(Reuters) -CVS Health Corp on Wednesday raised its annual profit forecast after strength in its insurance business and sales of COVID-19 over-the-counter test kits helped boost quarterly earnings.
Shares in the largest U.S. pharmacy chain rose about 3% before the bell.
The company’s retail and long-term care segment revenue rose 6.3% to $26.3 billion, as the sale of OTC antigen COVID test kits and the impact of the flu season helped offset the effect of lower COVID-19 vaccinations and diagnostic testing.
Pharmacy chain operators such as CVS have benefited from distributing COVID vaccines and tests during the pandemic, with an Omicron-driven surge in infections driving up demand for its OTC tests in the quarter.
Demand for lab tests and vaccinations, however, slowed as overall cases in the United States remained steady, with more than two-thirds of the people being fully vaccinated and about 48% having received a booster dose, according to government data.
Revenue at the company’s health insurance unit rose 11% to $22.8 billion while the medical benefit ratio or costs as a percentage of premiums fell to 82.9% from 84.1%, as demand for routine, non-elective medical care recovered at a slower-than-expected pace, allowing the company to rein in expenses.
CVS raised its adjusted profit outlook to $8.40-$8.60 per share from $8.20-$8.40 per share forecast earlier.
Net income for the quarter ended June 30 rose to $2.96 billion, or $2.23 per share, from $2.79 billion, or $2.10 per share a year earlier.
Total revenue rose to $80.6 billion from $72.6 billion a year earlier.
(By Leroy Leo and Bhanvi Satija in Bengaluru; Editing by Vinay Dwivedi)
