CVS sees higher adjusted profit as COVID tests, vaccinations rebound

[November 03, 2021]  (Reuters) -CVS Health Corp on Wednesday lifted its full-year adjusted earnings forecast after robust demand for COVID-19 vaccinations and tests helped the U.S. healthcare conglomerate beat analysts' estimates for third-quarter profit.

Major U.S. employers have been mandating COVID-19 tests and vaccines to combat the public health crisis in the wake of infections caused by the Delta variant, while booster shots have been authorized for some age groups and high-risk populations.

Rival Walgreens Boots Alliance also signaled a boost from higher demand for vaccinations following the spread of the variant.

CVS said it had administered more than 8 million COVID-19 tests and more than 11 million COVID-19 vaccines in the third quarter.

The company had in August cut its 2021 expectations for the number of COVID-19 vaccine doses it would administer at its clinics to a range of 32 million to 36 million, from its prior view of 29 million to 44 million doses, reflecting a slowdown in vaccinations during the second quarter.
 

CVS, best known for its large chain of drugstores across the United States, also operates a health insurance business, and a pharmacy benefits management unit, which helps negotiate lower drug prices for its customers such as employers and health insurers.

Sales in its health insurance unit rose 9.5% to $20.48 billion, while medical benefit ratio (MBR), the percentage of premiums paid for medical services, rose to 85.8% from 84% last year, due to higher COVID-19 related costs.

People walk by a CVS Pharmacy store in the Manhattan borough of New York City, New York, U.S., November 30, 2017. REUTERS/Shannon Stapleton/File Photo

Health insurers' medical costs have been in flux since the beginning of the pandemic. Lower medical claims for non-urgent procedures helped control costs, but COVID-19 vaccinations and care pushed them higher.

Revenue at its pharmacy benefit management unit rose 9.3% to $39.05 billion.

Excluding items, the company earned $1.97 per share, above estimates of $1.78, according to IBES data from Refinitiv.

CVS now expects full-year adjusted earnings per share of $7.90 to $8.00, from $7.70 to $7.80 previously.

(Reporting by Manas Mishra and Amruta Khandekar in Bengaluru; Editing by Sriraj Kalluvila)

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