CVS fourth-quarter earnings top expectations as Covid vaccines lift overall store sales

CVS fourth-quarter earnings top expectations as Covid vaccines lift overall store sales

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Teacher Jennifer Hogan, a reading specialist in the Lynn Public Schools, had tears in her eyes when she got her COVID-19 vaccine at a CVS in Medford, MA on March 5, 2021.
Suzanne Kreiter | Boston Globe | Getty Images

CVS Health said Wednesday that demand for Covid vaccines and at-home Covid tests lifted overall store sales, helping the company top expectations for fourth-quarter earnings.

Shares fell less than 1% in premarket trading.

It administered more than 8 million Covid tests and more than 20 million Covid vaccines in the fourth quarter, a significant jump from the nearly 17 million vaccines administered in the second quarter, and the 11.6 million that it gave in the third.

The drugstore chain and health insurer reiterated its fiscal 2022 forecast, saying it expects earnings from continuing operations to range between $7.04 to $7.24 per share and adjusted earnings to range between $8.10 to $8.30 per share.

Here’s what the company reported for the three-month period ended Dec. 31, compared with what analysts were expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $1.98 adjusted vs. $1.93 expected
Revenue: $76.60 billion vs. $75.67 billion expected

CVS reported fiscal fourth-quarter net income of $1.31 billion, or 99 cents per share, up from $973 million, or 74 cents per share, a year earlier.

The company said its net income from continuing operations was 98 cents. But it earned $1.98 per share, after adjustments, which was more than the $1.93 per share expected by analysts surveyed by Refinitiv.

Total revenue for the period rose to $76.60 billion from $69.55 billion a year earlier, exceedingexpectations of $75.67 billion.

CVS said it saw higher prescription volumes, front-of-store sales and vaccinations at its stores during the three month period. It said it also benefited from the growth of specialty pharmacy.

Across CVS’ business segments, retail/long-term care revenue grew 12.7% to $27.11 billion, health care benefits revenue increased 8.4% to $20.7 billion and pharmacy services revenue rose 8.2% to $39.34 billion.

Covid vaccinations, diagnostic tests and sales of over-the-counter test kits contributed about 40% of the increase in the retail/long-term care segment’s revenue for the quarter compared with the year-ago period.

Led by its new CEO Karen Lynch, CVS is expanding into more health-care services and pledging to use its scale to reduce costs and improve outcomes. The company is combining the different parts of its business: A huge national footprint of drugstores; its insurance business, Aetna; and pharmacy benefits manager, Caremark.

CVS is overhauling its stores to have a health-care focus. Starting this spring, it plans to shutter about 900 locations – or 9% of the company’s roughly 10,000 U.S. stores – over the next three years.

The company’s operating income in the quarter dropped by nearly 12%, with much of that coming from a store impairment charge of about $1.4 billion as it wrote down leases for property and equipment to plan for those closures.

Shares of CVS are up 51% over the past 12 months and touched a 52-week high on Tuesday. Shares closed Tuesday at $110.83, up 1.3%. The company’s market value is $146.30 billion.

Read the company’s press release here.

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