CVS feels effect of fewer promotions
Exclusion from pharmacy networks and efforts to rationalize promotional activity at CVS nearly 10,000 retail locations hurt customer traffic and had a predictable effect on same store sales.
The company said same store sales during the quarter ended June 30 declined 2.6 percent, with pharmacy sales dropping 2.8 percent and front end sales dropping 2.1 percent. The decline would have been worse but there was a modest benefit from sales related to the Easter holiday falling in the second quarter of 2017.
"The second quarter results we posted today keep us nicely on pace to achieve our full-year targets," said President and CEO Larry Merlo. "Operating profit in the Retail/LTC Segment was in line with expectations while operating profit in the Pharmacy Services Segment exceeded expectations. At the same time, we have generated substantial free cash flow year-to-date and continued to return significant value to our shareholders through dividends and share repurchases. While we are pleased to report results consistent with our expectations, we won't be satisfied until the total enterprise returns to healthy levels of earnings growth."
Revenue from the company's PBM side jumped nearly 10 percent to $32.3 billion in the quarter, helped by new business.
Overall, CVS Health's second-quarter earnings of $1.1 billion rose 19 percent compared to last year's quarter, when the company booked a $542 million loss on the early retirement of some debt.
Adjusted results came in at $1.33 per share, with revenue climbing 4 percent to $45.68 billion.
The company said it now expects adjusted earnings of $5.83 to $5.93 per share in 2017, as it raised the lower end of its previous forecast up from $5.77 per share.
CVS has more than 9,700 locations and more than 1,000 walk-in clinics in the U.S.