RUSH TO FILL MEDICINE CABINETS FUELS Q1 PROFIT FOR CVS
As pandemic continues, drugstore could start to see negative impact
A rush to fill medicine cabinets and pantries ahead of the rapidly spreading COVID-19 pandemic helped fuel a surging first-quarter profit for CVS Health.
The outbreak also lifted the health care giant’s insurance business because patients delayed or canceled some surgeries and used the system less.
But company leaders warned analysts on Wednesday that the pandemic’s impact will grow complex as the year evolves. Their stores saw a big drop in business after the quarter ended, as people stayed home while governments issued shelter-in-place orders.
Patients also stayed out of doctor offices, and that meant the company had fewer new prescriptions to fill. Those numbers will improve as shelter-in-place orders ease and company stores return to normal hours.
But soaring unemployment rates could hurt the company’s insurance business as people lose health coverage with their jobs.
And delayed surgeries or procedures that the insurer didn’t have to cover in the first quarter will probably be rescheduled later this year.
“The quarterly cadence of earnings is likely to vary from historical patterns,” Chief Financial Officer Eva Boratto said.
CVS Health operates one of the nation’s largest drugstore chains with about 9,900 retail locations.
It also runs prescription drug plans for big clients like insurers and employers through a large pharmacy benefit management business, and the company sells health insurance through its Aetna arm.
In the first quarter, net income jumped 41 percent to a little more than $2 billion compared to last year, when the company booked a big charge tied to some store closings. Revenue climbed 8 percent to $66.76 billion.
Total revenue from the company’s biggest business, its pharmacy benefit management arm, climbed 4 percent to nearly $35 billion. CVS Health sold more specialty drugs and 90-day prescriptions. Early refills of some medications also rose as people got ready for the pandemic.
Murphy writes for The Associated Press.