Earnings power from a major acquisition helped raise CVS Health’s profit 42% in the first quarter, and the company hiked its 2019 forecast after starting the year with a more pessimistic outlook.
The drugstore chain and pharmacy benefit manager set a new full year earnings forecast largely above Wall Street expectations after projecting in February earnings that would fall well short.
Revenue from the company’s pharmacy benefit management side grew 3% to $33.56 billion in the first quarter, helped by an increase in prescriptions processed and higher prices for brand-name medications. Pharmacy benefit managers, or PBMs, run prescription coverage for large clients like employers and insurers.
CVS Health leaders also told analysts on Wednesday that they were making progress improving their long-term care business, which generated a $2.2 billion charge in last year’s fourth quarter, and the company was cutting costs and closing under-performing stores on the drugstore side of operations.
Expectations for CVS Health have been low, and the company’s first quarter will help restore investor confidence in its management, SVB Leerink analyst Ana Gupte said in a research note.