A driver unloads merchandise from a delivery truck outside a CVS Health Corp. location in New Rochelle, New York, U.S., on Monday, March 16, 2020.
Angus Mordant | Bloomberg | Getty Images
CVS Health shares rose about 4% in premarket trading Wednesday after the company reported a huge jump in sales at its stores as customers rushed in to get prescriptions and other essentials during the coronavirus pandemic.
Same-store sales surged 9% during the quarter.
Here’s how the company did:
- Earnings per share: $1.91 cents, adjusted
- Revenue: $66.8 billion
“When facing any health crisis, including this pandemic, we’re uniquely positioned to understand consumer and patient needs and how to address them,” CVS chief executive Larry Merlo said in a press release. “This includes increasing access to medicine and virtual care, and testing thousands for the virus every day to ready our country to reopen safely.”
CVS reported adjusted earnings per share of $1.91. Its revenue for the fiscal quarter increased 8.3% to $66.8 billion compared to $61.6 billion for the same period last year. Net income rose to $2.01 billion, or $1.53 per share, in the quarter ended March 31, from $1.42 billion, or $1.09 per share, a year earlier.
Wall Street anticipated earnings per share of $1.63 cents on revenue of $64.01 million, based on a survey of analysts by Refinitiv. However, it’s difficult to compare reported earnings to analyst estimates as the pandemic disrupts typical shopping patterns and the global economy.
CVS did not change its financial outlook for 2020 earnings and cash, despite many other companies withdrawing them because of the pandemic. The company said it expects its 2020 earnings to be between $7.04 to $7.17 per share, adjusted, and its cash flow to be between $10.5 billion to $11.0 billion.
It withdrew other parts of its outlook, though, citing “the likelihood of significant variability in the impact of COVID-19” on the company’s finances.
The drugstore chain has kept stores open as an essential retailer during the coronavirus pandemic. It’s sold cleaning supplies, over-the-counter medications and prescriptions. It’s also opened drive-thru testing locations and announced plans to ramp up to nearly 1,000 sites by the end of May and process up to 1.5 million tests per month, so long as supplies and lab capacity are available.
Sales were strong across the stores. CVS said the pandemic caused more customers to order 90-day prescriptions, get early refills of medications and buy a larger volume of household goods and health items.The company’s same-store sales in pharmacy were up 9.3% and same-store sales in the front store were up 8% in the quarter. Prescription volume was up sharply, by nearly 10%.
CVS is one of the retailers that has hired during the pandemic. It announced in late March that planned to hire 50,000 people in part-time, full-time and temporary roles to keep up with demand.
But even some essential retailers have felt the pandemic’s effects. Drugstore competitor Walgreens’ fiscal fourth-quarter earnings illustrated a mixed picture as customers stockpiled, but then sheltered in place. In its earnings call in April, the international drugstore chain said same-store sales were up 26% in the first 21 days of March. But, it said, they dropped by a mid-teens percentage rate the last week of the month, as foot traffic declined and fewer people bought discretionary items like beauty products.
CVS is one of five major U.S. retailers that plans to add more drive-thru testing sites. The drive-thrus are staffed by CVS. It plans to open the new sites in store parking lots. Its current drive-thrus are set up in large parking lots with enough space for multiple lanes. They use Abbott Laboratories’ rapid testing device, which allows patients to get test results in minutes.