Don’t be fooled by a sour reaction from Wall Street. Second quarter results from CVS Health show the pharmacy and insurance giant has excellent vital signs.
Second-quarter sales of $72.6 billion and adjusted earnings of $2.42 a share both easily topped analyst expectations. CVS also upped its 2021 profit forecast for the second time this year.
Yet the stock fell sharply before recovering in early trading.
One reason for Wall Street’s skittishness: A rush of Covid-19 vaccinations helps explain the strong quarter. CVS administered about 17 million shots during the quarter—a pace which is bound to slow over the rest of the year. That resulted in extra customer visits and extra revenue. Comparable sales at the pharmacy counter and at the front of the store each rose about 12% from a year earlier.
Those growth rates will slow in the near term, but other, larger parts of the business are set to thrive in the longer term. For instance, the $70 billion acquisition of health insurer Aetna back in 2018 looks like a winner. Insurance revenues rose 11% from a year earlier and, while the segment’s operating income fell from pandemic-inflated levels, it was up 12% from the second quarter of 2019 even as demand for healthcare returned to normal levels.