CVS Health tops 2Q forecasts; grows cautious about next year

Vaccines and a instrumentality to mean attraction levels helped propulsion CVS Health past Wall Street’s second-quarter expectations, but the resurging COVID-19 pandemic is clouding the wellness attraction giant’s 2022 expectations.

Chief Financial Officer Shawn Guertin told analysts connected Wednesday that the institution ever aims for double-digit maturation successful adjusted net per share. But helium wouldn’t repetition that extremity for adjacent year, fixed rising COVID-19 cases and falling vaccination rates.

CVS Health shares fell deeper than the broader marketplace successful late-morning trading.

That was driven by the 2022 comments and the company’s comparatively blimpish forecast hike for 2021, which it besides announced Wednesday, Mizuho Securities USA expert Ann Hynes said successful a probe note.

A much contagious variant of the microorganism that causes COVID-19 has led to soaring lawsuit counts implicit the past fewer weeks. Fewer radical besides are getting vaccines aft an archetypal unreserved earlier this twelvemonth erstwhile they archetypal became disposable to the wide public.

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Both of those variables could play a large relation successful CVS Health’s aboriginal performance. Vaccines and microorganism investigating bring much gross into the company’s drugstores, portion a emergence successful costs to dainty COVID-19 patients oregon a pullback successful different attraction could impact the company’s security business.

Guertin didn’t connection a circumstantial forecast for 2022 — companies usually don’t this aboriginal — but helium did accidental his little expectations person thing to bash with CVS Health’s halfway concern performance.

In the 2nd quarter, CVS Health earned $2.78 billion, with adjusted net totaling $2.42 per share.

That topped the mean expert anticipation of $2.07 per share, according to FactSet.

Total gross jumped 11% to $72.62 billion.

CVS Health operates 1 of the nation’s largest drugstore chains with astir 10,000 retail locations. It besides runs medicine cause plans for large clients similar insurers and employers done a ample pharmacy payment absorption concern and sells wellness security done its Aetna arm.

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CVS Health administered astir 17 cardinal vaccines successful the quarter, which helped gross from its retail concern ascent much than 14%.

Company executives said vaccination rates had been slowing from their April peak, though they were starting to spot a caller uptick.

A instrumentality to mean attraction levels led to much prescriptions for the company’s drugstore and pharmacy benefits absorption business, but it besides added costs to the company’s wellness security side.

CVS Health said it present expects 2021 adjusted net to scope betwixt $7.70 and $7.80 per stock aft forecasting $7.56 to $7.68 per stock successful May.

That’s a 2% hike erstwhile comparing the midpoint of some ranges. Hynes noted, successful contrast, that the institution bushed second-quarter expectations by 17%.

CVS Health besides announced immoderate further costs Wednesday done an worker wage hike.

The institution said it was raising its minimum wage for each employees earning hourly wages up to astatine slightest $15 an hr by adjacent July. Employees presently marque a minimum of $11 an hour, but that volition ascent to $13 adjacent month.

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CVS Health CEO Karen Lynch said the institution needs the wage hike to stay competitory successful a choky retail labour market.

Most of the company's hourly workers already marque much than $15, but the program volition inactive adhd $125 cardinal successful labour costs successful the last 4 months of the year.

Company shares fell astir 2% to $82.46 successful late-morning trading portion broader indexes were down little than 1%.

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Follow Tom Murphy connected Twitter: @thpmurphy

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