CVS results beat on demand for prescription drugs, beauty products
(Reuters) - CVS Health Corp’s (CVS.N) third-quarter profit beat analysts’ estimates on Tuesday, as it benefited from higher sales of prescription drugs as well as consumer health and beauty products.
Quarterly same-store sales at front-end stores rose 0.8 percent in contrast to analysts’ expectation of a 0.8 percent drop despite brick-and-mortar drugstore chains like CVS coming under increasing pressure from consumer shift to online options.
“Front of store sales have fallen during this quarter for every year since 2012,” said Neil Saunders, managing director of GlobalData Retail, who called the sales rise at front-end stores a “break from tradition.”
Sales for beauty products at CVS stores have benefited from sales promotions and newer products. Last year, the company announced a initiative to have over a hundred new South Korean beauty brands at its stores.
CVS has also been testing its plan to sell a bigger assortment of brands and services like hair and nail salons in around four of its stores.
The company’s pharmacy same-store sales rose 8.7 percent, while analysts were expecting a 7.7 percent rise, driven by higher demand for prescription drugs.
The company said its $69 billion acquisition of health insurer Aetna Inc (AET.N), which won U.S. Department of Justice nod in October, is likely to close before Thanksgiving.
The deal is expected to reshape healthcare sector as it brings together one of the largest pharmacy benefits manager and one of the nation’s oldest health insurers.
The company said net income rose to $1.39 billion, or $1.36 per share, in the quarter ended Sept.30. Its income tax provision declined by $268 million in the quarter. (bit.ly/2D48hy8)
Excluding items, CVS Health earned $1.73 per share, compared with the average analyst estimate of $1.71.
Net revenue rose 2.4 percent to $47.27 billion, beating expectation of $47.18 billion.
Shares of the company rose 3.4 percent to $76.20 in early trading.
(This version of the story has been refiled to fix syntax in paragraph 2)
Reporting by Manas Mishra and Manogna Maddipatla in Bengaluru; Editing by Arun Koyyur
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