For the third quarter ended September 30, CVS Health Corp. posted company income from continuing operations of $1.24 billion, or $1.10 per diluted share, versus $948 million, or 81 cents per diluted share, in the year-earlier period.
Adjusted earnings per share came in at $1.28, an advance of 11.5%, including one cent of acquisition-related dilution from the net effect of the July 2015 debt financing and the inclusion of just-acquired Omnicare’s operations, and excluding acquisition-related transaction and integration costs.
Without those inputs, adjusted earnings per share would have come in at $1.29, and that matched a Zacks Investment Research analyst average estimate.
Third quarter net revenues advanced 10.3% to $38.6 billion compared to the year-prior period while operating profit increased 3.8% to $2.3 billion, the company related, including the effect of acquisition-related transaction and integration costs of $127 million.
On August 18, CVS closed the acquisition of Omnicare and made a structural change to its organization, the retailer maintained. In the reconfiguration, the CVS pharmacy services segment gained the specialty pharmacy operations of Omnicare. At the same time, the retail pharmacy segment added the Omnicare long-term care operation, as well as the commercialization services, supply chain solutions and patient support services, and has been renamed the Retail/LTC segment.
Revenues in the Retail/LTC segment increased 6.9% to $17.9 billion while comparable store sales at retail drug stores gained 1.7% versus the year-ago quarter. Front store comps, which include results from general merchandise such as housewares and home furnishings, declined 5.8% in the third quarter year over year with approximately 490 basis points attributable to lost tobacco and associated basket sales, CVS asserted. Softer customer traffic, partially offset by an increase in basket size, also hit third quarter comps, the company added.
CVS president and CEO Larry Merlo stated, “We delivered solid revenue and operating profit growth across our businesses, and we continue to expect significant growth in the fourth quarter, rounding out another terrific year for our company. Year to date, we generated $3.4 billion of free cash, and we are on pace to return more than $6 billion to our shareholders through dividends and share repurchases in 2015. The third quarter included the closing of the Omnicare acquisition in mid-August, and we are very optimistic about the potential that this long-term care business creates for us. It provides a new pharmacy dispensing channel, enhancing our ability to provide continuity of care for patients as they transition through the health care system. At the same time, we look forward to closing the Target pharmacy acquisition, which will enable us to reach more patients, add a new retail channel for our unique offerings, and expand convenient options for consumers. These acquisitions reinforce our progress on our established long-term targets.”
In the quarter, CVS opened 43 new drug stores and currently operates 7,911 retail drug stores.