As CVS evolves its health care operations, along with its pending acquisition of Aetna, the drug store boosted its fourth quarter income and sales.
In the fourth quarter, CVS Health posted company net income of $3.29 billion, or $3.22 per diluted share, versus $1.71 billion, or $1.59 per diluted share, in the year-prior period. In the fiscal year, the company recorded net income of $6.62 billion, or $6.44 per diluted share, versus $5.32 billion, or $4.90 per diluted share, in the fiscal year earlier.
According to CVS, the income increases primarily reflected the income tax benefit of $1.5 billion associated with the United States Federal Tax Cuts and Jobs Act. Also, net income for the three months and year ended December 31 included $56 million of bridge financing costs associated with the company’s proposed acquisition of Aetna.
Adjusted earnings per share for the fourth quarter were $1.92. Adjusted earnings per diluted share in the quarter surpassed a MarketBeat published analyst average estimate of $1.88.
Consolidated operating profit for the fourth quarter increased 3.6%, to $3.1 billion, year over year. CVS reported that the increase was partially due to improvement in gross profit in the pharmacy services segment. The retail/LTC segment gross profit increased, largely driven by improvements in front-store margin.
Consolidated operating profit for the fiscal year decreased 8.2%, to $9.5 billion, with the decline primarily driven by the previously-announced restricted networks that exclude CVS Pharmacy and continued pricing and reimbursement pressure in the pharmacy and retail segment, and other factors.
In the fourth quarter, net revenues increased 5.3% to $48.4 billion while revenues in the retail segment increased 0.3% to approximately $20.9 billion versus the period a year before. Comparable store sales increased 0.1% with front store comps, including general merchandise, declining 0.7% from the previous-year quarter. Seasonal cough and cold positively impacted the metric by 80 basis points. Hurting front end comps were softer customer traffic and efforts to rationalize promotional strategies, partially offset by an increase in basket size.
For the full fiscal year, net revenues gained 4.1%, to $184.8 billion while retail revenues decreased 2.1% to $79.4 billion with comps and front store comps both slipping 2.6% versus fiscal 2016.
Larry Merlo, CVS president and CEO, stated, “In 2017, we delivered on the four-point plan we set in place to return to more robust levels of growth. Our position in the evolving health care landscape is stronger than ever before, and we remain confident in our model and in our ability to make health care more affordable, more accessible and more effective.”