CVS Health boosted its 2021 guidance Tuesday ahead of its fourth-quarter earnings in early February, with executives citing better-than-expected performance in its retail segment.
In a filing with the Securities and Exchange Commission, the healthcare giant raised its full-year earnings projections to between $8.33 and $8.38 per share from a previous estimate of $8. The company also affirmed its 2022 guidance range of between $8.10 and $8.30 per share.
CVS' chief financial officer, Shawn Guertin, said during the annual J.P. Morgan Healthcare Conference on Tuesday morning that while the company is seeing positive performance across all of its business, the retail segment accounts for the bulk of the boost.
He said the retail business's strong results in the fourth quarter account for about 80% of the overperformance CVS saw in the quarter.
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"We were obviously seeing positive signs across all of our businesses, all of our businesses did very well," Guertin said. "Retail in particular has outperformed in the fourth quarter."
What's driving the retail business's boost? Guertin said it was on the back of higher-than-anticipated COVID-19 vaccinations and testing. COVID vaccines outpaced CVS' expectations in November and December, he said, and testing, particularly over-the-counter options, took off in December as well.
The remaining 20%, he said, comes from other factors such as higher net capital gains and the impact of prior year reserves.
Just as the over-the-counter testing sales boom, the Centers for Medicare & Medicaid Services issued guidance yesterday requiring health insurers to cover such tests beginning Jan. 15. As a major retail pharmacy chain and parent company to national insurer Aetna, CVS Health is in a unique position with how this regulation impacts its business, Guertin said.
He said the company is evaluating how the guidance's impacts could shake out as it sells tests at its pharmacies and pays for them for Aetna members.
"I do think it's important to remember that we are uniquely positioned in that in our model, we tend to have things go both ways," he said.