CVS health Corp.
Sales in the first quarter rose more than 11% as the pharmacy chain continued to benefit from administering Covid-19 vaccines and selling home tests.
The Woonsocket, RI-based company said on Wednesday that it expects demand for Covid tests and vaccines will boost sales throughout 2023.
“Many people like to model Covid going to zero for retail, and that’s a convenient modeling assumption, but I think that’s a very unlikely outcome for 2023 as we move from pandemic to endemic,” said CVS Chief Financial Officer Officer Shawn Guertin during a conversation with analysts.
CVS said Wednesday that it administered more than six million Covid-19 tests and over eight million Covid vaccines in the first three months of the year.
Demand for the Covid-19 test rose earlier this year as the wave of cases driven by the Omicron variant swept through the United States. The company’s sales in the same store, which include stores open for at least 12 months plus digital channels, grew by 10.7% in the first quarter from a year earlier, shortly after the first vaccines had been approved.
CVS expects to administer 18 million vaccines this year, a decrease of about 70% from last year; The demand for take-home samples is likely to fall by 50%, the company said.
In the meantime, key parts of the company will benefit from inflation, Mr Guertin said.
Higher prices tend to increase revenue and are likely to increase demand for the company’s private label offerings. The company said it has not yet seen costs rise in its pharmacy business and that labor costs are relatively stable because the company raised workers’ wages last year. However, CVS’s portfolio took realized capital losses, said Mr. Guertin.
The company had $ 76.83 billion in revenue during the period, which included a 9.2% increase in sales in the retail segment as consumers brought home test kits. At the same time, Covid-19 testing fell in stores.
The pharmacy chain has gained new customers through the pandemic, and executives expect some of these shoppers to stay.
CVS, rival in the pharmacy
Walgreens Boots Alliance Inc.,
grocery chains and big-box stores such as
has played prominent roles in the US effort to distribute Covid-19 vaccinations across the country. Many have also been the key to the federal effort to make rapid Covid-19 tests available at home.
Before the pandemic, CVS and other pharmacies fought to ward off an increasing number of online rivals. Covid-19 has proven to be a welcome tailwind. Now CVS is in the midst of trying to reshape itself as a broad healthcare provider. The dealer said last year it would close about 900 of its about 10,000 stores over three years and open several primary clinics.
Lack of staff has underscored both CVS and Walgreens, as pharmacists and pharmacy technicians have struggled to juggle Covid-19 tests and vaccines to fill prescriptions and serve customers.
CVS has seen its costs increase, in part due to wage increases, over the past year. Total cost of goods sold rose to $ 45.51 billion in the quarter, up from $ 40.90 billion a year earlier.
In the three months ended March 31, CVS had a quarterly profit of $ 2.32 billion, or $ 1.74 per share, up from $ 2.22 billion or $ 1.68 per share in the same period last year. .
The company said revenue related to the 340B drug rebate program was flat compared to last year. The federal program, which offers discounts on drugs to certain nonprofit hospitals, clinics and other facilities, is the focus of a battle between hospitals and pharmaceutical companies.
Drug manufacturers are cutting back on the flow of 340B-covered drugs through pharmacies like CVS, which enter into contracts with participating entities like hospitals. CVS says it “estimates pretty much flat in the program year by year” right now.
The company raised its earnings outlook for 2022 slightly and now expects earnings per share. share between $ 8.20 per. share and $ 8.40 per.
—Sharon Terlep and Anna Wilde Mathews contributed to this article.
Write to Will Feuer at [email protected]
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