CVS Health on Wednesday reported better-than-expected quarterly results as strong prescription drug sales helped offset continued weakness in its front-of-store business.
For the second quarter, revenue from CVS’ retail pharmacy segment reached $20.7 billion, up 5.7% from a year ago quarter, reflecting an 8.3% increase in pharmacy same-store sales.
Same-store prescription volume surged 9.5% as CVS benefited from its partnerships with pharmacy benefit managers.
But revenue from front-end sales, which includes goods like greeting cards and household items, grew only 0.2%, with front-end same-store sales dipping 1%.
Overall, CVS earned an adjusted $1.69 per share on $46.7 billion in revenue, up 2.2% on the year-ago period. Analysts had expected earnings of $1.61 per share on revenue of $46.35 billion. Same-store sales increased 5.9% company-wide.
“The strong revenue, adjusted EPS, gross and operating margins, along with cash flow generated in the quarter were the direct result of our team’s ability to increase prescription growth by expanding relationships with PBMs and health plans as well as our ongoing streamlining efforts and innovation,” CVS Chief Executive Larry Merlo said in a news release.
As CNBC reports, “CVS and other drugstores, including Walgreens Boots Alliance and Rite Aid, have seen their so-called front-of-store sales threatened as shoppers increasingly buy household staples online or from convenience stores. “
But on the pharmacy side, CVS is now processing more than a billion prescriptions annually as a pharmacy benefit manager. It has also added several Medicare prescription drug coverage networks to boost its prescription business.
Through its proposed acquisition of Aetna, company executives are hoping to move deeper into managing customer health and expand the care CVS provides through all of its retail locations.
CVS posted a net loss of $2.56 billion loss in the second quarter, compared with a $1.1 billion profit during the same period last year, due in part to a $3.9 billion charge related to its Omnicare unit, which provides pharmacy services to nursing homes and other clients.
Omnicare has been hit by lower occupancy rates in nursing facilities.