CVS Health Corp. reported stronger-than-expected fourth-quarter profit and revenues amid a rise in pharmacy sales and forecast a strong year ahead.
Net income fell to $975 million, or $0.74 cents a share, in the quarter ended Dec. 31, from $1.744 billion, or $1.34 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share was $1.30, topping analysts’ estimates of $1.24 per share.
Total revenue rose 4.0% to $69.55 billion, beating estimates of $68.73 billion, and primarily driven by growth in the health care benefits and retail/long-term care segments. Total same-store sales grew 5.3% during the quarter
Retail sales rose 6.6% to $24.062 billion as same-store sales increased 5.7%. Testing for COVID contributed about $400 million in revenue during the fourth quarter. CVS said it has administered about 15 million tests nationwide. It has also administered more than 3 million COVID vaccines in over 40,000 long-term care facilities.
For the coming year, CVS expects a $400 million to $500 million benefit from COVID-related activities.
CVS’s healthcare benefits division saw sales rise 11.4% to $19.1 billion as it added Aetna's operations to its legacy business.
Same-store sales in the pharmacy division rose 7.5% as prescription volume rose. Front of store comp sales decreased 1.8% primarily due to decreased customer traffic and reduced volume in cough and cold product sales largely as a result of the COVID-19 pandemic.
On the company’s earnings call, CVS president and CEO Karen Lynch, who replaced longtime chief executive Larry Merlo earlier this month, said the company is increasing investments into a wider range of health services. In 2022, CVS will reenter the individual public exchange created by the Affordable Care Act, which allows people to buy their own health insurance plans. Lynch said it will be the company’s first branded CVS Health Aetna product. The company did not disclose the geographies or cost of the plans, saying that more details will come in the second quarter.
For the full year, CVS total revenues rose 4.6% to $268.70 billion.
“We utilized the full depth and breadth of our capabilities and our presence in local communities across the country to play a leadership role in COVID-19 testing and vaccine administration,” said Lynch. “Our ability to deliver 2020 full-year results above expectations is a testament to the strength of our strategy and the flexibility of our diversified health services model. Our goal is to make health care more accessible, more affordable and simpler. In order to do this, we will accelerate the pace of our progress through targeted investments in key areas that will drive our consumer-focused strategy.”
CVS forecast adjusted earnings of between $7.39 and $7.55 per share for 2021, citing rising retail sales. The average estimate of analysts surveyed was $7.54.