CVS Raises Full-Year Expectations, Benefits From Insurance Business -- Update
August 05 2020 - 8:00AM
Dow Jones News
By Dave Sebastian
CVS Health Corp. raised its expectations for the full year as
its insurance business booked lower health-care benefit costs due
to the deferral of elective procedures amid the coronavirus
pandemic, though shelter-in-place measures also led to fewer new
prescriptions.
The pharmacy chain, which also owns the insurance giant Aetna,
on Wednesday said it now expects earnings of $5.59 to $5.72 a
share, or $7.14 to $7.27 a share on an adjusted basis. It
previously expected earnings of $5.47 to $5.60 a share, or $7.04 to
$7.17 a share on an adjusted basis.
The company said it sees more people using their insurance for
health care in the second half of the year. States have emerged
from lockdown measures implemented in March, though some are seeing
a resurgence in Covid-19 cases.
CVS posted second-quarter profit of $2.98 billion, or $2.26 a
share, compared with $1.94 billion, or $1.49 a share, in the same
period last year. Adjusted earnings were $2.64 a share, ahead of
the $1.91 a share analysts polled by FactSet had expected.
The Woonsocket, R.I.-based company reported sales of $65.34
billion, up 3% from the year-ago period, beating Wall Street
estimates.
Sales in the company's health-care benefits segment, which
includes Aetna, rose 6.1% to $18.47 billion. It reported a
medical-loss ratio, or the share of premiums the insurer pays out
in claims, of 70.3%.
Sales in the company's segment that fulfills medication
prescriptions and sells general products rose 1% to $21.66 billion,
though prescriptions filled declined 1.1% on a 30-day equivalent
basis and front-store revenues fell 4.6%. Pharmacy-services segment
sales rose slightly to $34.89 billion, partially offset by lower
provider visits during the quarter.
CVS, the biggest retail-chain conductor of Covid-19 tests in the
U.S., said it has opened more than 1,800 test sites at
drive-through locations. But test results have taken longer than
customers have been told, and some CVS employees involved in
testing have expressed concerns about the delays and said the
company hasn't been transparent about wait times for the results,
The Wall Street Journal reported last month.
Shares rose about 3% in premarket trading.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
August 05, 2020 07:45 ET (11:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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