A view outside a CVS Pharmacy store on July 16, 2020 in Miramar, Florida.
Johnny Louis | Getty Images
CVS Health on Wednesday outpaced analysts’ expectations for fiscal second-quarter earnings and raised its forecast for the year, as customers returned to doctors offices and more typical shopping patterns.
Yet shares of the company were down more than 1% Wednesday as CVS said it anticipated lower-than-expected earnings from Covid vaccines and higher-than-expected Covid-related health-care costs. It also warned of rising costs ahead, including an increase in employee wages and investments in technology.
The drugstore chain and health insurer said its business has begun to normalize, as customers buy more items in the front of the store and pharmacists fill more prescriptions. It said use of health-care benefits has returned to a more typical pattern, too, as people resume medical visits and procedures.
Same-store sales rose 12.3% in the second quarter from a year earlier.
However, amid rising Covid-19 cases and the spread of the delta variant, CEO Karen Lynch said CVS remains committed to expanding vaccine access and outreach.
The company said it administered nearly 17 million Covid vaccines and more than 6 million tests in the second quarter.
Ashtyn Evans, an analyst for Edward Jones, said CVS faces risks as it combines its retail, pharmacy and health insurance businesses and tries to become a “one-stop shop” for health care. She said that vision will take time. Plus, she said, it must overcome price pressure in its pharmacy services business. The equity research firm has a hold rating for CVS shares.
Here’s what the company reported for the three-month period ended June 30, compared with what analysts were expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.42 adjusted vs. $2.06 expected
- Revenue: $72.62 billion vs. $70.3 billion expected
CVS reported second-quarter net income of $2.78 billion, or $2.10 per share, down from $2.98 billion, or $2.26 per share, a year earlier.
Excluding items, it earned $2.42 per share, more than the $2.06 per share expected by analysts surveyed by Refinitiv.
Revenue jumped to $72.62 billion from $65.34 billion a year earlier, topping expectations of $70.3 billion.
CVS raised its guidance for the year, saying it expects 2021 earnings per share will range from $6.35 to $6.45, and after adjustments from $7.70 to $7.80.
As of Tuesday’s close, shares of CVS were up about 23% this year. Shares closed on Tuesday at $84, bringing the company’s market value to $110.59 billion.
