CVS Health Q2 tops estimates; to enter primary care
CVS Health is looking to dive even deeper into health care.
The company, which owns health insurance giant Aetna, pharmacy benefits manager Caremark and a national network of some 10,000 CVS Pharmacy drug stores, is hoping to acquire a stake in a primary-care company by the end of the year.
In remarks during CVS’ second-quarter earnings call, president and CEO Karen Lynch said the company wants to partner with a provider that has a strong management team and tech background along with the ability to grow quickly.
“We are committed to extending our health services,” Lynch said. “And we are very encouraged and confident that we'll take the next step on this journey by the end of this year.”
Walgreens and Amazon have already entered the space. In October, Walgreens became the majority owner of VillageMd, with plans to open hundreds of primary care Village Medical practices at Walgreen locations. More recently, in July, Amazon said it would acquire One Medical, a membership-based primary health care provider, for $3.9 billion. And Walmart is opening freestanding clinics.
Second-Quarter Results
The company reported net income of $2.95 billion, or $2.23 a share, for the quarter ended June 30, compared to $2.78 billion or $2.10 a share in the year-ago period. Analysts were looking for earnings of $2.18 per share.
Total revenues increased 11% to $80.636 billion, with growth across all segments, up from $72.616 billion last year. Analysts had predicted $76.41 billion in revenue. Front store sales grew more than 9%. Prescriptions 1.6% or 4.6% excluding the impact of the COVID-19 vaccination, which declined versus the prior year.
“Our retail script growth trend is remarkable as we have consistently increased market share year over year since the first quarter of 2020,” Lynch said on the call.
In the retail/LTC segment, total revenues increased 6.3% to $26.286 billion, driven by increased prescription and front store volume, including the sale of COVID-19 test kits and the impact of an extended cough, cold and flu season compared to the prior year, as well as pharmacy brand inflation.
“Despite a challenging economic environment, our differentiated business model helped drive strong results this quarter, with significant revenue growth across all of our business segments,” stated Lynch in the earnings release. “The continued success of our foundational businesses accelerated our strategy to expand access to health services and help consumers navigate to the best site of care.”
The company raised its outlook for the rest of 2022 with adjusted earnings per share now expected to be in the range of $8.40 to $8.60 compared to an earlier forecast of $8.20 to $8.40.