Growing prescriptions help push CVS past Q2 expectations

CVS Health thumped second-quarter expectations and hiked its fullyear forecast as growing prescription claims and COVID-19 test kits sales countered a drop in vaccinations.

A longer cough, cold and flu season also brought in more business, and claims in CVS Health’s biggest segment, pharmacy benefits management, rose about 4%. Pharmacy sales at the company’s established drugstores also climbed more than 7%.

CVS Health’s overall revenue jumped 11%, even as COVID-19 vaccinations fell compared with the same period last year, when many people were still getting their initial rounds of protection from the virus.

CVS Health administered about 6 million vaccinations in the quarter. That compares to nearly 17 million in the 2021 quarter.

Chief Financial Officer Shawn Guertin told analysts that CVS Health expects to administer nearly 20 million COVID-19 vaccinations this year. About 75% of that total was done during the first half.

Vaccine sales may fade over time, but they should remain higher than levels seen before the pandemic as COVID-19 shots become part of a seasonal routine for customers like flu shots, Edward Jones analyst John Boylan said in a research note.

CVS operates one of the nation’s largest drugstore chains with nearly 10,000 retail locations, a total it expects to pare by about 300 this year through a store optimization program. It also runs prescription drug plans for big clients like insurers and employers through its pharmacy benefit management business, and it provides health insurance for more than 24 million people through its Aetna arm.

Sales outside the pharmacy area of CVS Health’s established drugstores climbed more than 9% in the quarter, a jump aided by COVID-19 test kits that customers can buy without a prescription.

Company drugstores could see more gains in the back half of the year from treating more COVID-19 patients. Last month, the Food and Drug Administration said pharmacists can begin screening patients to see if they are eligible for Pfizer’s COVID-19 treatment Paxlovid and then prescribe the medication.

Overall, quarterly net income climbed 6% to $2.96 billion in the second quarter, and adjusted earnings totaled $2.40 per share. Total revenue topped $80.6 billion.

Analysts predicted earnings of $2.18 per share on $76.41 billion in revenue, according to FactSet.

CVS Health now expects to post adjusted earnings of $8.40 to $8.60 per share this year. That represents a 20-cent hike at both ends of the range from its previous forecast.

Industry analysts have been projecting earnings of $8.35 per share, according to FactSet.