© Reuters. FILE PHOTO: CVS Health logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Khushi Mandowara and Bhanvi Satija
(Reuters) -CVS Health Corp reported upbeat second-quarter earnings on Wednesday, and said it had begun implementing a restructuring program to cut costs after a recent spree of acquisitions, sending its shares up over 2% in premarket trading.
The company has been expanding beyond health insurance and pharmacies with its buyouts of primary-care provider Oak Street Health and home healthcare services firm Signify Health.
CVS Health (NYSE:), which completed the acquisitions earlier this year, has flagged higher-than-expected transaction and integration costs related to the deals.
As part of the restructuring program it started during the quarter to rein in costs, CVS said it would reduce its workforce and stop providing services related to clinical trials.
It recorded a $496 million restructuring charge, of which $344 million were severance and employee-related costs.
CVS, which said most of the restructuring was expected to be completed by year-end, trimmed its earnings per share outlook to between $6.53 and $6.75, from $6.90 to $7.12 forecast earlier.
It maintained its annual adjusted profit forecast at $8.50 to $8.70 per share.
CVS, which has a large retail pharmacy chain, a health insurance business and a pharmacy benefit management (PBM) unit, has said it would pause acquisitions in the near term but may look at “additional opportunities” over a longer timeframe.
Excluding items, the company reported a profit of $2.21 per share, above analysts’ average estimate of $2.11 per share, boosted by strength in its PBM unit, which negotiates drug prices with manufacturers.
Sales at CVS’ health services segment, which contains its PBM unit, rose 7.6% to $46.22 billion in the reported quarter compared with a year earlier.
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