- CVS Health announced Thursday it expects its effective tax rate under the recently-passed GOP tax bill to drop from 39% to 27% in 2018, an increase of about $1.2 billion in annual net income and cash flow. The company says it plans to use some of that flexibility to invest in future growth areas, especially as it works to combine with Aetna.
- CVS says it still expects that its acquisition of Aetna will close by the second half of this year, but says that for guidance purposes it assumes it will occur after year-end.
- Adjusted earnings per share are expected to be at the lower end of the $1.88-$1.92 range announced during the company’s 2017 Q3 earnings call. CVS attributed the hit primarily to the suspension of share repurchases during Q4 with its pending acquisition of Aetna.
CVS announced Dec. 3 it agreed to buy Aetna in a $69 billion deal. It remains unclear how the massive plan to combine the retail pharmacy giant with Aetna’s insurance business will play out, with the deal still having to withstand antitrust scrutiny from federal regulators.
The 2018 outlook from CVS predicts that adjusted operating profit in the company’s retail/long-term care (LTC) segment will grow by low-single digits, while its pharmacy services will grow by low-to-mid single digits.
The company pointed to its partnerships with Optum, Cigna and Express Scripts, and expanded participation as a preferred pharmacy in more Medicare Part D networks and expanded script growth in long-term care businesses as factors contributing to retail/LTC growth. However, the recent sale of RxCrossroads created some headwinds, CVS noted.
For its pharmacy benefit manager business, the company pointed to expected claims growth, the administration of rebates for Aetna's Medicare Part D buisness, increased usage of generics in specialty pharmacies and lower than historic branded drug price inflation as factors driving growth. But one piece of downward pressure is the about $150 million CVS plans to use to implement Anthem business.
Dave Denton, CVS Health EVP and CFO, says the company’s Q4 earnings call will be held in early February.