CVS Health’s bottom line rebounded from red to black in the fourth quarter, driven by revenue from Hartford health insurer Aetna and lower charges.
The Rhode-Island based pharmacy giant, which acquired Aetna in late Nov. 2018, reported $1.74 billion in profits, or $1.33 per diluted share, for the three months ended Dec. 31, 2019. That’s compared to a loss of $421 million, or 37 cents, in the same quarter of 2018.
Revenue totaled $66.89 billion, up 22.9% from $54.42 million in the fourth quarter of 2018 (which included approximately one month of Aetna operations). Aetna contributed the majority of the revenue increase, while CVS’ pharmacy services and retail segments were also contributors.
The profits beat analyst expectations, and CVS shares opened Wednesday at $74.58, up from Tuesday’s closing price of $73.85.
CEO Larry Merlo said the results “reflect strong financial and operational execution and a successful first year of integrating the Aetna business.”
“We’re using our unmatched capabilities to create a higher-quality, simpler and more affordable health care experience, which benefits patients, clients and consumers and positions the company for continued success,” he said.
The significant quarterly profit swing was impacted by a $2.23 billion impairment charge CVS took in the fourth quarter of 2018. CVS had no impairment charge in the fourth quarter of 2019.
In its first full year owning Aetna, CVS booked a profit of $6.63 billion, or $5.08 per share, an improvement from a loss of $596 million, or 57 cents, in 2018. CVS said the deal has produced synergies of approximately $500 million, higher than initial expectations.
CVS expects 2020 operating income to range between $12.8 billion and $13 billion, which would be above 2019 operating income of $11.99 billion. CVS also expects higher earnings per share from continuing operations this year.
Meanwhile, the company has been opening HealthHUB retail locations across the country, with the number slated to grow as high as 650 this year. That is expected to include a Hartford location, HBJ first reported in November.
