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CVS Health Q1 Adjusted EPS Tops Predictions, Confirms Full Year Outlook

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CVS Health Corporation CVS reported net income of $1.15 billion, down 6.1 percent from $1.22 billion in the prior year quarter. Its earnings also fell 2.8 percent to $1.04 a share from $1.07 a share in the same quarter in 2015. On an adjusted basis, the company would have witnessed 4 percent growth in its EPS to $1.18 for the current year's first quarter. This was $0.02 a share higher than the Street expectations.

CVS Health's net revenues grew 19 percent to $43.22 billion from $36.33 billion and came in above the analysts' estimations of $43.0 billion.

The company's President and CEO, Larry Merlo, commented, "We posted solid results this quarter and are off to a strong start in 2016. Operating profit in the retail business was in line with our expectations while operating profit in the PBM exceeded our expectations, driven by strong prescription volumes. We also generated $1.8 billion of free cash during the quarter and continued to return value to our shareholders through high-return investments in our business as well as dividends and share repurchases."

Merlo continued, "Our contract wins have grown for the 2016 PBM selling season and our 2017 season is off to a solid start with some early wins. Our distinctive, channel-agnostic solutions are resonating strongly in the market as they continue to control patient and client costs while improving health outcomes. We continue to believe we have the right strategy for success in the evolving health care marketplace."

Going forward, CVS Health confirmed its adjusted earnings outlook of $5.73-$5.88 a share for the full year 2016 while GAAP earnings were slashed to $5.24-$5.39 a share from $5.28-$5.43 a share. Analysts predict the company to earn $5.82 a share. It also reiterated free cash flow of $5.3-$5.6 billion while predicting cash flow from operations of $7.6-$7.9 billion.

For the second quarter, the company guided adjusted earnings to $1.28-$1.31 a share while GAAP earnings were guided between $1.17 and $1.20 a share. This was lower than the Street predictions of $1.35 a share.

On Monday, the stock traded 0.95 percent higher.

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