CVS Health reported a strong second quarter on Wednesday, raising the outlook for the year. The company is better positioned to weather the pandemic due to its diverse business, which also includes the large drugstore chain and health benefits.
The healthcare company exceeded analysts' earnings and revenue expectations in the second quarter.
The company's shares fell nearly 1% to $ 64.40 at the close. They had risen more than 6% in premarket trading early Wednesday, shortly after the company released earnings.
"The COVID-19 environment is accelerating our transformation and offering us new opportunities to demonstrate the power of our integrated offerings and the ability to serve consumers in the community, at home and in the hand, which has never been more important," said CVS boss Larry Merlo in a press release.
For the quarter ended June 30, the company reported against Wall Street expectations based on a Refinitiv analyst survey:
Earnings per share: $ 2.64 adjusted vs. $ 1.93 expected sales: $ 65.3 Billions expected against $ 64.23 billion
The drug store chain generated net income of $ 2.98 billion, or $ 2.26 per share, in the second quarter, compared to $ 1.94 billion, or $ 1.49 per share, in the previous year.
Excluding items, CVS earned $ 2.64 per share, above the refinitive analysts' expected $ 1.93 per share.
Revenue increased 3% to $ 65.3 billion from $ 63.43 billion in the previous year. It also surpassed the $ 64.23 billion expected by analysts.
CVS has raised its outlook for the year. Earnings of $ 5.59 to $ 5.72 per share are expected. After adjustments, earnings are expected to be between $ 7.14 and $ 7.27 per share, from a previous forecast of $ 7.04 to $ 7.17 per share.
In the drugstore chain, pre-business revenue and prescription volume declined in the quarter as many customers stayed at home while ordering.
Front store sales declined 4.6% year over year in the three month period. The number of prescriptions prescribed in the quarter decreased by 1.1% over the previous year by 30 days, as fewer customers went to the doctor and therefore fewer new prescriptions were received.
However, the company, which also operates in the health care sector, also received a boost from changing medical habits. Operating income increased more than 40% year-over-year as the election process and discretionary use of their healthcare services were postponed.
In CNBC's Closing Bell, Merlo said these trends reversed in June, when the economy opened up again and people used medical care more typically. The stores saw more buyers and also filled more prescriptions in June and July, he said.
However, he expects some technology-based habits to remain. The use of telemedicine increased by more than 700% in the second quarter. Customers used home health monitoring to feel more comfortable.
"This is something we have invested in, and you will see that we will bring more features and products to the market in the future," he said.
During the pandemic, CVS set up and operated Covid-19 test sites. The company announced that it has opened more than 1,800 test locations in transit locations to date, which are operated in coordination with federal, state, and local officials.
In late March, CVS announced plans to hire an additional 50,000 part-time, full-time, and temporary workers to keep up with demand and help with services such as delivering prescriptions home. It was announced on Wednesday that more than 40,000 employees have been hired so far.
Read the full results release here.