CVS Health beat expectations for the second quarter and raised its full-year forecast as growing prescription claims and sales of COVID-19 test kits counteracted a decline in vaccinations.
A longer cough, cold and flu season also boosted sales, and claims in CVS Health’s largest segment, pharmacy benefit management, were up about 4%. Pharmacy sales in the company’s established drug stores also increased by more than 7%.
CVS Health’s total sales rose 11%, even as COVID-19 vaccinations fell compared to the same period last year, when many people were still getting their first rounds of protection against the virus.
CVS Health delivered approximately 6 million vaccinations in the quarter. That compares to nearly 17 million in the quarter of 2021.
Chief Financial Officer Shawn Guertin told analysts that CVS Health expects to administer nearly 20 million COVID-19 vaccinations this year. About 75% of that total was done in the first half.
Vaccine sales may decline over time, but they should remain above pre-pandemic levels as COVID-19 injections become part of a seasonal routine for clients such as flu shots, said Edward Jones analyst John Boylan in a research note.
CVS operates one of the nation’s largest drugstore chains with nearly 10,000 retail locations, a total expected to decrease by about 300 this year through a store optimization program. It also carries out prescription drugs for major clients such as insurers and employers through its pharmacy management business, and it provides health insurance to more than 24 million people through its Aetna branch.
Sales outside the pharmacy area of CVS Health’s established drugstores were up more than 9% in the quarter, a jump helped by COVID-19 test kits that customers can purchase over the counter.
Corporate drugstores could make more profit in the second half of the year by treating more COVID-19 patients. Last month, the Food and Drug Administration said pharmacists can begin screening patients to see if they qualify for Pfizer’s COVID-19 treatment Paxlovid and then prescribe the medication.
Overall, quarterly net income increased 6% to $2.96 billion in the second quarter, and adjusted earnings were $2.40 per share. Total revenue was $80.6 billion.
Analysts were forecasting earnings of $2.18 a share on revenue of $76.41 billion, according to FactSet.
CVS Health now expects adjusted earnings of $8.40 to $8.60 per share this year. That represents a 20 cent increase at either end of the previous forecast’s range.
Industry analysts are forecasting earnings of $8.35 per share, according to FactSet.
Shares of CVS Health Corp., based in Woonsocket, Rhode Island, rose 4% or $4.20 to $99.57 in late morning trading on Wednesday, as broader markets rose slightly.
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