Bulletin: CVS Health Corp.'s Front-End Sales Are Soft But Cash Flow Expectations Are Higher; Ratings Unaffected

NEW YORK (S&P Global Ratings) Aug. 2, 2016--S&P Global Ratings said today that its ratings on CVS Health Corp. (BBB+/Stable/A-2) are unaffected by the company's strategy to shift its focus on better-margin customers have led to what we believe is a temporary softness in front-end comparable sales (or sales of general merchandise), which declined 2.5% for second-quarter 2016. CVS is emphasizing its shift in marketing efforts toward more frequent, valuable customers while pulling back on promotionally-oriented customers. We also believe increased competition from other retail formats such as discount stores are having some impact on the company's retail business. Performance in the pharmacy services segment as well as long-term care business remains strong with good same-store growth and increasing prescription

...NEW YORK (S&P Global Ratings) Aug. 2, 2016--S&P Global Ratings said today that its ratings on CVS Health Corp. (###+/Stable/A-2) are unaffected by the company's strategy to shift its focus on better-margin customers have led to what we believe is a temporary softness in front-end comparable sales (or sales of general merchandise), which declined 2.5% for second-quarter 2016. CVS is emphasizing its shift in marketing efforts toward more frequent, valuable customers while pulling back on promotionally-oriented customers. We also believe increased competition from other retail formats such as discount stores are having some impact on the company's retail business. Performance in the pharmacy services segment as well as long-term care business remains strong with good same-store growth and increasing prescription volumes. Consolidated company-reported operating margins declined to 5.6% for the current quarter from 6.2% a year ago on drug pricing and reimbursement rate pressures and faster-growing...

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