CVS Well being mentioned Wednesday that demand for Covid vaccines and at-home exams lifted total retailer gross sales, serving to the corporate prime expectations for fourth-quarter earnings.
Its shares have been down greater than 5% Wednesday afternoon, after it reiterated quite than raised its fiscal 2022 forecast.
The pharmacy chain and health-care firm administered greater than 8 million Covid exams and greater than 20 million Covid vaccines within the fourth quarter, a major leap from the practically 17 million pictures 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 companies have led to a lift in its retail and pharmacy enterprise over the previous 12 months, notably throughout the vacation quarter when customers sought out booster pictures and at-home exams forward of gatherings.
Here is what the corporate reported for the three-month interval ended Dec. 31, in contrast with what analysts have been anticipating, primarily based 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 companies and pledging to make use of its scale to scale back prices and enhance outcomes. The corporate is combining the completely 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 referred to as the corporate’s administration of hundreds of thousands of Covid exams and vaccines “a robust instance of the connection we’re constructing with customers, which ends up in new clients searching for a variety of different well being companies at CVS Well being.”
CVS reported fiscal fourth-quarter web earnings of $1.31 billion, or 99 cents per share, up from $973 million, or 74 cents per share, a 12 months earlier.
The corporate mentioned its web earnings 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 earnings within the quarter dropped by practically 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 tools to plan for these closures.
Whole income for the interval rose to $76.60 billion from $69.55 billion a 12 months earlier, exceeding expectations of $75.67 billion.
Identical-store gross sales at CVS rose by 13.4% within the fourth quarter. CVS mentioned it noticed increased prescription volumes, front-of-store gross sales and vaccinations throughout 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 companies income rose 8.2% to $39.34 billion.
Covid vaccinations, diagnostic exams and gross sales of over-the-counter check kits accounted for about 40% of the rise within the retail phase’s income.
Within the coming fiscal 12 months, 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 quite than elevating its forecast after seeing a few of its enterprise pulled ahead. He mentioned demand for booster pictures jumped sooner than anticipated — within the fourth quarter, quite 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 exams.
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.