Dive Brief:

• CVS Friday announced net revenues grew 10.3% to $38.6 billion and operating profit rose 3.8% to $2.3 billion in the third quarter, including the effect of acquisition-related transaction and integration costs of $127 million.

• And while the company’s Q3 profit rose 30%, for the first time in six quarters it didn’t manage to meet Wall Street estimates. Shares were down Friday morning on the news.

• The company's forecast for the year is also slightly lower. The drugstore retailer said it expects adjusted earnings of $5.68 to $5.88 per share next year, or growth of 10% to 14%, but analysts had estimated average earnings of $5.99.

Dive Insight:

CVS is feeling some pain from lower reimbursement rates on medications and the release of new (lower-priced) generic drugs. Its report comes in a week that Walgreens, fresh from a merger from U.K. drugstore retailer Boots, announced it would acquire rival Rite-Aid. 

The company could benefit in the long run from its nearly $2 billion acquisition of Target’s pharmacy business, which will have CVS operating within Target stores. 

And its recent acquisition of prescription-drug fulfillment company Omnicare Inc. greatly expands its pharmacy services and gives it greater clout in its dealings with pharmaceutical companies.

CVS Health has moved assertively to rebrand itself well beyond a retail drugstore. While other drugstore retailers have also moved to provide more clinical health services, CVS Health has ended tobacco sales and relinquished those profits — a sign of how strong its pivot is.

“The third quarter included the closing of the Omnicare acquisition in mid-August, and we are very optimistic about the potential that this long-term care business creates for us,” CVS president-CEO Larry Merlo said in a statement. “It provides a new pharmacy dispensing channel, enhancing our ability to provide continuity of care for patients as they transition through the health care system. At the same time, we look forward to closing the Target pharmacy acquisition, which will enable us to reach more patients, add a new retail channel for our unique offerings, and expand convenient options for consumers. These acquisitions reinforce our progress on our established long-term targets.”