earnings per share of $6.87 to $7.08 for the full year 2018. The Company also provided guidance for the second quarter of 2018, with adjusted profit growth of flat to up 3.25% and adjusted earnings $1.59 to $1.64 per share as compared to Street consensus of $1.40. The previously announced acquisition of Aetna was approved by shareholders of both companies on March 13, 2018. The regulatory approval process is proceeding within a time frame consistent with expectations, according to the company. Despite share price weakness over the past year, I remain positive on the stock and on management’s ability to find innovative and profitable ways to reduce healthcare costs. I also see significant upside for shares if CVS can close the Aetna deal and deliver on its financial targets. The shares trade at about 11 times estimated full-year estimated earnings of $6.30 per share and yield nearly 3%.