CVS Health Corp. (NYSE: CVS) reported second-quarter 2020 results before markets opened Wednesday. The pharmacy and health care giant posted quarterly adjusted diluted earnings per share (EPS) of $2.64 on revenues of $65.3 billion. In the same period a year ago, the company reported EPS of $1.89 on $63.4 billion in revenues. Second-quarter results also compare to the consensus estimates for $1.93 in EPS on revenues of $64.2 billion.
While revenue was up year over year, the COVID-19 pandemic adversely affected sales in CVS’s retail, long-term care and pharmacy segments. Operating income rose more than 40%, which the company also attributed to reduced benefit costs as consumers deferred elective procedures and other discretionary use of the company’s health care benefits segment.
In the face of the uncertainty related to the coronavirus outbreak, CVS updated its guidance for the 2020 fiscal year. The company raised its adjusted EPS guidance from a range of $7.04 to $7.17 to a new range of $7.14 to $7.27, reflecting an estimated change in its full-year tax rate.
Guidance for operating cash flow was raised from a prior range of $10.5 to $11 billion to a new one of $11 to $11.5 billion as well.
CVS also noted that it expects higher operating costs in its health care segment in the second half of the year as more claims for benefits are received and the company continues to make “significant COVID-19 related investments.”
Pharmacy same-store sales rose 4.6% in the quarter, while front-of-store sales declined by 4.5%. Prescription volume rose by 0.6%, and the number of prescriptions filled fell by 1.1% year over year to 345.4 million.
The medical benefits ratio fell by 13.7% from 84% in the second quarter of last year to 70.3%, primarily due to the deferral of elective procedures. The decline in paid benefits lifted operating income in the health care segment by 188.7%.
Shares traded up as much as 5% in Wednesday’s premarket, before settling back to a gain of about 2.6% at $66.70. The stock closed at $64.98 on Tuesday, in a 52-week range of $52.04 to $77.03. The consensus price target on the stock is $78.78.