CVS warns of lower profit, prescription losses
Drug-store chain CVS Health lowered its profit forecast for the year and warned that it would lose tens of millions of prescriptions in 2017, sending the company's stock plunging.
The company reported a sharp increase in profit and revenue for the third quarter, compared to a year earlier, but investors are fretting about the worsened outlook.
CVS shares tumbled 13.8% in pre-market trading Tuesday to $71.40.
The company said it expects to lose more than 40 million retail prescriptions in 2017 due to "new restricted pharmacy networks" that exclude CVS.
For 2016, CVS lowered its full-year earnings-per-share projection from a previous range of $4.92 to $5 to a new range of $4.84 to $4.90.
CVS CEO Larry Merlo said in a statement that company remains "confident in our model," but "very recent pharmacy network changes in the marketplace are expected to cause some retail prescriptions to begin migrating out of our pharmacies this quarter. In addition, we are currently experiencing slowing prescription growth in the overall market as well as a soft seasonal business."
Net revenue rose 15.5% to $44.6 billion for the third quarter, missing S&P Global Market Intelligence expectations of $45.3 billion. Net income jumped 23.6% to $1.5 billion, reflecting a sharp increase in operating profit and meeting expectations.
On a per-share basis, earnings totaled $1.43 for the quarter, matching expectations.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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