CVS Health reported strong first quarter results with revenues at $69 billion, up 3.5% from the same period last year. Although the company generated $2.9 billion in cash flow from operations, this was down almost 13%, primarily driven by a healthier America outside of COVID-19 illnesses. The company stated that approximately 40% of the decline of operating income relates to weak sales of cough, cold and flu related products. Other factors impacting the drop include pandemic related costs and severe inclement weather in some markets. Operating profits, however, were up 2.2%, driven by strong performance in the healthcare benefits segment and pharmacy services. “We delivered strong first quarter results and improved our outlook for the year,” said CVS Health president and CEO Karen S. Lynch. “We continue to execute on our strategy while simultaneously managing through a pandemic, helping the country on the road to recovery.” The company stated that its current assets and brand strength are driving results as it works toward improving care delivery and driving growth.
The retail segment remains soft due to the cough and cold season being mild
The retail segment including stores and pharmacy sales was up 2.3% but operating income dropped by almost 27%. The spike in demand last March resulting from the onset of the pandemic has impacted this year’s results as measured year over year. Currently, there are 8,300 CVS locations offering vaccinations which will help drive future in-store retail sales because of customers shopping during vaccination appointments.
Loyalty programs drive future growth
The ExtraCare program has more than 74 million ExtraCare members who can also join two other free loyalty programs at CVS – ExtraCare Pharmacy & Health Rewards and ExtraCare BeautyClub – to get additional savings and earnings benefits, delivering even more value from shopping at CVS. The company recently rolled out the CarePass, which offers exclusive perks, including free delivery of eligible prescriptions and store favorites, 20% off CVS Health brand products and more to paid subscribers.