Don’t be fooled by a bitter reaction from Wall Street. Second quarter results from CVS Health show the pharmacy and insurance giant has excellent vital signs.
Second-quarter revenue of $ 72.6 billion and adjusted earnings of $ 2.42 per share far exceeded analysts’ expectations. CVS also increased its profit forecast for 2021 for the second time this year.
However, the title fell sharply before recovering at the start of the session.
One of the reasons for Wall Street’s reluctance: a rush for Covid-19 vaccinations helps explain the strong quarter. CVS administered around 17 million shots in the quarter, a pace that is expected to slow for the remainder of the year. This resulted in additional customer visits and additional income. Comparable sales at the drugstore counter and at the front of the store each increased by approximately 12% from the previous year.
These growth rates will slow down in the short term, but other larger parts of the business are expected to prosper in the longer term. For example, the $ 70 billion acquisition of health insurer Aetna in 2018 appears to be a winner. Insurance revenue grew 11% year-over-year and, while segment operating income fell from pandemic-inflated levels, it increased 12% from second quarter of 2019, even as the demand for health care returned to normal levels.