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CVS Health Updates 2018 Adj. Operating Profit Growth - Quick Facts

CVS Health Corp. (CVS) updated its previous adjusted consolidated operating profit growth guidance of 1.0% to 4.0% for the full-year 2018 to down 1.5% to up 1.5%. The company revised its 2018 guidance to reflect the effects of the tax reform achieved through the Tax Cuts and Jobs Act. In addition to debt reduction, the company is dedicating a portion of the benefits to additional investments in employees, data analytics, care management solutions, and service offering enhancements, a portion of which will be capitalized. The impact to the company's 2018 consolidated operating profit is expected to be at least $275 million. The company expects to deliver adjusted consolidated operating profit growth of 0.5% to 4.5% for the first quarter of 2018.

Consolidated operating profit for the three months ended December 31, 2017, increased 3.6%, to $3.1 billion. The company said the increase was partially due to improvement in gross profit in the Pharmacy Services Segment as result of a favorable shift in the timing of Medicare Part D profits between the third and fourth quarters of 2017, when compared to 2016, as well as growth in network and specialty volume, and favorable purchasing economics. The Retail/LTC Segment gross profit increased, largely driven by improvements in front store margin. The improvements in operating profit were also due to a $50 million decrease in acquisition-related transaction and integration costs as well as a $30 million decrease in store rationalization costs.

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