- CVS reported stronger-than-expected first quarter earnings, beating analyst expectations on profit and revenue in the first quarter with its purchase of Aetna complete.
- Revenue climbed nearly 39% from the prior year to $62 billion, fueled by more prescriptions filled during the quarter. Net income also rose 43% to $1.4 billion from a year ago.
- The retailer and PBM said its integration of health insurer Aetna is on track and expected to reach cost savings of $300 million to $350 million by year's end.
The results follow a disappointing fourth quarter of 2018.
CVS tweaked its guidance forecast for the year, now expecting to generate operating income between $11.8 billion and $12 billion, up from a prior guidance $11.7 billion to $12.1 billion for the year.
Shares rose roughly 6% in late morning trade. Still, some analysts were underwhelmed.
"The upward revision of the company's 2019 operating income guidance is encouraging although it comes after the company guided to a significantly lower operating income for 2019 in its fourth quarter earnings call," Moody's Vice President Mickey Chadha said in a statement.
During the call with investors, CVS CEO Larry Merlo touted momentum created in the first quarter, including what he called "significant Medicare Advantage membership growth." He added the company continues "to grow share in our retail pharmacy and we realigned some of our operations to drive greater value."
The company faces some headwinds in the near-term, including that of its long-term care unit and pressures related to its PBM business.
CVS said the long-term care unit, which includes Omnicare, is on track to improve margins. The company also reported a $2.2 billion goodwill impairment charge related to this unit in 2018.
Merlo did step lightly into the discussion on potential policy changes to the U.S. healthcare system. Democratic presidential hopefuls for 2020 are pushing differing forms of universal coverage, using the term "Medicare for All."
While Merlo did not use that language in his prepared remarks Wednesday, he predicted the private sector would survive.
"Regardless of what shape and form the next stage of healthcare takes, we remain confident that the private sector will play an essential role in both shaping and executing that next stage," Merlo said.