CVS Health Corporation (NYSE:CVS) lowered its profit forecast for the year and warned weak growth for 2017, as the company said that it will lose 40 million prescriptions next year.
The biggest U.S. drugstore chain expects adjusted earnings per share of $5.77 to $5.93 for 2017. The Wall Street Analysts had expected earnings of $6.52 per share. For 2016, CVS cut its full-year earnings-per-share guidance from a previous range of $4.92 to $5 to $4.84 to $4.90. "Obviously we are not satisfied with next year’s growth projection," Merlo said.
The stock dropped 11.88 percent to $73.44 in the early trading. CVS is losing millions of prescriptions to its rivals Walgreens Boots Alliance Inc. Walgreens Boots has been aggressively pursuing deals under the lead of CEO Stefano Pessina.
“Walgreens is trying to be the best friend of every PBM that’s not named Caremark,” said Mr. Fein. Walgreens is courting prescriptions because it wants to drive more traffic to its stores, so it can sell shoppers beauty and other products. CVS Health has been less willing to chase foot traffic with discounts, and even encourages customers to fill prescriptions by mail.
For the latest quarter, CVS reported a profit of $1.54 billion, or $1.43 a share, compared with $1.25 billion, or $1.11 a share, a year earlier. Revenue increased 15 percent to $44.62 billion in the third quarter ended Sept.30.
"We continue to be confident in our business model and our ability to drive long-term growth," Merlo said. "We’ve long said that the beauty of our model is that we can pivot to address changes in the market."