CVS Performance Reflects Tough Channel Environment
It’s been an intense year for drug store chains. Following announcements of store closures by Walgreens and Rite-Aid, CVS Health Corp. is out with its latest financial results, which were mixed for the second quarter.
On one hand, CVS reported a 2.6% boost in revenue during Q2 to reach $91.2 billion. In the pharmacy and consumer wellness segment, which includes retail pharmacies, health and wellness products and general merchandise, revenue rose 3.7%, topping $29.8 billion.
Overall operating income, though, fell to $3.04 billion from $3.23 billion for the quarter ending June 30 and adjusted earnings per share (EPS) dipped to $1.83 from $2.21 on a year-over-year (YoY) basis. The company’s health insurance business, Aetna, has also been struggling and that unit’s president, Brian Kane, is exiting the company.
CVS tweaked its outlook for the full year, based on the current operating climate marked by consistent consumer wariness, ongoing general problems with loss and shrink and prescription reimbursement rate challenges, among other factors. The company revised its adjusted EPS guidance to a range of $6.40 to $6.65 from at least $7.00 and changed its guidance on cash flow from operations to approximately $9 billion from at least $10.5 billion.
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CVS is stepping up efforts to stem losses, announcing a plan to slash $2 billion in expenses over the next several years. CEO Karen Lynch said that that company is pursuing growth while curbing costs in light of higher medical costs.
“We have many points of differentiation that position us to win now and into the future," she said. "Our innovation is accelerating more transparent pharmacy reimbursement models, increasing the use of biosimilars, and providing better patient outcomes through our connected health care delivery assets. Our integrated model and our strategy are enabling us to execute in a challenging environment and we are delivering the value our customers demand. We are taking action today to ensure we make the most of our many opportunities, including leadership changes in the Health Care Benefits segment."
With its CVS Pharmacy subsidiary, Woonsocket, R.I.-based CVS Health has 300,000-plus colleagues – including more than 40,000 physicians, pharmacists, nurses and nurse practitioners. The company is No. 5 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
