WOONSOCKET, RI – CVS Health revenue surged in the third quarter as the drugstore chain and pharmacy benefits manager added health insurance and pushed ahead with a plan to change how many of its stores operate.
The company said Wednesday its roughly $69 billion acquisition of the insurer Aetna helped its top line climb 36% in the quarter while earnings rose 10%.
Overall, CVS Health booked $1.53 billion in net income on $64.81 billion in revenue. Adjusted earnings totaled $1.84 per share.
Those results easily topped Wall Street's expectations for earnings of $1.77 per share on $63.03 billion in revenue, according to Zacks Investment Research.
CVS Health saw pharmacy claims climb more than 9% in the third quarter from its pharmacy benefit management side, which runs drug plans for customers like insurers and employers.
The company's prescription growth remains healthy and shows that the company is gaining market share, Moody's vice president Mickey Chadha said in an email.
The addition of Aetna's mail-order prescription business and specialty pharmacy operations also helped. Conversely, rival Walgreens Boots Alliance has said it has been hurt by a loss of business that Aetna shifted to CVS.
CVS Health's overall performance prompted the company to raise its 2019 forecast again. The company now expects 2019 earnings to range between $6.97 and $7.05 per share.
That's higher than the average analyst expectation for earnings of $6.98 per share, according to FactSet.
CVS Health Corp. runs more about 9,900 retail locations and processes over a billion prescriptions annually.
The company completed the Aetna deal nearly a year ago and plans to use the new business to help it move deeper into providing health care services and managing customer care.
Drugstores have been experimenting with more services as they face growing competition from online retailers like Amazon.com.
CVS Health said in June that it will start expanding a new store format that provides dietitians, helps people monitor chronic diseases like diabetes and includes community rooms that can be used for things like yoga classes. The company could open as many as 650 of these so-called HealthHub stores by the end of next year and is aiming for 1,500 by the end of 2021.
Chief Executive Larry Merlo told analysts Wednesday that initial results from some HealthHub stores in Houston were encouraging, and CVS was working to turn into the "country's leading consumer health company."
Chronic disease management has become a big source of health care spending and could help a company that's dealing with issues like tighter reimbursement on prescription drugs.
But this push also puts CVS Health in competition with doctor groups and hospital systems that also are working to keep patients healthy.
Shares of the Woonsocket, Rhode Island, company jumped nearly 5% to $70.62 in late morning trading, while broader indexes rose slightly.
The stock had climbed only about 3% so far this year as of Tuesday's close.
Follow Tom Murphy on Twitter: @thpmurphy