CVS profit nearly doubles on U.S. tax overhaul

[February 08, 2018]    By Nandita Bose

NEW YORK (Reuters) - Drugstore chain and pharmacy benefits manager CVS Health Corp, posted a big jump in fourth quarter profit on Thursday, helped by savings from the new U.S. tax law, sending its shares up over 2 percent.

A CVS Pharmacy store is seen in the Manhattan borough of New York City, New York, U.S., November 30, 2017. REUTERS/Shannon Stapleton

The company also said it would raise the minimum wage for its hourly employees to $11 an hour, effective April 2018.

CVS expects a benefit of at least $275 million in 2018 from the new tax plan, which it will invest in its business. In January the company said it expected its tax rate to be about 27 percent this year.

Last year, CVS said it would buy health insurer Aetna for $69 billion and tackle soaring healthcare spending through lower-cost medical services in pharmacies.

The company's pharmacy services unit revenue rose about 9.2 percent to 34.2 billion in the fourth quarter ended Dec. 31, primarily driven by growth in its pharmacy network and specialty pharmacy claims.

Net income attributable to the company rose 92.6 percent to $3.3 billion, or $3.2 per share, in the fourth-quarter ended Dec. 31, from $1.7 billion, or $1.59 per share, a year earlier, helped by an income tax benefit of $1.5 billion.

Excluding tax savings, the company earned $1.92 per share, beating analysts' average estimate of $1.89, according to Thomson Reuters I/B/E/S.

Revenue rose 5.3 percent to $48.4 billion.

CVS said it expected adjusted operating profit growth of 0.5 percent to 4.5 percent during the first quarter.

(Reporting by Nandita Bose in New YorkEditing by Chizu Nomiyama and Andrew Hay)

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