CVS Health Corp (NYSE:CVS) posted mixed fourth quarter earnings results and reaffirmed its 2017 outlook, as pharmacy services continue to drive the bulk of the company’s growth.

Written by StockNews.com

The Woonsocket, RI-based pharmacy chain reported Q4 EPS of $1.71, which was $0.04 better than the Wall Street consensus estimate of $1.67.

Revenues rose 11.7% from last year to $45.97 billion, missing analysts’ view of $46.51 billion, however.

CVS said that Pharmacy Services Segment revenue jumped 17.9% to $31.3 billion in the latest period, helped by growth in pharmacy network and specialty pharmacy claims. Those claims rose 23.9% to 294.3 million in Q4, helped by an increase in net new business.

Meanwhile, revenues in the Retail/LTC Segment gained 4.7% to $20.8 billion, mostly driven by the acquisition of Target (TGT) pharmacies.

Pharmacy same store prescription volumes rose 2.0% on a 30-day equivalent basis, while same store sales fell 0.7%. Front store comps were hurt by slower customer traffic and “efforts to rationalize promotional strategies.”

Looking ahead, CVS forecast Q1 EPS of $1.07 to $1.13, which is in-line with Wall Street expectations for earnings of $1.12 per share.

CVS also reiterated its previously announced 2017 EPS forecast of $5.77 to $5.93, straddling analysts’ view of $5.86.

The company commented via press release:

“In 2016, we delivered strong results across the enterprise, with revenues up nearly 16% and Adjusted EPS up more than 13%. Adjusted EPS in the fourth quarter came in just above the high end of our guidance, as the Retail/LTC segment delivered results in line with our expectations while the PBM exceeded expectations. We also generated more than $8 billion in free cash for the full year, exceeding our expectation, and we returned more than $6 billion to shareholders through dividends and share repurchases. Our substantial cash generation capabilities provide opportunities to bolster our growth, and we will continue to be thoughtful and disciplined with respect to using our free cash to return value to shareholders.”

CVS Health Corp shares rose $1 (+1.3%) in premarket trading Thursday. Year-to-date, CVS has declined -1.79%, versus a 2.55% rise in the benchmark S&P 500 index during the same period.

CVS currently has a StockNews.com POWR Rating of C (Neutral), and is ranked #2 of 5 stocks in the Medical – Drug Stores category.