CVS Health expects growth in 2022 as pandemic impact eases

CVS Health and Wall Street share the same view of the drugstore chain’s growth potential as COVID-19’s impact on the company begins to ease.

Average analyst expectations for 2022 earnings of $8.20 per share fit within CVS Health’s expected initial forecast for the new year, Chief Financial Officer Shawn Guertin said Wednesday morning, promising to provide more details at the company’s annual investor meeting Dec. 9.

Company shares that have already advanced more than 30% so far this year jumped again in morning trading after Guertin made his comments on a call with analysts to discuss third-quarter results.

The executive noted that the average 2022 forecast would represent about 8% growth from the company’s baseline 2021 forecast of $7.55 per share. That figure doesn’t count capital gains or factors like a wage increase the company announced earlier this year.

CVS Health runs a drugstore chain with more than 10,000 retail locations. It also sells health insurance through its Aetna arm and manages pharmacy benefits for big customers like employers and insurers.

Customers have been filling more prescriptions — the core element of CVS Health’s business — and returning to its stores, prodded in part by the need to get COVID-19 vaccinations or tests.

Guertin said the company expects demand for vaccines and tests to begin slowing. The number of vaccines delivered in the third quarter dropped to 11 million from 17 million in the second quarter.

The recent government decision to allow children ages 5 to 11 to get the preventive shots will have only a "modest" impact, the CFO added.

Next year, CVS Health expects the number of COVID-19 vaccines and tests its stores deliver to fall to well under half of what it delivered this year. That will dent CVS Health’s drugstore business. But that could be balanced by fewer pandemic-related claims and costs for the insurance side.

In the recently completed third quarter, CVS Health delivered better-than-expected results as net income soared 30% to $1.59 billion.

The company posted adjusted earnings of $1.97 per share. That’s 10% higher than the average analyst forecast of $1.79 per share, according to FactSet. Total revenue grew 10% to $73.8 billion.

Revenue from the company’s biggest business, pharmacy benefits management, grew 9% to $39.05 billion, helped by more pharmacy claims and growth in pricey specialty drugs.

The company’s Aetna insurance business, which covers more than 23 million people, saw sales climb nearly 10%.

Sales from established drugstores also jumped 10% in the third quarter compared to last year, when the pandemic had more of an impact on consumer shopping.

Shares of CVS Health Corp., based in Woonsocket, Rhode Island, climbed more than 4% to $95.51 as broader markets slipped in midday trading.