Nov. 4 (Bloomberg) — CVS Health Corp. beat analyst's third-quarter estimates as prescription drug sales made up for the loss the company suffered after it quit selling tobacco products at its retail pharmacies.
Profit excluding one-time items of $1.15 a share beat by 2 cents the average of analysts' estimates compiled by Bloomberg. Revenue at the front of the store, where CVS previously sold tobacco items, fell 4.5 percent, based on same-store sales.
CVS stopped selling tobacco products and changed its name to CVS Health in September to focus on the medical side of its operations at its 7,700 drugstores. None of its rivals have followed suit on cigarettes, a step the company has said will cost it about $2 billion a year in revenue.
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Sales rose 9.7 percent to $35 billion, beating the $34.7 billion average of analysts' estimates. Pharmacy services revenue grew 16 percent, to $22.5 billion, the Woonsocket, Rhode Island-based company said in a statement today.
CVS shares rose 2.7 percent to $88.42 at 7:40 a.m. in New York.
The company also narrowed its forecast for 2014 adjusted earnings to $4.47 a share to $4.50 a share, from $4.43 to $4.51. Net income fell to $948 million, or 81 cents a share, from $1.25 billion, or $1.02, a year earlier, after the company paid down debt ahead of schedule.
The Patient Protection and Affordable Care Act, which will help provide health insurance coverage to some of the 42 million Americans the U.S. Census says didn't have coverage through 2013, may benefit CVS. The law will send increased business to the company's 900 walk-in medical clinics and spur prescription drug sales, which may help make up for the fall-off in tobacco sales.
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