CVS Well being will face a brand new problem within the coming yr: proving to buyers it could drive development and retain prospects, at the same time as demand for Covid vaccines and testing fades.

Shares fell 5.45% to shut Wednesday at $104.79, after the health-care firm beat expectations for fiscal fourth-quarter earnings, however declined to lift its 2022 outlook.

Pandemic-related companies have pushed foot site visitors and gross sales for the pharmacy chain over the previous yr. CVS has administered greater than 32 million Covid assessments and greater than 59 million Covid vaccines. Its vaccination quantity peaked within the fourth quarter — with greater than 20 million photographs — as Individuals ready for vacation gatherings and the omicron variant unfold throughout the nation, encouraging extra folks to get booster photographs. Employers’ vaccine mandates and the authorization of vaccines for youths between ages 5 and 11 additionally lifted demand within the fall and winter.

That has translated to larger gross sales and new buyers, too. Some prospects tossed objects of their baskets, obtained prescriptions stuffed or signed up for the pharmacy’s loyalty program as they went to shops for a shot.

Nevertheless, Covid instances have fallen considerably throughout the nation. The seven-day common of day by day new instances within the U.S. is 234,941, a 46% drop from every week in the past, in accordance with information compiled by Johns Hopkins College. That decline is inflicting some states, together with New York, to elevate indoor masks mandates.

As pandemic tailwinds wind down, CVS should present it could ship on ambitions to turn out to be extra of a health-care vacation spot. The corporate acquired well being insurer Aetna in 2018 and owns pharmacy advantages supervisor Caremark. It’s overhauling its retailer footprint, closing about 900 areas and including extra medical companies to others. And it plans to open major care clinics the place prospects can go to a physician.

Chief Government Karen Lynch mentioned the worldwide well being disaster deepened loyalty and elevated use of the corporate’s web site and app. Visits to CVS’ web site grew to greater than 2 billion in 2021, up almost 55% over the prior yr. She mentioned CVS now serves 40 million prospects digitally, a rise of about 10% over the previous six months.

“Our work to check and vaccinate America for Covid is a robust instance of the connection we’re constructing with shoppers, which results in new prospects looking for a spread of different well being companies at CVS Well being,” she mentioned on a Wednesday earnings name.

Brian Tanquilut, an analyst for Jefferies, mentioned the corporate has a bigger viewers for these well being companies — if it could hold prospects engaged.

“There isn’t any denying ‘Hey, we’ve got a chance right here the place we’ve got folks coming to the shops'” he mentioned. “You have already hooked them, so it’s important to discover a strategy to make them keep.”

He mentioned gross sales will probably decelerate earlier than that health-care companies technique kicks in. Nevertheless, he mentioned, the corporate seems to have a way of urgency because it seems to be for primary-care corporations to amass.

His value goal for CVS inventory is $120, about 13% above the place it’s at the moment buying and selling.

On a Wednesday earnings name, Chief Monetary Officer Shawn Guertin mentioned CVS’ 2022 forecast assumes there will not be a fourth Covid shot and one other wave of instances. He mentioned the corporate expects vaccine quantity to say no by about 70% to 80% and the quantity of in-store testing to fall by 40% to 50% in contrast with 2021.

One exception might be modest development in gross sales of at-home Covid assessments, he mentioned. CVS has bought greater than 22 million over-the-counter assessments, with about 70% of these bought within the fourth quarter.

He mentioned the increase in booster photographs occurred sooner than anticipated. That pulled extra gross sales into the fourth quarter of 2021 quite than the primary quarter of 2022, he mentioned.

He famous that the pandemic wasn’t fully optimistic for the corporate, although. It additionally led to larger medical prices for its well being advantages enterprise, which offset a number of the elevated gross sales.

Ashtyn Evans, an analyst for Edward Jones, mentioned CVS’ anticipated drop-off in vaccines and testing could also be too conservative. Even when it is correct, she mentioned, CVS will nonetheless get long-term pandemic advantages.

“Now, they’ve prospects who’re extra used to going right into a CVS retailer, interacting with CVS through their app,” she mentioned. “They’re exiting the pandemic with the next buyer base than after they began.”

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