CVS Health Corp. profit spiked 55 percent in the three months through June, buoyed by lower benefit costs as insurance policyholders delayed elective surgeries and other medical procedures to avoid infection during the COVID-19 pandemic.
The Woonsocket, Rhode Island-based pharmacy healthcare provider earned $2.99 billion, or an adjusted $2.64 per share, as revenue rose 3 percent to $65.3 billion. Wall Street analysts surveyed by Refinitiv were expecting adjusted earnings of $1.93 a share on revenue of $64.2 billion.
|CVS||CVS HEALTH CORP.||73.97||-0.52||-0.70%|
“Our earnings in this environment demonstrate the strength of our strategy and the power of our diversified business model,” CEO Larry Merlo said in a statement. The drugstore chain, which manages prescription-drug benefits through its Caremark subsidiary, expanded into health insurance with its 2018 acquisition of Aetna.
Operating income from the company's healthcare benefits segment soared 189 percent from a year ago as members opted for fewer elective procedures. That helped lower the medical benefit ratio, or amount of premium revenue spent on medical care and services, to 70.3 percent from 84 percent.
There were downsides to the trend, too, however. Fewer trips to healthcare providers also reduced prescription counts and retail sales for CVS stores, undermining that portion of that business.
The company raised its full-year 2020 adjusted earnings outlook to a range of $7.14 to $7.27 per share, up from $7.04 to $7.17.
CVS shares tumbled 13 percent this year through Tuesday, lagging the S&P 500's 2.34 percent gain.