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CVS profit in line with estimates as pharmacy sales increase

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(Bloomberg) — CVS Health Corp. (NYSE:CVS) earnings matched analysts’ earnings estimates in the fourth quarter, after the August acquisition of nursing-home pharmacy Omnicare helped drive sales growth at its drugstores.

Earnings were $1.53 a share excluding one-time items, the Woonsocket, R.I.-based company said in a statement, reiterating its 2016 earnings forecast. Fourth-quarter sales in the retail-pharmacies division rose 12 percent, with about half of the increase coming from the long-term care business bought as part of Omnicare. That deal also boosted revenue at the pharmacy benefit management (PBM) business, which contracts with health insurers and employers.

Fourth-quarter net income rose to $1.5 billion, or $1.34 a share, from $1.3 billion, or $1.14, a year earlier. Revenue increased 11 percent to $41 billion.

CVS has been bulking up through acquisitions. Last year it bought Omnicare for $13 billion and the pharmacy locations inside Target Corp. stores for $1.9 billion. Competitors are growing, too. OptumRX, the PBM arm of UnitedHealth Group Inc. (NYSE:UNH), bought benefit-management company Catamaran Corp. in July 2015. In addition, Walgreens Boots Alliance Inc.’s agreement last year to purchase Rite Aid Corp. could threaten CVS’s market share in the retail-pharmacy market.

CVS also said:

  • Same-store sales increased 3.5 percent.

  • Pharmacy-services revenue increased 11 percent, primarily driven by growth in specialty pharmacy, including the impact of Omnicare.

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