People walk by a CVS Pharmacy store in the Manhattan borough of New York City.
Shannon Stapleton | Reuters
CVS Health‘s fourth-quarter earnings beat Wall Street’s expectations on Tuesday as pharmacy sales got a lift and the drugstore chain expands Covid-19 testing and vaccines.
Shares of the company were up slightly in premarket trading.
Here’s what the company reported for the fiscal fourth quarter ended Dec. 31, compared with what analysts were expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.30 adjusted vs. $1.24 expected
- Revenue: $69.55 billion vs. $68.75 billion expected
The drugstore chain reported fiscal fourth-quarter net income of $975 million, or 75 cents per share, down from $1.74 billion, or $1.33 per share, a year earlier.
Excluding items, it earned $1.30 per share, outpacing the $1.24 per share expected by analysts surveyed by Refinitiv.
Revenue rose to $69.55 billion from $66.89 billion a year earlier. That’s higher than analysts’ expectations of $68.75 billion.
CVS also shared its full-year guidance for the upcoming fiscal year. It projected earnings per share ranging from $6.06 to $6.22 and full-year adjusted earnings per share to $7.39 to $7.55. Its full-year cash flow from operations is projected at $12 billion to $12.5 billion.
For CVS, the pandemic has brought benefits and downsides. On the one hand, the global health crisis has caused some people to skip trips to the store and doctor’s office. That has weighed on its front-of-store sales and led to fewer new prescriptions. On the other hand, it has given the drugstore a chance to show off the convenient health-care services it provides, such as telemedicine and its Minute Clinic, and gain new business opportunities like drive-thru testing.
Same-store sales grew 5.3% during the three-month period compared with the same time a year earlier. They jumped by 7.5% in the pharmacy division, as prescription volume rose but were down by 1.8% in the front of store, as customers cut back on visits and did not need to buy as much flu and cold medication during the pandemic.
CVS is taking on a larger role in the administration of Covid vaccines at its stores. Last week, the federal government shipped doses directly to retail pharmacies’ stores — including CVS locations in 11 states.
On a Tuesday call with investors and analysts, CVS Chief Executive Karen Lynch said about 8 million consumers came to CVS for the first time because of Covid testing. She said it anticipates it will reach millions of new customers with Covid vaccines, too.
“We will use this opportunity to shape a health experience that demonstrates the value we bring,” she said. “It will create the opportunity to expand our customer base while deepening relationships with current customers.”
She described the federal program with CVS and other pharmacies as “the linchpin of the Biden administration’s plan to vaccinate 300 million Americans by the end of the summer.” She said CVS has the capacity to administer 20 million to 25 million doses per month, depending on supply.
CVS said it has administered about 15 million tests nationwide. It has also given more than 3 million Covid vaccines in over 40,000 long-term care facilities.
The drugstore chain and its competitor, Walgreens, struck a deal with the federal government in October to provide the shots to staff and residents at nursing homes and assisted living facilities. It began vaccinations in December and plans to complete both doses at the long-term care facilities in mid-March.
Lynch said the chain will accelerate investments in a wider range of services, beyond just filling prescriptions, to lower costs and make care easier for patients. She pointed to a program that brings kidney dialysis services into the home to reduce hospital admissions and an oncology program that matches people to clinical trials.
Next year, she said the company will re-enter the individual public exchange created by the Affordable Care Act, which allows people to buy their own health insurance plan. She said it will be the company’s first branded CVS Health Aetna product. CVS acquired the health insurer in 2018.
As of Friday’s market close, CVS shares were up less than 1% over the past year. The company’s stock, which has a market value of $97.13 billion, touched a 52-week high of $77.23 in mid-January. It closed at $74.21 on Friday.