Front-of-store sales wow at CVS in Q2
CVS Health Corp. maintained its momentum in the second quarter, reporting earnings and sales that beat the Street. It also raised its yearly forecast as its business begins to normalize and front-end sales pick up.
Early in the quarter, CVS launched more than 150 new products under its various store brands, including an expansion of its Live Better by CVS Health brand, new Gold Emblem coffee items (all Fair Trade certified) and the launch of Goodline Grooming Co., a men’s grooming brand.
The company also reported it was raising its minimum wage.
CVS posted net income of $2.791 billion, or $2.10 a share, for the quarter ended June 30, down from $2.986 billion, or $2.26 a share, in the year-age period. CVS attributed the drop primarily due to the return of “more normalized utilization levels” in the health care benefits segment following a significant decrease in utilization in the year-earlier period due to the COVID-19 pandemic.
Adjusted earnings per share came to $2.42, easily topping the $2.06 per share forecast by analysts.
Total revenues rose 11.1% to $72.6 billion from $65.3 billion, topping the $70.2 billion analysts had expected. Same-store sales rose 12.3%.
Front store same-store sales rose 12.0% and pharmacy same-store sales were up 12.4%.
“We delivered another quarter of strong results and once again raised our outlook for the year,” said CVS Health president and CEO Karen S. Lynch. “This quarter was highlighted by broad sales and earnings outperformance, as well as sequential operating margin improvement. We continue to play a critical role in helping America prevail against the pandemic while demonstrating the effectiveness of our unique business model, which is focused on meeting customer needs through innovations that make health care more local, affordable and connected.”
CVS administered more than 6 million COVID-19 tests in the quarter and nearly 18 million vaccines nationwide during the quarter. On the company’s earnings call, CVS CFO Shawn Guertin said the company is now expecting to give between 32 million and 36 million doses this year, lower than the 29 million to 44 million doses than it had anticipated in February. Guertin said while vaccinations were down in July over June, but there has been an uptick as some people get their first doses amid the spreading delta variant.
CVS raised its full-year guidance. It now expects earnings per share to range from $6.35 to $6.45, up from previous guidance of $6.24 to $6.36. It expects adjusted earnings per share to range from $7.70 to $7.80, up from prior guidance of $7.56 to $7.68.
The company also raised its full year 2021 cash flow from operations projections to be in the range of $12.5 billion to $13.0 billion from $12.0 billion to $12.5 billion.