By Sruthi Ramakrishnan
(Reuters) - CVS Health Corp (NYSE:CVS) forecast current quarter profit below Wall Street estimates and said it has been ordered to cooperate with investigations into possible false claims submitted to a government healthcare program and drug pricing.
Shares of the company, which also reported its fourth straight decline in quarterly comparable sales, fell 1.4 percent to $78.03.
The No.2 U.S. drug store chain, however, reported quarterly profit above Wall Street estimates on strength in its pharmacy benefits management business (PBM), which helped to more than offset a 2.6 percent drop in same-store sales.
"Retail side of the business is struggling even if PBM was better than expected and actually pretty strong for what was expected," Jeremy Bryan, portfolio manager at Gradient Investments.
CVS Health forecast current-quarter adjusted profit of $1.47 to $1.50 per share, below the average analyst estimate of $1.63, according to Thomson Reuters I/B/E/S.
LEGAL ISSUES
The company said the attorney general for the Southern District of New York has sought information on possible false claims submitted in connection with reimbursements for Medicare Part D prescription drugs.
Minnesota's attorney general has also sought information from it regarding a probe into pricing of insulin and epinephrine drugs, CVS Health said.
Sanofi (PA:SASY) SA, Eli Lilly and Co and Novo Nordisk (CO:NOVOb) were named in a proposed class action lawsuit, which alleged the firms simultaneously hiked insulin prices by over 150 percent in the past five years.
Mylan (NASDAQ:MYL) NV, the maker of emergency epinephrine injectors EpiPen, is facing investigations after it doubled the cost of its syringes used to treat severe allergic reactions.
On Monday, a class-action lawsuit was filed against CVS Health, which alleged the company colluded with third-party PBMs to raise generic drug prices.
"The allegations against us made in this proposed class action suit are built on a false premise and are completely without merit," CVS Health spokesman Michael DeAngelis said in a statement on Tuesday.
Net income attributable to drug store chain rose about 19 percent to $1.1 billion, or $1.07 per share, in the second quarter ended June 30.
Excluding items, the company earned a profit of $1.33 per share, beating the average analyst estimate of $1.31.
Net revenue rose 4.5 percent to $45.69 billion, beating expectations of $45.37 billion.