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CVS sales up 11%, driven by Covid-19 demand

SVC Health Corp.

SVC -0.54%

first-quarter sales rose more than 11% as the drugstore chain continued to benefit from the administration of Covid-19 vaccines and the sale of home tests.

The Woonsocket, RI-based company said on Wednesday it had administered more than six million Covid-19 tests and more than eight million Covid vaccines in the first three months of the year.

Demand for Covid-19 tests surged earlier this year as the wave of cases caused by the Omicron variant swept across the United States. The company’s same-store sales, which include stores open at least 12 months plus digital channels, rose 10.7% in the first quarter from a year earlier, shortly after the first vaccines were authorized.

CVS reported revenue of $76.83 billion during the period, which included a 9.2% sales increase in the retail segment as consumers purchased test kits from carry. At the same time, in-store Covid-19 testing has declined.

CVS executives warned in February that they did not expect another Covid-19 booster injection to be authorized this year and that profits from Covid-19-related sales could decline, particularly in the second semester 2022.

The drugstore chain has won new customers throughout the pandemic and executives expect some of those shoppers to stick around.

Walgreens Boots Alliance pharmacy competitor CVS Inc.,

grocery chains and big box stores like Walmart Inc.

played a leading role in US efforts to distribute Covid-19 vaccines across the country. Many also played a key role in the federal effort to make rapid at-home Covid-19 testing available.

Before the pandemic, CVS and other pharmacies struggled to fend off a growing number of online competitors. Covid-19 proved a welcome tailwind. Today, CVS is trying to transform itself into a large healthcare provider. The retailer said last year it would close about 900 of its roughly 10,000 stores over three years and open more primary care clinics.

Staffing shortages have tested CVS and Walgreens as pharmacists and pharmacy technicians scrambled to juggle Covid-19 testing and vaccines with filling prescriptions and serving customers.

Rapid home Covid-19 tests promise convenience and speed, but the accuracy of the tests depends on how and when you take them. The WSJ’s Daniela Hernandez explains everything you need to know about home testing and how to get accurate results. Illustration: David Fang and Jacob Reynolds

CVS has seen its costs rise, in part due to salary increases, over the past year. Total cost of goods sold reached $45.51 billion in the quarter, up from $40.90 billion a year earlier.

In the three months ended March 31, CVS posted quarterly earnings of $2.32 billion, or $1.74 per share, compared with $2.22 billion, or $1.68 per share, a year ago. one year old.

Excluding one-time items, adjusted earnings were $2.22 per share. Analysts polled by FactSet had expected $2.17 per share. Sales also topped consensus opinions.

Sales increased nearly 13% in its health benefits segment. In the pharmacy services segment, sales increased by almost 9%. And in the retail segment, sales increased by more than 9%.

The company raised its 2022 earnings outlook slightly, now expecting earnings per share of between $8.20 and $8.40 per share, an increase of 10 cents on either side.

Write to Will Feuer at [email protected]

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