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CVS Health to Close Aetna Merger by Thanksgiving

Analysis  |  By Jack O'Brien  
   November 06, 2018

In its first earnings report since receiving federal approval for its megamerger with Aetna, CVS posted net revenues of $47.3 billion, up 2.4% year-over-year.

CVS Health reported another strong round of earnings for Q3 Tuesday morning, and stated that the company expects the merger with Aetna to close before Thanksgiving.

Net revenues totalled $47.3 billion for Q3, up from $46.7 billion in Q2 and 2.4% better than revenues posted this time last year. Adjusted earnings per share (EPS) rose to $1.73, up from an EPS of $1.50 in Q3 2017.

CVS also reported a net income increase of $105 million in Q3, up 8.2% year-over-year, which factored into an improved guidance for the end of the year. The company now expects cash flow from operations of nearly $9 billion with free cash flow of $7 billion to round out 2018.

While the financial statistics CVS reported were impressive, one of the most significant aspects of Tuesday's earnings report was that the company announced that it expects to close on its merger with Aetna by Thanksgiving. After receiving approval from the Department of Justice in early October, the two potential partners also have garnered approval from 23 of 28 states.

Despite the threat from New York state regulators that they would block the deal, CVS stated in its earnings report that there are "no remaining antitrust impediments to closing the proposed acquisition of Aetna."

Related: CVS-Aetna Deal Tests Who Has The Right Data

Related: CVS-Aetna Forcing Hospitals to Rethink Their Business Models


"Given CVS Health’s performance year-to-date and our confidence in our expectations for the remainder of this year, we are confirming our stand-alone consolidated operating profit, adjusted EPS and free cash flow guidance for 2018," Larry Merlo, CEO of CVS Health, said in a statement. "While CVS and Aetna remain separate companies today, the performance of both companies highlights the very solid financial foundation on which we’ll build our revolutionary new model that will transform the health care experience for consumers and, in the process, deliver substantial value for our shareholders."

Related: If CVS Bets Big on Urgent Care, Hospitals Should Worry


  • Consolidated operating profit decreased by $146 million, or 5.6% year-over-year, which the company attributed to three factors.

    • 1. A $64 million increase in acquisition-related transaction and integration costs.

    • 2. Operating expense increases related to savings investments from the tax reform bill passed last year.

    • 3. An additional increase in operating expenses associated with business growth.

  • The pharmacy chain also expects a full year consolidated operating profit decline of between 39% to 41%, reflecting goodwill impairment.

  • CVS kept its adjusted EPS guidance in a range between $6.98 to $7.08.

  • Pharmacy revenues grew 2.6% for CVS in Q3, reaching $33.8 billion, due in large part to growth in mail choice claim volume.

For complete financial information, review CVS Health's filing with the Securities and Exchange Commission.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.


Net revenues were up 2.4% and adjusted EPS rose to $1.73, an increase of $0.23 compared to Q3 2017.

CVS also reported a net income increase of $105 million, up 8.2% year-over-year, which factored into an improved year-end guidance.

CEO Larry Merlo said the pharmacy chain is entering the Aetna deal on a "very solid financial foundation."

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