CVS Health Corp. (NYSE:CVS) reported a sharp rise in fourth quarter earnings, supported by savings from US tax cuts.
Donald Trump’s US tax reforms resulted in a US$1.5bn benefit to the company’s earnings in the quarter to December 31, with net income surging 92.6% to US$3.3bn, or US$1.59 per share.
Excluding the tax savings, the company reported earnings of US$1.92 per share, beating analysts’ forecasts of US$1.89.
CVS, which runs the second-largest drugstore chain in the US, said it would use part of its tax benefit to raise the minimum wage for its hourly employees to US$11 an hour from April 2018.
Revenue rose 5% to US$48.38bn, ahead of estimates of US$47.54bn. Growth in the pharmacy services business, which processes prescriptions, offset a flat performance from its drugstores.
Bricks and mortar stores have been struggling with fewer customer visits as more shoppers go online to make purchases.
CVS, which last year said it would buy health insurer Aetna for US$69bn, expects adjusted operating profit growth of 0.5% to 4.5% in the first quarter.