People walk through a CVS Pharmacy store in Manhattan, New York.
CVS Health raised its full-year profit forecast on Wednesday after beating Wall Street expectations for its fiscal second quarter.
The health care company said it now expects adjusted earnings per share for the full year to be between $8.40 and $8.60, compared to its previous estimate of $8.20 to $8.40.
Shares rose about 4% in premarket trading.
Here’s what the company reported for the three months ended June 30, compared to what analysts expected, based on a survey of analysts by Refinitiv:
On an unadjusted basis, CVS earned $2.95 billion, or $2.23 per share, up from $2.78 billion, or $2.10, a year earlier. Revenue of $80.64 billion also saw year-over-year growth, up from $72.62 billion in the same period in 2021.
The results cover several parts of CVS’s healthcare business. It has a large pharmacy footprint, owns insurer Aetna and CVS Caremark pharmacy benefit manager, and provides patient care through MinuteClinics within its stores.
CEO Karen Lynch said the company’s strategy to add more health services is increasing sales and deepening customer relationships.
“Our team is making significant progress on our strategy as we strive to become the nation’s leading healthcare solutions company,” he said in an earnings call. And he added that the company “will continue to build on this strong momentum.”
Same-store sales were up 8% year-on-year as customers bought Covid home test kits and cough, cold and flu medicines. That beat an expected 0.3% decline in same-store sales, according to StreetAccount consensus estimates.
In pharmacy, same store sales increased by 7.6%. On the store front, same-store sales were up 9.4%.
Processed pharmaceutical claims gained 3.9% on a 30-day equivalent basis in the three months ended June 30, compared to a year earlier. It was affected by a prolonged cough, cold and flu season compared to the same quarter in 2021.
Customers visited CVS stores more often and bought more when they did, the company said. CVS reported single-digit growth in trips and mid-single-digit average basket size growth during the quarter, Chief Customer Officer Michelle Peluso said on the earnings call.
Pandemic-related sales
While sales grew in the quarter, CVS said in a news release that the growth was partially offset by declines in Covid testing and vaccinations, the introduction of new generic drugs and pressure on pharmacy payments. To see also : Top 10 best books of 2022 EW.com.
CVS administered more than 4 million Covid tests and about 6 million Covid vaccines during the three-month period, Lynch said on the earnings call. That’s down from more than 6 million tests and more than 8 million shots given in the first quarter.
However, one aspect of Covid care has increased: Lynch said demand for antiviral drugs to treat Covid infections continues to rise.
Pandemic-related services remain big business for CVS, even as testing and vaccine volumes are down.
Chief Financial Officer Shawn Guertin said the company expects to administer nearly 20 million Covid vaccines this year, of which about 75% have already been administered. It said it expects to offer about 19 million tests and sell more than 50 million test kits, more than double the number sold the previous year.
In total, he said, those three categories will bring in nearly $3 trillion in revenue, down about 33% from the previous year. He said CVS is prepared to spend more in the back half of the year as it prepares for a spike in Covid cases.
Additionally, he said, pandemic-related items are driving foot traffic and sales at the front of stores. The company attributed around 60% of retail performance to “Covid categories”.
Read the company’s earnings release here.
