CVS Health raised its full-year adjusted earnings forecast on Wednesday after strong demand for COVID-19 vaccinations and tests helped the U.S. healthcare conglomerate beat third-quarter profit estimates.
To combat the public health crisis caused by infections caused by the Delta variant, major U.S. employers have mandated COVID-19 tests and vaccines, while booster shots have been authorized for some age groups and high-risk populations.
Walgreens Boots Alliance also reported a boost from increased demand for vaccinations as a result of the variant's spread.
In the third quarter, CVS said it administered more than 8 million COVID-19 tests and more than 11 million COVID-19 vaccines.
The company reduced its 2021 expectations for the number of COVID-19 vaccine doses administered at its clinics to a range of 32 million to 36 million in August, down from a prior range of 29 million to 44 million doses, reflecting a slowdown in vaccinations during the second quarter.
CVS is best known for its large chain of drugstores across the United States, but it also has a health insurance business and a pharmacy benefits management unit that helps negotiate lower drug prices for its customers, including employers and health insurers.
Sales in its health insurance unit increased 9.5 % to $20.48 billion, while the medical benefit ratio (MBR), or the percentage of premiums paid for medical services, increased to 85.8 % from 84 % the previous year, owing to higher COVID-19-related costs.
Medical costs for health insurers have been fluctuating since the outbreak of the pandemic. Lower medical claims for non-urgent procedures helped keep costs in check, but COVID-19 vaccinations and care drove them up.
The company's revenue from its pharmacy benefit management unit increased 9.3 % to $39.05 billion.
According to IBES data, excluding items, the company earned $1.97 per share, exceeding estimates of $1.78.
CVS now expects adjusted earnings per share of $7.90 to $8.00 for the full year, up from $7.70 to $7.80 previously.