A CVS Pharmacy retailer is seen within the Manhattan borough of New York City, New York.
Shannon Stapleton | Reuters
CVS Health on Wednesday outpaced Wall Street’s expectations for first-quarter earnings and raised its steerage for the yr, because it noticed demand for prescriptions and extra, whereas demand for Covid vaccines and testing declined.
The health-care firm stated it now expects adjusted earnings per share for 2022 to vary from $8.20 to $8.40 in contrast with its earlier forecast of between $8.10 to $8.30.
Shares have been up greater than 1% in early buying and selling.
Here’s what the corporate reported for the three-month interval ended March 31, in contrast with what analysts have been anticipating, based mostly on a survey of analysts by Refinitiv:
Earnings per share: $2.22 adjusted vs. $2.15 anticipatedRevenue: $76.83 billion vs. $75.39 billion anticipated
The health-care firm reported web earnings of $2.31 billion, or $1.74 per share, greater than the $2.22 billion, or $1.68 per share, a yr earlier.
Excluding gadgets, CVS earned $2.22 per share, greater than the $2.15 per share anticipated by analysts surveyed by Refinitiv.
Revenue elevated to $76.83 billion from $69.1 billion a yr earlier. That topped/fell in need of analysts’ expectations of $75.39 billion.
Same-store gross sales at CVS grew 10.7% within the first quarter in comparison with the year-ago interval. In the pharmacy, same-store gross sales rose 10.1% and within the entrance retailer, same-store gross sales elevated 13.2%.
CVS stated it attracted new prospects, crammed extra prescriptions and noticed a extra typical cough, chilly and flu season within the first quarter. In the year-ago interval, fewer buyers sought medicines for seasonal diseases as they wore masks and spent extra time at house. The firm stated it additionally noticed gross sales improve from pharmacy model inflation.
Sales will increase have been partially offset by the introduction of latest generic medicine, reimbursement strain within the pharmacy section and a drop in Covid testing demand, the corporate stated.
The firm’s working earnings took successful, declining 2.4% within the quarter, on account of a pending settlement between CVS and the state of Florida to settle opioid claims towards the corporate for $484 million. That settlement will likely be paid over an 18-year interval.
Looking past Covid checks and pictures
Customers have turned to CVS drugstores throughout pandemic, in search of Covid checks and vaccines. Now, the corporate is in search of different methods to attract foot visitors, drum up enterprise and stem competitors from on-line retailers. It has added extra health-care companies to its shops and inspired members of its medical health insurance enterprise, Aetna, to go to its drugstores for medical care.
In the primary quarter, CVS noticed declining demand for pandemic-related companies. It administered greater than 6 million Covid checks and greater than 8 million Covid vaccines within the three-month interval. That compares to greater than 8 million Covid checks and greater than 20 million Covid vaccines within the fourth quarter.
Instead of getting Covid checks at drugstores, extra customers are shopping for over-the-counter take a look at kits. CVS pointed to these as a gross sales driver within the quarter — however didn’t specify what number of it bought.
CVS expects about 18 million Covid vaccines in 2022, together with fourth booster pictures, which represents a 70% decline in contrast with the prior yr, Chief Financial Officer Shawn Guertin stated on an earnings name. Testing, excluding at-home kits, are anticipated to drop by about 50% yr over yr, he stated.
Sales of over-the-counter checks will doubtless be the identical or greater, however that may nonetheless equate to a 60% to 65% decline in Covid-related contributions, he stated.
Guertin stated Covid remains to be going to be an element this yr and subsequent. “Many prefer to mannequin Covid going to zero for retail, and that is a handy modeling assumption, however I believe a really extremely unlikely final result for 2023 as we transfer from pandemic to endemic,” he stated.
CEO Karen Lynch stated on an earnings name that the pandemic has impressed extra prospects to show to its shops and web site for well being care. For occasion, she stated, the corporate supported 10,000 digital psychological well being visits in 2019. That soared to 10 million digital visits for psychological well being in 2021.
The firm introduced final yr that it’ll shut about 900 shops over the following three years.
So far, Lynch stated CVS has closed about 100 of the 300 it plans to shutter this yr. She stated has retained about 70% of the prescription quantity and greater than 95% of the staff from these shops.
Guertin stated it’s nonetheless major care corporations it might purchase to construct out its choices. The firm introduced it will discover such partnerships or acquisitions at an investor day in December.
Lynch stated CVS is enhancing the client expertise with extra tech instruments. It can have free, same-day pickup of on-line purchases at about 6,000 shops later this yr. It makes use of Microsoft textual content analytics to automate paper or fax-based prescriptions. Machine studying software program helps monitor sufferers and flag if they’re prone to not taking their treatment — so a pharmacist or a health-care supplier can intervene.
As of Tuesday’s shut, shares of CVS are down about 7% up to now this yr, outperforming the 12% decline of the S&P 500. Shares closed Tuesday at $95.98, bringing the corporate’s market worth to $126.04 billion.
Read the corporate’s press launch right here.
This story is growing. Please examine again for updates.