Because of COVID, CVS Withdraws Most of Guidance, But Maintains EPS and Cash Flow Outlook

CEO Larry Merlo said the company is focused on increasing access to "medicine and virtual care, and testing" throughout the pandemic.

CVS Health released its Q1 2020 earnings report Wednesday morning, highlighted by total revenues of $66.8 billion and adjustments to its guidance for the rest of the year.

Despite the emergence of the coronavirus disease 2019 (COVID-19) in mid-March, CVS reported an operating income of $3.5 billion, a 28.6% increase year-over-year. Similarly, the company's net income topped $2 billion, an increase of $585 million compared to Q1 2019.

Looking ahead, CVS did acknowledge the uncertainty surrounding the ongoing COVID-19 outbreak and how the company is positioned to fare.

CVS has maintained its full year guidance on GAAP diluted earnings per share (EPS) in a range between $5.47 to $5.60, its adjusted EPS in a range of $7.04 to $7.17, and its cash flow from operations in a range between $10.5 billion to $11 billion.

However, the company has pulled the rest of its guidance citing the "significant variability" of the pandemic's impact on the bottom line.

C-suite Perspective:

"When facing any health crisis, including this pandemic, we’re uniquely positioned to understand consumer and patient needs and how to address them," Larry Merlo, CEO of CVS, said in a statement. "This includes increasing access to medicine and virtual care, and testing thousands for the virus every day to ready our country to reopen safely. We’re utilizing our innovation-driven health care model, scale and unique capabilities to benefit consumers across the health care system, and none of this could be done without the tireless dedication of our colleagues."

The pandemic did increase revenues for CVS' retail/long-term care and pharmacy services segment, due to greater front store volume, "greater use of 90-day prescriptions and early refills of maintenance medications."

Front store revenues increased 8.5% year-over-year, boosted by "consumer health and general merchandise sales" driven by the outbreak.

In late March, CVS announced that it would waive co-payments and out-of-pocket cost-sharing for its Aetna members related to inpatient admissions for COVID-19 treatment.

Additionally, CVS has opened drive-thru coronavirus testing sites across five states with an increased focus on minority and underserved communities.

CVS' earnings came less than a week after the company announced a collaboration with WellSpan Health to "coordinate patient care and medication needs."

For complete financial information, review CVS Health's filing with the Securities and Exchange Commission.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

Photo credit: San Carlos, CA - Aug. 19, 2016. CVS Pharmacy. Originally named Consumer Value Store, CVS Pharmacy is now a subsidiary of the American retail and health care company CVS Health. (Editorial credit: jejim / Shutterstock.com)