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CVS Shares are Tumbling


Last Wednesday, CVS Health announced the forecast on its earnings for the whole year. It went off the expectations of the analysts.

CVS badly wanted a change as they spent almost $70 billion at the pharmacy. These old problems plague CVS as it persuades Wall Street.

The acquirement of Aetna has been close in November by CVS. In the 56th year of history, the transaction is an exciting change. This year’s forecast in CVS was released last Wednesday disappointing investors and gave fear regarding the company’s business.

As forecast by CVS for 2019, there are adjusted rates per share from $6.68 to $6.88 which per share is lower than $7.41 polled by the Refinitiv analysts anticipates lower than 47.08 per share adjusted as reported by CVS in 2018.

Moreover, two out of three units in business, pharmacy and long-term/retail care services, has a possibility of dropping of income as predicted by the company. Health Care benefit is the third part which does not require a yearly change in estimation because of the newly developed business, Aetna.

CVS is planning to invest the same amount this year as they spent in Aetna. They anticipated saving from incorporating it.

CVS shares decline to 8 percent last Wednesday, a nightmare since 2016.

CEO Larry Merlo discussed with the analysts the CVS earning results for the fourth quarter, “We understand the importance of balancing near-term execution with a longer-term vision acutely, and we are confident that these actions will position us well in 2020 and beyond.”

Many pharmacies are now suffering compensation pressure over the steep prices of prescription medicines.

Kevin Hourican, President of CVS Pharmacy, said that it has a significant impact on everyone. The long-term care department of CVS, which provides pharmacy facilities for senior citizens, has been a drag on the financial outcome of the company.

Caremark, the assistance management business of CVS pharmacy, is challenging because of the unraised prices of drugmakers on branded prescription medicines.

The Trump administration requested Congress to prohibit rebates or negotiation between drugmakers and PBMs providing medicines on formularies.

On a conference call last Wednesday, executives assured analysts that they are fixing the issues. CVS is struggling to provide solutions on various challenges in the old businesses rather than aiming its innovative vision.