CVS jumps on earnings beat as its merger with insurance company Aetna begins to pay off
- CVS traded as much as 5.6% higher on Wednesday after beating second-quarter earnings expectations and raising its yearly profit forecast for the second time in 2019.
- The earnings beat arrives as the company plans to open about 50 HealthHUB stores by the end of the year. The new venture represents the direction CVS hopes to go in after acquiring health insurer Aetna for $70 billion in November.
- The earnings beat comes after rival Walgreens announced Tuesday it plans to close 200 US stores.
- Watch CVS trade live here.
CVS rose as much as 5.6% in early Wednesday trading after beating second-quarter expectations and continuing the integration of health insurer Aetna into its portfolio.
The company also raised its full-year profit guidance for the second time in 2019. The positive report assured investors the company remains financially stable after acquiring Aetna for $70 billion in November.
"While still early, we remain confident that we will be able to realize the potential of our innovative and powerful new business model to deliver enhanced value to our clients and the consumers we serve," CVS CEO Larry Merlo said in the report.
Here are the key numbers:
Revenue: $63.43 billion, versus the $62.65 billion estimate
Earnings per share: $1.89, versus the $1.69 estimate
2019 earnings per share forecast: between $6.89 to $7.00, versus the $6.84 estimate
The company plans to open 1,500 locations for its new HealthHUB stores by the end of 2021, with about 50 opening by the end of the year. The new venture marks a turning point for the company's Aetna integration, as HealthHUB stores focus on services including wellness and care for chronic diseases like diabetes. The first three stores opened in Houston in early 2019.
CVS's earnings beat follows a Tuesday announcement from rival Walgreens that it will close 200 stores in the US to "increase operations efficiencies." The announcement, coupled with Walgreens' April earnings miss, signals that CVS may face more pressure from Amazon than traditional pharmacies as the e-commerce company expands its PillPack pharmacy business.
CVS closed Tuesday at $54.09 per share, down about 17% year-to-date.
The company has 18 "buy" ratings, 10 "hold" ratings, and no "sell" ratings from analysts, and a price target of $68.14, according to Bloomberg data.
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