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Thursday October 21st, 2021 8:11PM

CVS posts strong Q4 numbers, but pandemic weighs on results

By The Associated Press
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CVS Health easily beat fourth-quarter expectations as revenue from COVID-19 testing and prescription growth helped counter hits from an ongoing global pandemic.

The drugstore chain and pharmacy benefit manager also released a forecast for this year that largely fell below Wall Street expectations and shares slid Tuesday.

The pandemic has kept customers away from drugstores and hurt sales of products like cough and cold treatments, which normally grow during colder months.

The company's health insurance business also has started adding claims for COVID-19 treatments.

But a big part of CVS Health's business, the number of prescriptions filled, continued to climb in the fourth quarter even though the flu season has been mild and fewer people are going to the doctor and getting new prescriptions.

Testing for COVID-19 also helped bump up revenue from the company's drugstore business more than 6% in the quarter. CVS Health said it has administered about 15 million tests at more than 4,800 locations.

The company is delivering vaccines to residents of nursing homes and other long-term care locations nationwide. Those vaccines will become a growing source of income later this year once more of the company's stores start offering them.

CVS Health earned $973 million in the final quarter of 2020, with results adjusted for one-time gains and costs totaling $1.30 per share.

That’s six cents better per-share than Wall Street had expected, according to a survey by Zacks Investment Research.

Revenue grew 4% to $69.55 billion, also beating analyst projections handily.

CVS Health operates one of the nation’s largest drugstore chains with nearly 10,000 retail locations. It also runs prescription drug plans for big clients like insurers and employers through a large pharmacy benefit management business, and the company sells health insurance through its Aetna arm.

Overall net income tumbled 44% compared with the final three months of 2019, the last financial quarter before the pandemic hit. The decline was due partly to the early extinguishment of $674 million in debt.

For the full year, CVS Health made $7.18 billion on $268.7 billion in revenue, with adjusted earnings totaling $7.50 per share.

In 2021, the Woonsocket, Rhode Island, company expects full-year earnings to range between $7.39 and $7.55 per share.

That falls mostly below the bar set on Wall Street, where analysts expect, on average, $7.54 per share according to FactSet.

The company expects COVID-19 to have little impact on 2021 adjusted EPS. Revenue from vaccines and testing for the virus will boost operating income by anywhere from $400 million to $500 million.

But the insurance business could take a hit similar in size from claims for treating people with COVID-19.

New CEO Karen Lynch also said Tuesday that the company's Aetna insurance business plans to re-enter next year individual insurance marketplaces created by the Affordable Care Act. Aetna left the markets entirely a few years ago, and many other insurers scaled back their presence after getting swamped initially with bigger-than-expected claims and losses.

Shares of CVS Health Corp. slipped 4% to $71.24 while broader markets rose slightly Tuesday.

The stock had already climbed about 9% this year.

_____

A portion of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on CVS at https://www.zacks.com/ap/CVS

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