CVS banks on future gains from pediatric vaccines as hesitant adults drive recent COVID vaccination decline

CVS Health Corp. said Tuesday that it has recently seen a decrease in the number of adults coming in for COVID-19 vaccinations, but its outlook for the remainder of the year assumes gains from the administration of pediatric vaccines.

“[R]Lately we have seen some reluctance with the vaccine. We’ve seen a drop of about 30% when you look at some of the recent data there, ”said Eva Boratto, CVS’s CVS, + 4.18% chief financial officer on the earnings call, according to a FactSet transcript.

“Our outlook is based on the vaccine for children. But what’s not included in our current estimates is the impact of a booster if one comes later this year. “

Pfizer Inc. PFE, + 0.31%, has said it expects the U.S. Food and Drug Administration to approve the use of its COVID-19 vaccine in 12 to 15-year-olds next week.

See: The Pfizer COVID-19 vaccine is expected to receive FDA approval for 12 to 15-year-olds next week

CVS reported first-quarter earnings and revenue ahead of expectations earlier Tuesday, raising its outlook for the full year. The company now expects adjusted earnings per share of $ 7.56 to $ 7.68, up from $ 7.39 to $ 7.55. FactSet’s consensus is for an EPS of $ 7.54.

The results drove stocks up 3.9% during Tuesday trading, with the price heading for its highest close since November 2018.

CVS says it administered more than 17 million vaccines and more than 23 million COVID tests by April. The pharmacy retailer is now administering COVID vaccines in 49 states at more than 8,300 locations.

The company sees a 90% compliance rate for second doses, which Chief Executive Karen Lynch attributed to the practice of scheduling both vaccines at the same time and providing only the second dose.

“We are successfully driving the engagement of health services among customers new to CFS Health through COVID testing and vaccines,” she said.

“This has somewhat offset the impact of a weak flu, cough and cold bout. Although it was early, we saw improvement in April as vaccinated customers shop more actively at CVS locations, part of a nationwide trend. “

Also: Pfizer Beats Earnings Expectations and Raises Expectations as Revenue Outlook for COVID-19 Rises 73%

The company is also strengthening the services it offers, for example with the expansion of mental health services through its MinuteClinic and HealthHUB programs. CFS has seen increases in substance abuse, domestic violence, depression and anxiety during the pandemic.

“What we’ve done is we’ve placed licensed clinical social workers in some of our health centers, and what we’re trying to do is really connect physical health with mental health,” said Lynch.

CVS may be growing in some parts of the business, but the retail segment is still struggling, notes Neil Saunders, CEO of GlobalData.

“While CVS has attracted customers on the testing and vaccination side, there is little evidence that this spills over into the general retail portion of its business,” Saunders wrote.

And: Moderna increases production of COVID-19 vaccines at its Massachusetts site by 50%

Retail sales grew 2.3% this quarter to $ 23.27 billion. However, front-end sales, which included items customers would pick up on a shopping trip rather than a prescription transaction, declined.

Still, Saunders takes into account the ways in which the pandemic distorted customer activity.

“Of course, part of the decline is due to CFS during a period of increased demand last March, when many consumers were stocking up on general merchandise and over-the-counter drugs and vitamins at the start of the pandemic,” Saunders said.

Mizuho analysts led by Ann Hynes think the “conservative” guidance is a “cautious” move given the retail segment’s decline.

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“The rollout of vaccines should help restore store inventory trends in 2H: 21, but greater hesitation with vaccines could result in vaccines administered at the bottom of + 2% to 3% of the total script guidance,” Mizuho said. .

“Fortunately, higher administration costs should compensate for any headwinds.”

Mizuho rates CVS stock buyback with a price target of $ 82.

CVS shares have gained 18.4% over the past year, outperforming the benchmark S&P 500 index SPX, -0.96%, which is an increase of 10.2% for the period.

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