CVS Health raises full-year profit forecast on Aetna strength - Yahoo Finance

FILE PHOTO: Logos of CVS and Aetna are displayed on a monitor above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 5, 2017. REUTERS/Lucas Jackson/File Photo

By Manas Mishra and Caroline Humer

(Reuters) - CVS Health Corp on Wednesday raised its full-year profit forecast and reported first-quarter earnings that topped Wall Street estimates due to growth in its Aetna health insurance business, and as drug prices fell within its expectations.

Shares rose more than 5 percent to $57.35. They had fallen 17 percent this year, hurt by a weak forecast in February and a cut to rival Walgreen Boots Alliance's full-year outlook last month due to lower generic drug prices.

Aetna, CVS's health insurance unit, beat analysts' consensus by more than a billion dollars in the quarter, helped by its accounting for lower medical costs than anticipated during the fourth quarter.

The company, which bought Aetna for $69 billion in November, said 2019 cost savings from the deal were tracking near the high end of its $300 million to $350 million range, and that 2020 savings would likely exceed its $750 million target.

The company said a handful of new "HealthHub" pharmacies launched in Houston this year that provide healthcare services, such as chronic care management for diabetes, have drawn more customers than expected. It plans to launch more such stores in Houston and plans to provide details of a national roll-out next month.

"Consumerism in healthcare is here to stay," CVS Chief Executive Larry Menlo said. "We are beginning to see this evolution through the HealthHubs. We are not just selling hundreds of products, it's a combination of products and services."

Menlo also said the company would take part in a pilot project announced by the U.S. Center for Medicare and Medicaid Services to expand point-of-sale rebates to patients in Medicare plans. The government has also proposed a rule that would require health plans to pass on all rebates, but it is not clear if it will be finalized for 2020.

Sales in its health care benefits unit rose by $16.55 billion to $17.78 billion with the addition of Aetna to its operations.

Sales of prescription drugs at its pharmacies were hurt as the company gets paid less for filling prescriptions. That was offset by higher volumes and higher prices of brand name drugs.

CVS in February had cautioned that rebate payments it guaranteed to customers were larger than what it has received from drugmakers due to lower-than-expected increases in drug prices.

"Considering that expectations have been low, we see this as the first positive catalyst that restores investor confidence in this management team," SVB Leerink analyst Ana Gupte said of the first-quarter profit and raised 2019 forecast.

CVS said it now expects full-year adjusted profit of $6.75 to $6.90 per share, compared with its prior forecast of $6.68 to $6.88.

Overall sales at its retail unit, which also sells over-the-counter-drugs and consumer health products, rose 3.3 percent to $21.12 billion.

The drugstore chain operator and pharmacy benefits manager said it earned $1.62 per share excluding items, beating analysts' average estimate by 12 cents per share, according to IBES data from Refinitiv.

Net income rose 42.4 percent to $1.42 billion in the first quarter. Revenue rose 34.8 percent to $61.65 billion.

(Reporting by Manas Mishra in Bengaluru and Caroline Humer in New York; Editing by Saumyadeb Chakrabarty and Bill Berkrot)

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2019-05-01 15:24:00Z
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Why that strong ADP jobs number could be painting an inaccurate picture - CNBC

A store front window in Miami Beach.

Joe Raedle | Getty Images

Moody's Analytics chief economist Mark Zandi said technical issues may have made ADP's report on the April job market look much stronger than it actually was.

Earlier Wednesday, ADP's report with Moody's said private sector hiring hit an eye-popping 275,000 in April, just about 100,000 more than expected.

But Zandi said on CNBC shortly after the release that technical factors may have inflated the number. He also said, in the ADP release, that the number overstates the strength of the economy.

"Bottom line, I don't think it's going to come in at 275,000. My sense is its going to come in pretty close to consensus 175,000 to 200,000," he later said in a telephone interview.

ADP's payroll number sometimes tracks close to the actual government nonfarm payroll report, and sometimes not. Still, it is monitored by Wall Street as one metric to watch ahead of the monthly jobs report, typically released two days later.

Zandi said he doesn't normally qualify the number. "I did that because there are three technical issues going on that conspired to pump it up," he said.

"We take the ADP number, other economic variables and use that to estimate the BLS number. The ADP number came in unusually soft compared to what we've been seeing in recent history. Relative not only to last couple of months but last couple of years," he said.

At the same time, very low jobless claims in the survey week counterbalanced the weak ADP payroll number. And that inflated the number. Another factor is the 275,000 ADP number includes some actual history of the government reports.

"When trying to predict this months' change we also look at recent history. If you're in a period of strong job growth, that will affect your estimate. If you're in a period of weak job growth, that will affect your estimate. And if you have a period of extraordinary volatility, that's also going to show up in the number, and that pumped up the [ADP] number," he said.

Zandi said there are often technical factors surrounding the number, but this was an extreme case.

"It's an estimate. I could adjust it, but I didn't' want to do that. I didn't' think that was appropriate," he said. "I thought it was important to provide context."

Nonfarm payrolls, released by the government, have been extremely volatile this year. January job gains totaled 312,000; February was 33,000 and there were 196,000 jobs created in March.

As for the government's report Friday, Zandi said it may contain its own quirks. For instance, the government report theoretically could be inflated by census workers added to the government payrolls in April or May.

"That could be a couple hundred thousand people," he said.

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2019-05-01 14:43:49Z
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Apple's iPad is the hidden gem in the company's earnings - Business Insider

Reuters/John Gress

• Coverage of Apple's second-quarter earnings has focused on lower iPhone sales, strong growth in services and accessories, and the company's bullish revenue forecast. 
• The tech giant's hidden gem was the iPad with sales growth of 22% in the period, the biggest increase in six years.
• iPad revenues returned to growth in Greater China and rose by at least 10% in all other regions.
• Sales of iPhones and Macs fell last quarter, while services revenue grew at a slower rate.
• The iPad appeals to first-time buyers, giving Apple more users to target with its services and accessories.
• Watch Apple trade live.

Coverage of Apple's second-quarter earnings has focused on the record slump in iPhone sales, rising sales of services and accessories, and a bullish revenue forecast for the current quarter.

But stock-watchers may have missed a hidden gem in the tech giant's results: the iPad.

Sales in Apple's tablet division soared 22%to about $4.9 billion in the first three months of 2019, the fastest pace of growth in six years, CEO Tim Cook said on the company's earnings call. More than half of its customers were first-time iPad buyers, he added, which boosted the base of active iPad users to an all-time high.

The iPad's "blockbuster quarter" saw it return to top-line growth in Greater China, Cook said on the call, and post "strong double-digit growth" in revenues across the Americas, Europe, Japan, and the rest of Asia Pacific. Moreover, its sales surged to a second-quarter record in Japan, and more than doubled in South Korea, Thailand, and Mexico. 

The product line's performance is striking relative to Apple's other offerings. Sales of iPhones fell by 17% to about $31 billion in the second quarter, shrinking from 61% to 54% of turnover, according to Apple's earnings report. Mac revenues slid 5% to $5.5 billion too.

Sales in the services business rose 16%, slower than iPad revenues. Only the wearables, home, and accessories segment — which houses numerous products including Apple Watch, Apple TV, Air Pods, Beats, and HomePod — expanded faster, with sales growth of 30%. 

Strong tablet sales were "fueled primarily by the great customer response to our new iPad Pros," said CFO Luca Maestri on the earnings call. The latest model's resolution, processing power, and support of Apple Pencil and Smart Keyboard make it a popular replacement for laptops with both consumers and professionals, he added.

The iPad is also helping Apple to capture the enterprise market.

"Across 450 airlines, iPad is overwhelmingly the preferred solution for the pilot's electronic flight bag," Maestri said on the call, adding that it's also used for ground operations and flight maintenance.

"One of the largest airlines in the world tells us that the adoption of iPad has cut maintenance delays in half."

Still, the iPad's appeal to first-time buyers could generate the most value for Apple. Adding more users to its ecosystem allows the company to flog more cables and covers, as well as hawk subscriptions to Apple Music, Apple News+, and the upcoming Apple Arcade, boosting accessories and services revenue.

The iPad's resurgence could prove temporary, but as Apple races to offset plunging iPhone sales, it shouldn't be ignored.

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2019-05-01 13:55:36Z
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Private payrolls surge by 275,000 in April, blowing past estimates and biggest gain since July - CNBC

The U.S. economy added far more jobs than expected in April as payrolls in the services sector grew by the most in more than two years, according to data released by ADP and Moody's Analytics on Wednesday.

Private payrolls grew by 275,000 last month, the biggest increase since July, when they expanded by 284,000. Economists polled by Dow Jones expected private payrolls growth of 177,000.

Services-providing jobs increased by 223,000 in April, led by a gain of 59,000 jobs in professional and business services. Education and health services companies also added 54,000 jobs while employment within the leisure and hospitality industry expanded by 53,000.

Goods-producing jobs — which include construction, manufacturing and mining — rose by 52,000, led by a 49,000 payrolls increase in construction. The economy added just 5,000 manufacturing jobs while mining employment declined by 2,000.

Overall, medium-sized businesses, those that employ between 50 and 499 people, led the way in jobs creation last month by adding 145,000 jobs. Jobs within small businesses, meanwhile, increased by 77,000 while large companies hired 53,000.

"The job market is holding firm, as businesses work hard to fill open positions," Mark Zandi, chief economist at Moody's Analytics, said in a statement. "The economic soft patch at the start of the year has not materially impacted hi ring. April's job gains overstate the economy's strength, but they make the case that expansion continues on."

Wednesday's report came after the Commerce Department said last week the economy grew by 3.2% in the first quarter on an annualized basis. That was the best start to a year since 2015. The official jobs report for April from the government will be released this Friday.

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2019-05-01 12:16:05Z
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CVS Health beats first-quarter expectations, raises full-year forecast - CNBC

Pedestrians pass in front of a CVS location in New York.

Scott Mlyn | CNBC

CVS Health on Wednesday reported first-quarter earnings and revenue that beat analysts' expectations and raised its full-year earnings forecast.

Here's what the company reported compared with what Wall Street was expecting, based on average analysts' estimates compiled by Refinitiv:

• Adjusted earnings per share: $1.62 vs. $1.50 expected
• Revenue: $61.65 billion vs. $60.39 billion expected

This quarter was the first full one since CVS closed its $70 billion acquisition of health insurer Aetna in November.

On an unadjusted basis, CVS' fiscal first-quarter net income rose to $1.42 billion, or $1.09 per share, up from $998 million, or 98 cents per share a year earlier. When excluding the costs of integrating Aetna, store closures and some other items, CVS earned $1.62 per share, above the $1.50 per share expected by analysts surveyed by Refinitiv.

Revenue rose 35% to $61.65 billion — largely driven by the new Aetna business — beating expectations of $60.39 billion.

"Following the close of our Aetna acquisition in late November, our first full quarter of combined operations was a success in many ways," CVS CEO Larry Merlo said in a statement.

CVS raised its 2019 earnings forecast to between $6.75 and $6.90 per share, up from the previously guided range of $6.68 to $6.88 per share.

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2019-05-01 11:02:12Z
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Apple stock on a $327 billion rally after iPhone sales bottom out - Business Insider

Apple CEO Tim Cook.Getty

• Apple's stock charged its way up to $212 in pre-market trading on Wednesday, after reporting its worst-ever decline in iPhone sales. 
• It cements a $327 billion rally in its market cap since January 3, when Apple issued an explosive sales warning on holiday trading, blaming weak iPhone sales in China.
• A number of analysts think the downturn in iPhone sales has got as bad as it is going to get, with the market bottoming out.
• Visit Business Insider's homepage for more stories.

Apple stock has been on a steady recovery rally in recent months, which looks set to be cemented by a Wall Street vote of confidence in the iPhone maker's latest earnings.

Since hitting an 18-month low of $142.19 on January 3 — directly after Apple issued an explosive sales warning on holiday trading after iPhone sales took a hit in China — Apple's stock charged its way up to $212 in pre-market trading on Wednesday. 

If these gains hold during normal trading hours, it means Apple's stock will close the day on a high not seen since November last year.

The $212 pre-market share price marks a $327 billion rally since January 3, putting Apple's market cap at $999.7 billion. It means Apple is close to the trillion-dollar valuation it broke last year when it became the world's most valuable company.

Markets Insider

Wall Street responded warmly to Apple's second-quarter earnings, published Tuesday. The company beat expectations, posting revenue of $58 billion, with higher than forecast iPhone and services sales.

Read more: Apple's shares jump as its Q2 numbers beat the Street

The view of some analysts was that the downturn in iPhone sales has got as bad as it is going to get after Apple's brutal earnings warning in January, described by Wedbush at the time as "the darkest day in the iPhone era."

iPhone sales stood at $31 billion in Q2, 2019.Business Insider Intelligence

iPhone sales may have fallen $7 billion year-on-year in Q2, but Wells Fargo said "we are now seeing indications stabilizing / bottoming iPhone demand" in a note to clients. Bank of America Merrill Lynch agreed: "iPhones/China have bottomed out and are improving." Credit Suisse also noted that the "iPhone likely bottomed."

It's a view that was echoed by Apple CEO Tim Cook, who struck a relieved note on an earnings call Tuesday. "We certainly feel a lot better than we did 90 days ago," he said. 

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2019-05-01 10:22:26Z
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CVS Health beats first-quarter expectations, raises full-year forecast - CNBC

Pedestrians pass in front of a CVS location in New York.

Scott Mlyn | CNBC

CVS Health on Wednesday reported first-quarter earnings and revenue that beat analysts' expectations and raised its full-year earnings forecast.

Here's what the company reported compared with what Wall Street was expecting, based on average analysts' estimates compiled by Refinitiv:

• Adjusted earnings per share: $1.62 vs. $1.50 expected
• Revenue: $61.65 billion vs. $60.39 billion expected

This quarter was the first full one since CVS closed its $70 billion acquisition of health insurer Aetna in November.

On an unadjusted basis, CVS' fiscal first-quarter net income rose to $1.42 billion, or $1.09 per share, up from $998 million, or 98 cents per share a year earlier. When excluding the costs of integrating Aetna, store closures and some other items, CVS earned $1.62 per share, above the $1.50 per share expected by analysts surveyed by Refinitiv.

Revenue rose 35% to $61.65 billion — largely driven by the new Aetna business — beating expectations of $60.39 billion.

"Following the close of our Aetna acquisition in late November, our first full quarter of combined operations was a success in many ways," CVS CEO Larry Merlo said in a statement.

CVS raised its 2019 earnings forecast to between $6.75 and $6.90 per share, up from the previously guided range of $6.68 to $6.88 per share.

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2019-05-01 11:01:50Z
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