CVS Boosts Q4 Revenue With Focus On COVID Testing, Vaccines

CVS said on Tuesday (Feb. 16) that it is re-entering the Obamacare health plan market next year, and that its multi-pronged response to COVID has helped it grow sales and new consumer relationships.

Citing the depth and breadth of the capabilities of its 300,000 employees and nearly 10,000 stores, CVS Health announced that its fourth-quarter sales and earnings had topped expectations, and that “after careful consideration” its Aetna unit would re-enter the so-called Obamacare market on Jan. 1, 2022 after a four-year hiatus.

Officially, the Rhode Island-based chain said its revenues rose 4 percent to $69.5 billion, with adjusted earnings per share falling 25 percent to $1.30 for the three months that ended Dec. 31, led by an 11 percent increase in sales for its Health Care Benefits segment, which includes Aetna.

“For years, we’ve used our voice to advocate for policies, programs and regulations at the local, state and national levels that support access to affordable care for all Americans,” CVS President and CEO Karen Lynch told investors on a conference call, saying the company has decided to re-enter the individual public exchange market as of Jan. 1, 2022.

“As the ACA has evolved, there’s evidence of market stabilization and remedies to earlier structural issues. It is now time for us to participate in these markets. We will show that we can bring great value to those who seek coverage, and you can expect to hear more about our exchange re-entry plans and future updates,” Lynch said.

COVID Wins and Losses

COVID has presented CVS with numerous challenges and opportunities, as the unprecedented pandemic hurt foot traffic in stores and lowered demand for traditional fourth-quarter staples like cough and cold medicines. But the company’s multi-pronged response to the coronavirus — spanning its Minute Clinics, in-store testing and immunization programs; out-of-store medication delivery and vaccine programs in long-term care facilities; and Return Ready partnerships with colleges and universities — CVS has added eight million new consumer relationships.

“Our transformation over the last decade has enabled us to become the nation’s leading diversified health services company and one of the most trusted brands in America,” Lynch said, noting that CVS’ relationship with over 100 million people has uniquely positioned the company to support customers for “every meaningful moment of health throughout their lifetime.”

A big part of the journey for the foreseeable future will include the continued rollout of COVID vaccines, after its initial pivot and rapid embrace of COVID testing.

“Today, we remain the largest community testing organization in the U.S. We’ve administered approximately 15 million tests at our more than 4,800 testing locations nationwide,” Lynch said. “We’ve administered more than three million vaccine doses to the patients and staff in over 40,000 long-term care facilities across the country.”

Currently, CVS is administering approximately 250,000 COVID immunizations across 11 states each week at over 350 locations, but said it has the capacity to do 20-25 million doses per month depending on supply availability.

Virtual Care and Growth

Lynch said the company is also planning to expand its virtual care business, after launching e-clinic services and Minute Clinics in 33 states and the District of Columbia, allowing consumers to interact with nurse practitioners for comprehensive online.

At the same time, CVS offered conservative guidance for the full year 2021, forecasting adjusted EPS of $7.39 to $7.55, slightly below the $7.54 average estimate of the 27 analysts who cover the company. 

“We are starting 2021 with strong momentum, and we are accelerating our pace of progress to drive our consumer-centric strategy,” Lynch said. “We will further develop and refine our strategy to leverage the rapid shift in healthcare underway in the U.S. We will enhance the consumer experience through the expansion of digital services and platforms that seamlessly connect in-person channels. We will expand our portfolio with new, innovative, consumer-oriented solutions that improve health, lower medical costs and create better health outcomes.”