CVS says its acquisition of Aetna is still on track as higher sales of prescription drugs continue to offset retail sales declines at the retailer.
The company posted a better-than-expected first-quarter profit helped by higher sales of prescription drugs at its stores. Same store sales increased 5.8%, while pharmacy same store sales surged 7.3% on higher prices of branded drugs and partnerships with other pharmacy benefits managers.
"We generated solid results in the quarter, benefiting from higher prescription volumes within our retail pharmacy business and a lower effective income tax rate," said President and Chief Executive Officer Larry Merlo. "At the same time, we continue to focus on long-term growth initiatives and to invest in process improvements and technology enhancements that will position us well to expand our reach in providing access to high-quality and more affordable care."
Overall revenue from the company's retail business increased 5.6% to about $20.4 billion.
The company's retail business accounts for a shrinking share of its total sales, with most revenue now coming from its pharmacy benefits manager. Net revenue from its pharmacy benefit management business rose 3.2% to $32.22 billion, driven by higher claims on costlier drugs among other things.
Net income attributable to the company rose to $998 million, or 98 cents per share, in the reported quarter ended March 31 from $952 million, or 92 cents per share, a year earlier.
Net revenue rose 2.6 percent to $45.69 billion.
The company also said that it was sticking with its expectations of closing the $69 billion deal to buy Aetna in the second half of the year.
"The Aetna transaction will provide us the means to further lower health care costs for consumers and payors. In March, the transaction was approved by shareholders of both companies. We are moving forward on both the regulatory and integration planning fronts in support of a close in the second half of this year and a smooth, efficient integration of operations," Merlo said.
CVS has more than 9,800 retail locations, more than 1,100 walk-in medical clinics, and a leading pharmacy benefits manager with approximately 94 million plan members.