CVS Health raises annual profit view after first-qtr beat; shares rise

© Reuters. CVS Health logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -CVS Health Corp beat estimates for first-quarter results on Wednesday, helped by strong performance in its retail store operations and insurance unit, encouraging the company to raise annual adjusted profit forecast, sending its shares up about 2%.

Pharmacy chains like CVS have benefited from distribution of COVID-19 vaccines and tests during the pandemic. However in February, the company said it expected a big decline in COVID-19 vaccination and testing administered at its stores this year.

The company administered more than six million COVID-19 tests and over eight million COVID-19 vaccines in the quarter, even as the pace of people getting boosters slowed down and U.S. reported a drop in testing.

But the company said demand for over the counter COVID-19 tests was higher which added to its retail segment growth.

The company, which operates one of the largest U.S. drugstore chains, manages pharmacy benefits for employers and health plans and owns the Aetna health insurer, said retail segment performance was also driven by inflation of branded drugs and higher prescription volumes.

Same store sales rose 10.7% in the quarter, as easing coronavirus curbs boosted footfalls.

Falling demand for COVID-19 related products was also offset by membership growth in its healthcare benefits segment, which offers various insurance products and services. The segment saw a 12.8% rise in revenue in the quarter.

Morningstar analyst Julie Utterback said CVS turned in a 'stellar' quarterly performance which allowed the management to increase its bottom-line outlook slightly for the full year and is pushing shares up.

On an adjusted basis, CVS earned $2.22 per share, compared with estimates of $2.15, while first-quarter revenue of $76.82 billion surpassed estimates of $75.4 billion.

The company now expects 2022 full-year adjusted profit to be between $8.20 and $8.40 per share, higher than its prior guidance of $8.10 and $8.30 per share.