CVS Health says peak Covid vaccinations have already taken place

CVS Health chief executive Karen Lynch said on Wednesday the peak in Covid-19 vaccination was behind the company.

In a profit appeal, she said the drugstore chain had administered 30 million doses and continued to deliver them to stores across the country. Still, she said vaccination rates have slowed since April – even though the delta coronavirus variant has led to a new wave of cases in parts of the country with large unvaccinated populations.

The company has lowered its outlook for the number of vaccines it plans to administer this year, after the number it supplied fell in May and June, Shawn Guertin, CVS chief financial officer, said at the ‘call. He said the company now expects to give between 32 and 36 million doses this year. That’s lower than the 29 million to 44 million doses he said he expected in February.

However, the retailer raised its profit forecast for the year.

CVS provided an update on vaccination and shared second quarter results at an inflection point of the coronavirus pandemic. More than 70% of American adults have now received at least one dose of a Covid vaccine, but cases are increasing rapidly in states like Florida and Texas where vaccination rates remain low. The seven-day average of daily coronavirus cases in the country is now higher than the peak of last summer – a time when the United States did not yet have an approved Covid vaccine.

The increase in cases, fueled by the variant of the delta coronavirus, has prompted some retailers to reinstate mask warrants, companies to demand vaccinations and politicians to announce new safety measures. It has also created new uncertainty as companies attempt to bring their workforce back to the office and forecast profits.

Pharmacy competitor Walgreens Boots Alliance said on Wednesday it had seen increased vaccination rates in recent weeks in lagging states such as Alabama, Florida, Georgia and Kentucky. He said he administered more than 29 million Covid vaccines in his stores.

Guertin said CVS is still trying to figure out what the delta variant may mean for its business, which includes Aetna, the health insurer it acquired. He said he had not factored booster shots into his outlook for the full year and included a limited contribution from pediatric vaccines.

CVS posted higher profits in the second quarter of last year compared to the most recent, as healthcare facilities canceled elective surgeries to free up hospital beds. Some have started canceling these medical procedures again – but it’s too premature to say how widespread this will be, Guertin said.

He said vaccinations were down in July from the previous month, but there was a slight increase as the delta variant prompts some people to receive the first doses. Covid testing and in-store retail sales remained strong, he said.

However, he said the company’s Covid-related costs have also been higher than expected on the health benefits side of its business – an expense that will persist if more people need treatment.

Ashtyn Evans, equity research analyst at Edward Jones, said she didn’t expect CVS to experience the same level of cost savings and sales growth during this wave of the pandemic. For example, she said, clients are unlikely to repeat a large storage of prescriptions and medical supplies. Plus, Evans said, even though elective surgeries slow down, they can only be postponed for so long. She said the company will also have to absorb higher medical costs if more people are hospitalized due to Covid-19.

Going forward, Evans said, CVS will need to drive growth and increase profits in other ways – like transforming people who have come for a Covid test or shooting into a sustainable client and adding health services that make them to come back.

– Reuters contributed to this report.