CVS Raises View as Covid Shots, Tests Offset Weak Flu Season

(Bloomberg) -- CVS Health Corp. raised its full-year forecast as Covid-19 vaccines and testing helped boost first-quarter results and offset a weak cold and flu season.

The health-care company gave 17 million Covid shots at long-term care facilities and at its pharmacies through April. CVS is now immunizing in about 8,300 locations in 49 states, Chief Executive Officer Karen Lynch said Tuesday on a call with analysts.

With about 9,900 locations nationwide, CVS has administered some 23 million virus tests, including 9 million in the first quarter. Vaccines and testing are already attracting foot traffic, company executives said, and about 9% of new customers who received a test through CVS filled a new prescription with the pharmacy.

But the benefits won’t last forever. Demand for shots has already slipped about 30%, CVS Chief Financial Officer Eva Boratto said. That’s consistent with a national drop-off in interest, with those most eager already immunized. CVS now expects Covid shots to contribute 2% to overall volume growth, at the low end of the 2% to 3% range it originally expected.

Still, CVS says the pandemic has presented opportunities for the company to connect with new customers.

“Rising to meet the challenge of Covid-19 has advanced the transformation of the health-care industry,” Lynch said. “For CVS Health, the chance to serve our nation at such a critical time has further proven the value of our strategy.”

Forecast, Results

Adjusted net income for 2021 will be $7.56 to $7.68 a share, CVS said in a statement, up from an earlier range of $7.39 to $7.55. Adjusted earnings were $2.04 a share, beating the $1.71 expected by Wall Street analysts. Revenue of $69.1 billion also exceeded analysts’ average estimate.

CVS rose as much as 3.9% as of 10:29 a.m. in New York, the most intraday since Dec. 3. Through Monday’s close, the stock had gained 14% this year.

The boost from tests and vaccines helped offset some of the challenges facing CVS’s retail business. Sales in the front of the store, where drugstore items are sold, slid 11% year-over year. A weak cough, cold and flu season, coupled with the pandemic’s contagion precautions, kept some customers out of its stores.

Both CVS’s pharmacy-benefits manager Caremark and its health insurer Aetna posted year-over-year increases in revenue. CVS, which acquired Aetna in 2018, is trying to combine its pharmacy and insurance benefits with its drugstores.

Health Hubs, or health-centric stores, are a key piece of that effort. CVS opened about 250 new Health Hubs in the quarter, bringing the total to about 800, Lynch said. CVS expects to have about 1,000 by the end of the year, she said.

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