Investors were be looking to hear how CVS's (CVS) continued transition into a pharmacy benefits manager is going and what the longer term impact of exiting Tricare will be.
CVS, which reported this morning, saw shares drop 16% in pre-market trading after the company lowered its profit outlook for this year. The drug store giant recently exited Tricare -- the military health program for the Department of Defense -- a curious move to investors, which has impacted the company's pharmacy market share.
However, Leerink analyst David Larsen didn't believe the impact will be that large. "While there are ~127M+ scripts associated with Tricareeach year, we estimate that just ~30.6M of these prescriptions are 'retail' and as a result we do not believe that CVS' exclusion from the Tricare network will be material," Larsen wrote in a note to clients.
Despite Larsen's tempered negativity, he did note that many investors believe the move will have an "unfavorable EPS impact to CVS will be much higher than what we estimate."
Credit Suisse analyst Robert Willoughby cut his 2017 earnings estimates to $6.55 a share, down from $6.60 a share, because of the loss of the contract. However, other aspects of the company's business, like "another solid PBM selling season in 2017, deal synergies from recent transactions including Target pharmacies," and the ability to add more stores are "tailwinds" for the company.
Analysts surveyed by Yahoo! Finance expect the company to earn cents a share on $45.3 billion in revenues.
In addition to the impact from the loss of Tricare, investors are looking to hear how CVS's role as a pharmacy benefits manager (PBM) is going, as well as how taking over Target's (TGT) pharmacies is going.