CVS Health delivered better-than-expected first quarter earnings as the drugstore chain and pharmacy benefit manager forged ahead with its buyout of the insurer Aetna, a deal the companies say will transform how customers get care.
CVS Health announced late last year that it would spend about $69 billion in cash and stock on Aetna, the nation's third-largest health insurer. CVS Health CEO Larry Merlo told analysts Wednesday that the deal gives CVS Health a chance to "rethink and reinvent health care in our country."
The companies are trying to capitalize on a growing push to take care beyond the occasional doctor visit in order to better control medical spending and keep people healthy. Insurers and employers who provide coverage want patients with chronic conditions to monitor their health more frequently so they stay out of expensive hospitals and emergency rooms.
They also want people seeking help for low-grade problems like sinus infections to use less-expensive options like drugstore clinics.
CVS Health plans to expand the services it offers through its nearly 10,000 retail locations, deliver more care at home and get more involved in helping customers with things like staying on their medicines.
The company envisions turning some stores into one-stop shops where a customer with diabetes could get her eyes and blood sugar checked, visit a nurse practitioner and fill a prescription.
CVS Health is targeting patients with conditions like high blood pressure, asthma or depression. It also wants to help others deemed high risk and people who leave a hospital but still need care at home.
"We know there are billions of unnecessary and avoidable health care dollars being spent in these areas, and we know that we can and must do better," Merlo said Wednesday.
Merlo said Wednesday that CVS Health and Aetna remain on track to close their deal in the second half of this year. Shareholders from both companies approved the proposed acquisition in the first quarter, but regulators are still reviewing it.
Wall Street hasn't shared so far the enthusiasm CVS Health executives have for the Aetna deal. Analysts have noted that the companies face big challenges in combining and also expanding care.
CVS Health shares dipped more than 3 percent to $65.64 in midday trading Wednesday, after the company released its first-quarter results and a favorable forecast for 2018.
The stock had already fallen more than 9 percent since Dec. 1, the last trading day before the companies announced the Aetna deal. The broader S&P 500 index slipped less than 1 percent in the same time frame.
In the first quarter, CVS Health Corp. booked a $998 million profit, with adjusted earnings of $1.48 per share. Revenue grew 2.6 percent to $45.69 billion.
Analysts expected, on average, earnings of $1.41 per share on $45.77 billion in revenue, according to FactSet.
The company said prescriptions sold at stores open at least a year grew more than 8 percent in the quarter, which helped push overall sales at those stores up nearly 6 percent.
Revenue from the company's biggest business, which handles pharmacy benefit management, climbed 3 percent to about $32.2 billion.
CVS Health also said Wednesday that 2018 adjusted earnings should fall between $6.87 and $7.08 per share. FactSet says analysts forecast, on average, earnings of $6.47 per share.
Woonsocket, Rhode Island-based CVS Health is the second-largest U.S. drugstore chain behind Walgreens. It also processes well over a billion prescriptions annually as one of the nation's largest pharmacy benefit managers