Amid coronavirus pandemic, CVS Health exceeds business expectations, awaits flu season, coronavirus vaccine
The company has rolled out community testing sites for COVID-19 at more than 1,800 CVS drive-thru locations
The COVID-19 pandemic is creating new business opportunities for CVS Health as the company expands access to testing and awaits the flu vaccine season and eventual coronavirus vaccine.
The company has rolled out community testing sites for COVID-19 at more than 1,800 CVS drive-thru locations with "swab-and-send diagnostics." More than half of the locations are in communities with "significant need for support," officials said during a Wednesday conference call discussing the company’s second quarter earnings.
“Now those of you who have been following us for some time know that CVS Health is much more than just your corner drugstore,” said Larry Merlo, president, CEO and director of CVS Health Corporation, according to a Yahoo Finance–edited transcription of the call. “And in this era of COVID, our strategy of diverse assets across health care, this triad of care where connections are delivered in the community, at home and in the palm of your hand could not be more important."
"Looking at our second quarter performance, the diversity of our portfolio of assets enabled our enterprise to exceed our expectations," said Eva Boratto, executive VP and CFO of CVS Health Corp.
Larry Merlo, president and chief executive officer of CVS Health Corp., speaks during an interview in New York, U.S., on Thursday, May 9, 2019. (Photographer: Christopher Goodney/Bloomberg via Getty Images)
By the end of July, CVS Health had administered about 2 million COVID-19 tests, with the majority scheduled digitally.
“The turnaround times through the months of May and June were in that three-day range," Merlo said. "And coming out of the July 4 holiday, we did see a spike in testing demand as well as a spike in the turnaround time,” which was addressed by reducing daily testing by 25% and working with laboratories to increase capacity. Merlo said the company has since seen a dramatic improvement.
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MAY 15: A sign promoting drive-thru coronavirus (COVID-19) tests at CVS Pharmacy on May 15, 2020 in Bridgewater, Massachusetts. (Photo by Maddie Meyer/Getty Images)
Merlo added that 40% of people tested at CVS Pharmacy were new customers, saying, “we're now connected with them digitally with the objective of making them long-term CVS customers.”
During the second quarter, Merlo said performance was impacted as shelter-in-place orders took effect. People withdrew from their regular shopping and doctor visits, thereby adversely affecting CVS’ pharmacy and front-store revenues.
However, reduced benefit costs from deferred elective procedures resulted in a 41% growth in operating income over three months, boosting its health benefits segment, according to a company release.
Merlo also said the company's retail prescription home delivery volume is up by more than 500% over the last quarter.
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CVS Health also launched a business-to-business testing solution, called Return Ready, with more than 40 clients already enrolled, including universities and businesses across various sectors.
Further, Merlo said the company expects to administer up to 18 million flu vaccines this fall, "which is more than what we have administered in the last few years.”
“The importance of the seasonal flu vaccine is never going to be more important...” he said, adding he expected many government public service announcements to encourage flu vaccines, especially because flu symptoms mimic those of COVID.
As the company looks ahead, it is "well positioned" to administer COVID-19 vaccines as they become available, the CEO added.