Upcoming AWS Coverage on Molina Healthcare Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 15, 2017 / Active Wall St. announces its post-earnings coverage on CVS Health Corp. (NYSE: CVS) ("CVS"). The Company posted its first quarter fiscal 2017 results on May 02, 2017. The Drugstore chain and pharmacy benefits manager reported a 3% y-o-y increase in revenue and also re-iterated its FY17 earnings outlook. Register with us now for your free membership at:

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One of CVS Health's competitors within the Health Care Plans space, Molina Healthcare, Inc. (NYSE: MOH), reported its financial results for Q1 2017 on May 02, 2017. AWS will be initiating a research report on Molina Healthcare in the coming days.

Today, AWS is promoting its earnings coverage on CVS; touching on MOH. Get our free coverage by signing up to

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Earnings Reviewed

CVS's net revenues for the three months ended March 31, 2017 increased 3.0%, or $1.3 billion, to $44.5 billion compared to revenue of $43.2 billion in the three months ended March 31, 2016. The Company's revenue numbers exceeded analysts' consensus of $44.2 billion.

For Q1 2017, CVS's consolidated operating profit decreased $392 million, or 18.0%. The decrease was due to the previously-announced restricted networks that exclude CVS Pharmacy as well as continued price compression in the Pharmacy Services segment and continued reimbursement pressure in the Retail/LTC segment. The decrease also reflected a charge of $199 million associated with the closure of 60 retail stores in connection with the Company's enterprise streamlining initiative. This was partially offset by a $46 million decrease in acquisition-related integration costs in the reported quarter.

CVS's net income for Q1 2017 decreased 16.9%, to $953 million and this was primarily driven by the decline in operating profit, partially offset by lower interest expense of $31 million related to refinancing activity in the prior year as well as the improvement in the effective income tax rate from 39.4% to 37.3%. The Company's GAAP earnings per diluted share from continuing operations for the reported quarter was $0.92 compared to $1.04 in the prior year. CVS's adjusted earnings per share for Q1 2017 were $1.17 compared to $1.18 for Q1 2016; however, it topped Wall Street's estimates of $1.10 per share.

Segment Results

For Q1 2017, CVS's revenues in the Pharmacy Services segment increased 8.5% to $31.2 billion, primarily driven by growth in pharmacy network claim volume as well as brand inflation and growth in specialty pharmacy, partially offset by increased generic dispensing and price compression. Pharmacy network claims processed during the reported quarter jumped 10.5% on a 30-day equivalent basis to 376.8 million compared to 340.9 million in the year earlier same quarter. The increase in pharmacy network claim volume was attributed to an increase in net new business. Mail choice claims processed during Q1 2017 increased 4.5% on a 30-day equivalent basis to 63.7 million compared to 61.0 million in Q1 2016, primarily driven by continued adoption of the Company's Maintenance Choice® offerings and an increase in specialty pharmacy claims.

During Q1 2017, revenues in CVS's Retail/LTC segment fell 3.8% on a y-o-y basis to $19.3 billion. The decrease was largely driven by a 4.7% decrease in same store sales, continued reimbursement pressure and an increase in generic dispensing rate.

For Q1 2017, CVS' Pharmacy same store sales decreased 4.7% and were negatively impacted by approximately 480 basis points due to recent generic introductions. Same store prescription volumes declined 1.4%, on a 30-day equivalent basis, in the reported quarter. The marketplace changes that restrict CVS Pharmacy from participating in certain networks had an approximately 460 basis point negative impact on same store prescription volumes, while the absence of leap day versus the prior year had an approximately120 basis point negative impact on same store prescription volumes. Adjusting for both the network changes and leap day, same store prescription volumes would have been 580 basis points higher, and would have increased 4.4% in the reported quarter on a 30-day equivalent basis.

CVS' Front store same store sales declined 4.9% in Q1 2017, the absence of leap day versus the prior year had a 100 basis point negative impact on front store same store sales, while the shift of the Easter holiday to Q2 2017 from the Q1 2016 had a 75 basis point negative impact. For the reported quarter, the generic dispensing rate increased approximately 140 basis points to 87.0% in CVS's Pharmacy Services segment and increased approximately 180 basis points to 87.5% in the Company's Retail/LTC segment.

Real Estate Program

During Q1 2017, CVS opened 27 new retail stores and closed 60 retail stores. In addition, the Company relocated 10 retail stores. As of March 31, 2017, the Company operated 9,676 retail stores, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico, and Brazil.

CVS intends to close a total of approximately 70 retail stores during 2017 and expects to take a cumulative charge of approximately $220 million primarily associated with the remaining lease obligations of such stores. The Company closed 60 of the 70 retail stores in Q1 2017 and took a charge of $199 million. The Company expects to close approximately ten additional stores during the remainder of 2017.

Outlook

CVS re-affirmed its FY17 EPS and cash flow forecast and provided guidance for Q2 2017. The Company continues to expect to deliver GAAP diluted EPS of $5.02 to $5.18 and adjusted EPS of $5.77 to $5.93 for the full year 2017. CVS is projecting to deliver GAAP diluted EPS of $1.15 to $1.19 and adjusted EPS of $1.29 to $1.33 in Q2 2017. The Company also confirmed its FY17 cash flow from operations guidance of $7.7 to $8.6 billion and free cash flow guidance of $6.0 billion to $6.4 billion.

Stock Performance

At the closing bell, on Friday, May 12, 2017, CVS Health's stock slipped 2.52%, ending the trading session at $80.21. A total volume of 9.05 million shares were traded at the end of the day, which was higher than the 3-month average volume of 6.16 million shares. In the last month and previous three months, shares of the Company have advanced 3.55% and 2.80%, respectively. Moreover, the stock gained 2.92% since the start of the year. The stock is trading at a PE ratio of 16.63 and has a dividend yield of 2.49%.

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SOURCE: Active Wall Street