(AP) — CVS Health‘s earnings nearly doubled in the last quarter of 2017, fueled by a $1.5 billion tax benefit that helped counter a flat performance from its drugstores.
The company also said Thursday that it will use part of its federal tax overhaul benefit to beef up employee compensation and start a new parental leave program.
CVS Health runs the nation’s second-largest drugstore chain with more than 9,800 locations. The company also processes more than a billion prescriptions annually as a pharmacy benefit manager, or PBM.
In the fourth quarter, the company earned $3.29 billion. Results adjusted to exclude the tax break totaled $1.92 per share. Revenue climbed 5 percent to $48.38 billion.
That topped Wall Street’s expectations. Analysts surveyed by FactSet expected earnings of $1.89 per share on $47.54 billion in revenue.
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The company’s PBM side, which processes prescription claims for insurers, large employers and other clients, saw revenue increase more than 9 percent to $34.2 billion in the fourth quarter. Meanwhile, revenue from the business segment largely made up of its stores came in nearly flat at around $21 billion.
Sales from established stores also came in flat and fell in the front end, or the area outside the store pharmacies. That’s an important metric because it excludes the impact of stores that have opened or closed recently.
Drugstores, like other retailers, have been struggling with fewer customer visits as more shoppers shift to buying what they need online.
Woonsocket, Rhode Island-based CVS Health Corp. also said Thursday that it booked $56 million in financing costs for its planned purchase of the insurer Aetna Inc., a $69-billion deal announced in December. CVS Health is not offering an earnings-per-share forecast for 2018 because of that pending deal.
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The company also said Thursday that it was raising its starting wage for hourly workers to $11 an hour from $9. It also said it will not increase health insurance premiums for the 2018-2019 plan year, and it will start a paid parental leave program that gives employees with a new baby four weeks off at full pay.
Several other companies also have announced employee bonuses or other enhanced benefits since Republican lawmakers and President Donald Trump sped at $1.5 trillion tax cut plan into law at the end of last year. Another health care company, the Blue Cross-Blue Shield insurer Anthem said Monday that it will contribute $1,000 into the 401k retirement accounts of more than 58,000 employees and recent retirees.