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CVS Health Increases Low End Forecast for 2016

December 16, 2015 By Troi Freelan Leave a Comment

On Wednesday, CVS Health increased its dividend while tightening its earnings forecast for 2016. The company also repeated a message of patience, as the second largest chain of drugstores in the nation laid out growth expectations.

Acquisitions as well as other gains in business will give a boost to revenue in 2016, but it will not show for a few months as it will need time to trickle down to the company’s bottom line said the company in a prepared statement.

The company added during its annual New York analysts meeting that growth in earnings would increase during second six month of 2016.

During August, the company closed on a deal worth over $10 billion to acquire Omnicare a pharmaceutical distributor. The deal allows CVS Heath to have national reach in the dispensing of prescription drugs to the skilled and assisted living nursing homes amongst other healthcare providers.

CVS expects Omnicare to add as much as 20 cents to its per share earnings for 2016.

In addition, CVS Health said that it closed on the acquisitions of in-store pharmacies at Target the retail giants. The deal was worth $1.9 billion and announced back in June.

The pharmacies and clinics in the Target acquisition will be integrated and rebranded and amount to over 1,660 pharmacies and 80 clinics. The integration and rebranding will take between six and eight months to complete.

Overall, CVS Health expected its adjusted earnings for 2016 to be from $5.73 to $5.88 a share in comparison to an earlier guidance that started with $5.68 a share.

Analysts are expecting $5.82 a share in adjusted earnings.

CVS Health has over 7,900 retail pharmacies but it draws the majority of its overall revenue from its business of pharmacy benefits management, which operates prescription drug programs for clients such as employers and insurers.

The company said its new forecast represents an 11.25% to 14.25% growth based upon its forecast for this year, which is reaffirmed at between $5.14 and $5.18 a share.

Shares at the company climbed over 3.5% on Wednesday following the announced to trade at $95.83 during midday trading.

CVS announced as well that it is paying 42.5 cents per share cash dividend, which is up from an original 35 cents that makes the annual dividend $1.70.

Filed Under: Business, Health Tagged With: CVS Health, Target Pharmacies

About Troi Freelan

Troi Freelan is a freelancer, blogger, and web designer specializing in finance and investing. During his years working for several top banks, he has learned the ins and outs of the financial industry and the inner workings of business finance. Today, he spends most of his time writing financial news and caring for his two children in the wide-open spaces of Ohio.

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