CVS Well being mentioned Wednesday that demand for Covid vaccines and at-home checks lifted general retailer gross sales, serving to the corporate prime expectations for fourth-quarter earnings.
Its shares fell almost 3% early Wednesday, after it reiterated slightly than raised its fiscal 2022 forecast.
The pharmacy chain and health-care firm administered greater than 8 million Covid checks and greater than 20 million Covid vaccines within the fourth quarter, a big leap from the almost 17 million photographs administered within the second quarter, and the 11.6 million that it gave within the third.
CVS has performed a key position within the nation’s response to the coronavirus pandemic, together with competitor Walgreens Boots Alliance. Covid-related providers have led to a lift in its retail and pharmacy enterprise over the previous yr, significantly in the course of the vacation quarter when customers sought out booster photographs and at-home checks forward of gatherings.
This is what the corporate reported for the three-month interval ended Dec. 31, in contrast with what analysts have been anticipating, based mostly on a survey of analysts by Refinitiv:
- Earnings per share: $1.98 adjusted vs. $1.93 anticipated
- Income: $76.60 billion vs. $75.67 billion anticipated
Led by its new CEO, Karen Lynch, CVS is increasing into extra health-care providers and pledging to make use of its scale to scale back prices and enhance outcomes. The corporate is combining the totally different components of its enterprise: An enormous nationwide footprint of drugstores; its insurance coverage enterprise, Aetna; and pharmacy advantages supervisor, Caremark.
On an earnings name, she known as the corporate’s administration of thousands and thousands of Covid checks and vaccines “a strong instance of the connection we’re constructing with customers, which ends up in new prospects in search of a variety of different well being providers at CVS Well being.”
CVS reported fiscal fourth-quarter web revenue of $1.31 billion, or 99 cents per share, up from $973 million, or 74 cents per share, a yr earlier.
The corporate mentioned its web revenue from persevering with operations was 98 cents. But it surely earned $1.98 per share, after changes, which was greater than the $1.93 per share anticipated by analysts surveyed by Refinitiv.
CVS is overhauling its shops to match that health-care focus. Beginning this spring, it plans to shutter about 900 places – or 9% of the corporate’s roughly 10,000 U.S. shops – over the subsequent three years.
The corporate’s working revenue within the quarter dropped by almost 12%, with a lot of that coming from a retailer impairment cost of about $1.4 billion because it wrote down leases for property and gear to plan for these closures.
Whole income for the interval rose to $76.60 billion from $69.55 billion a yr earlier, exceeding expectations of $75.67 billion.
Similar-store gross sales at CVS rose by 13.4% within the fourth quarter. CVS mentioned it noticed greater prescription volumes, front-of-store gross sales and vaccinations in the course of the newest interval. It mentioned it additionally benefited from the expansion of specialty pharmacy.
Throughout CVS’ enterprise segments, retail/long-term care income grew 12.7% to $27.11 billion, health-care advantages income elevated 8.4% to $20.7 billion and pharmacy providers income rose 8.2% to $39.34 billion.
Covid vaccinations, diagnostic checks and gross sales of over-the-counter check kits accounted for about 40% of the rise within the retail section’s income.
Within the coming fiscal yr, CVS mentioned it expects earnings from persevering with operations to vary between $7.04 and $7.24 per share and adjusted earnings to vary between $8.10 and $8.30 per share.
Chief Monetary Officer Shawn Guertin mentioned CVS is sustaining slightly than elevating its forecast after seeing a few of its enterprise pulled ahead. He mentioned demand for booster photographs jumped sooner than anticipated — within the fourth quarter, slightly than the primary quarter of 2022.
In 2022, Guertin mentioned the corporate anticipates the variety of vaccines administered will drop roughly 70% to 80%, and the quantity of in-store diagnostic testing will decline 40% to 50% in contrast with 2021. He mentioned CVS expects “modest full-year quantity development” for at-home Covid checks.
Shares of CVS are up 51% over the previous 12 months and touched a 52-week excessive on Tuesday. The inventory closed Tuesday at $110.83, up 1.3%. The corporate’s market worth is $146.30 billion.