CVS Health, a retail pharmacy shocked wall street as it performed better than expectations in the second quarter. It went a step further and raised the year’s forecast. The company’s revenue grew to 63.43 billion USD against 62.65 billion USD expected. Its share prices went up to 1.89 USD adjusted, against 1.69 USD expected. Wall street’s estimations were based on a survey conducted by Refinitiv’s analysts.
The retail pharmacy and pharmacy benefit manager, CVS reported a net income of 1.93 billion USD or 1.49 USD per share in the second quarter. It had suffered a huge loss of 2.56 billion USD or 2.52 USD per share in 2018. When adjusted, the company had outperformed the expectations of wall street and earned 1.89 USD per share. Net sales grew by 35% against last year’s 46.92 billion USD. This happened largely because CVS acquired Aetna, a health insurance business. The company’s shares rose by 7.5% on Wednesday. CVS witnessed this profit because of the cost of branded medicines increased in the second quarter. CVS’ both units, i.e., pharmacy benefit managers and drugstores, make more profit when the prices of medications increase. As drugmakers faced political scrutiny, they hiked the prices this year. 19% more prescriptions were filled in the second quarter of 2019 as compared to the second quarter of 2018 by CVS’ pharmacy. The company attributed this to clinical programs which are intended to keep patients on medications. An increase in the number of people buying OTC health products aided in the increase in sales. Aetna health insurance business, the company’s new acquisition reached 17.4 billion USD, beating wall street’s expectations.
According to the company’s CEO, Larry Merlo, they are planning on transforming CVS and healthcare sector using innovative methods. CVS still has some challenges to overcome, such as political pressure to lower drug prices, competition from its online rival, amazon and so on. To tackle this, CVS is expanding its business by increasing the number of stores and integrating with Aetna to start new health-focused stores called HealthHub.