Investing.com -- Shares in CVS Health Corp (NYSE:CVS) edged up above $100, after the nation's second-largest drugstore chain reported an 8% spike in first quarter earnings on Friday.
Fueled by gains in its pharmacy benefits management division, CVS posted earnings of $1.22 billion, up from $1.13 billion over the same period in 2014. The division, which negotiates prices customers pay for prescription drugs, saw its revenues soar 18% over the period to $24 billion. CVS also posted strong earnings in its specialty drugs division, spurred by gains among its Cancer, Hepatitis C and Multiple Sclerosis prescription drug sales.
"We delivered better-than-expected results this quarter, primarily driven by stronger-than-expected prescription volumes as well as favorable purchasing and rebate economics in the PBM," CVS Pharmacy CEO Larry Merlo said in a statement. "Adjusted EPS increased 12.2%, to $1.14, five cents above the high end of our guidance range, with operating profit in the retail business in line with our expectations and operating profit in the PBM exceeding our expectations. We also generated approximately $1.6 billion in free cash flow, and we continued to return significant value to our shareholders through our disciplined capital allocation practices."
CVS Pharmacy's sales from its drugstore division fell 3% to $17 billion, a decline the company attributes to its decision to discontinue sales of tobacco products. CVS officials said Friday that the drugstore division likely would have posted gains for the quarter if it still offered tobacco products for sale.
CVS also raised its 2015 outlook for annual earnings per share of 5.08 to 5.19, above forecasts of 5.16.
"We are already off to a solid start in the 2016 PBM selling season. Our integrated model allows us to provide differentiated products and services that generate savings for our clients while providing better health outcomes and convenience for patients. We remain very well positioned with our distinctive, channel-agnostic solutions, which are resonating strongly in the marketplace." Merlo added.
Shares in CVS rose 1.18% to 100.46 on Friday.