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BLOOMBERG
CVS Health Corp cut its earnings forecast for the year as it looks to pay for two major acquisitions that are central to its strategy of broadening its health-care services.
Adjusted profit for 2023 will be $8.50 to $8.70 a share, Woonsocket, Rhode Island-based CVS said in a statement, a decrease of 20 cents across the range from its earlier view. The company cited costs for acquiring technology provider Signify Health, along with another deal for Oak Street Health. CVS now faces challenges of integrating Oak Street and Signify and determining how they want their care delivery business to operate.
As traditional retail pharmacy has become more competitive, giant drug-store and retail chains have looked to other dimensions of health care for alternative revenue streams. Rival Walgreens Boots Alliance Inc has been adding primary care centres to US locations, and earlier this year, Amazon.com Inc closed a $3.49 billion deal with virtual primary-care clinic company One Medical.
CVS’s adjusted earnings for the quarter were $2.20 a share, beating the $2.09 average estimate of analysts surveyed by Bloomberg. Revenue rose 11% from a year ago to $85.3 billion, beating estimates of $80.9 billion.
The chain also realigned how it reports earnings with the creation of two new segments that will replace the retail/long-term care and pharmacy services units. The first, Health Services, will include health-care delivery operations such as Oak Street and Signify. The other segment, Pharmacy and Consumer Wellness, includes current businesses such as traditional retail pharmacy, specialty pharmacy, mail-order pharmacy and front-store offerings.