WOONSOCKET, R.I. (AP) — More prescriptions and lower taxes pushed CVS Health past third-quarter expectations as the pharmacy giant closed in on a deal it will use to change how millions of people manage their health.
CVS Health said Tuesday that it expects to complete its $69 billion acquisition of the nation’s third-largest health insurer, Aetna, before Thanksgiving.
The companies announced their proposed combination late last year, with plans to dive deeper into providing care and to capitalize on a growing push from employers and insurers to control medical spending, in part by keeping people healthy.
CVS Health will expand the care it provides through many of its nearly 10,000 stores, converting them into places where customers can do anything from tracking blood sugar to keeping chronic conditions in check. CVS operates more than 1,000 clinics in its stores, which is marketed as a better option to deal with low-grade problems like sinus infections, rather than paying higher fees at the doctor’s office or emergency room.
CVS also wants to use its tie up with Aetna and its more than 22 million customers to monitor prescription use and to help people stay on their medications.
CVS CEO Larry Merlo told analysts Tuesday that both CVS and Aetna, which reported better-than-expected results last week, have created a solid financial foundation “on which we will build our revolutionary new model” for care.
In the third quarter, CVS Health’s prescription volume in stores open at least a year jumped 9 percent. That pushed revenue from its retail-long-term care business up more than 6 percent to about $20.9 billion.
CVS Health also recorded a $268-million drop in income taxes due to federal tax cuts.
Overall, net income climbed 8 percent to $1.39 billion, while adjusted earnings per share totaled $1.73. Revenue rose 2 percent to $47.27 billion.
Analysts expected, on average, third-quarter earnings of $1.71 per share on $47.2 billion in revenue, according to FactSet.
CVS Health Corp., based in Woonsocket, Rhode Island, is the nation’s second-largest drugstore chain. It also runs prescription drug plans for customers like insurers and employers, processing more than a billion prescriptions annually.
The company also reaffirmed on Tuesday its forecast for 2018 adjusted earnings of between $6.98 and $7.08 per share. CVS Health has been conservative with its forecast this year as it focuses on the Aetna deal.
Analysts predict earnings of $7.04 per share on average.
Shares of CVS Health advanced 3 percent, or $2.23, to $75.92, as broader indexes edged up slightly after markets opened Tuesday. The stock had already climbed about 2 percent so far this year.