CVS 3Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Pretty solid growth

“Our adjusted earnings per share increased from 9% to $1.15 per share, a penny above the high end of our guidance range. Both the PBM and retail segments exceeded our revenue expectations along with the retail business delivering expanded gross margin. Operating profit in the retail business grew 8.8% at the high end of our expectations while operating profit in the PBM grew 8.5% exceeding our expectations.”

PBM clients are focused on controlling specialty spend

“Our clients continue to be very focused this season on achieving better control of specialty spend and we continue to differentiate our specialty offerings to provide a high level of clinical support to patients while managing trend for our clients and driving continued share gains in the business.”

Modest positive benefit from health reform

” Regarding health reform, not much is new since our last update and we continue to see a modest positive benefit to our script transform reform and that’s largely from the expansion of Medicaid. ”

Front store traffic was down

” turning to the front store, we saw a continued decrease in traffic that was partially offset by an increase in the average customer ticket. Our front store comps were down 4.5% and adjusting for the tobacco compact costs would have been approximately 480 basis points higher.”

Plans are emphasizing consumer driven plans with narrower networks

“I think as far as plan design changes we’re obviously see more movement consumer driven health plans. Where the member there’s more financial responsibility particularly upfront. So we are seeing providers, a high interest of providers in fact most of 50% providing coverage of generics so that there isn’t a negative impact on adherence which we are very pleased to see. I think other things around plan design are I think you are going to see more interest in narrow networks as we are kind of, as we are returning to higher trend I think plans are going to be looking to at the lower cost and ways like that. And I think when you think of narrow networks you really got to just aggregate the different segments.”