CVS CVS Health Corporation

By Sharon Terlep 

CVS Health Corp. executives warned Wednesday of an impending surge in medical problems unrelated to coronavirus, as the pharmacy chain's data suggest Americans are delaying routine health care during the pandemic.

CVS, which owns insurance giant Aetna, says patients in April received fewer new prescriptions, starting fewer new treatments and seeing doctors less frequently, a concern especially for patients who have chronic conditions such as diabetes and heart disease, which can lead to costly hospitalizations when not treated consistently.

Meantime, store and prescription sales dropped in April following a pandemic-driven surge in business earlier in the year, the company said. Aetna also saw a decline in commercial contracts as businesses dropped insurance coverage for workers to cut costs, laid off workers or closed.

The emerging trends follow a first quarter during which CVS had higher sales as the pandemic prompted consumers to fill more routine prescriptions and to spend more at the pharmacy chain's stores.

The pandemic has led to dramatic shift in consumer patterns, the company said. Virtual visits to the company's urgent-care clinic grew sixfold while prescription home delivery grew 10-fold. Online prescription refill requests grew 50%.

"We are seeing a new normal emerge," CVS CEO Larry Merlo said. "We expect elements of today's new norm will become part of tomorrow's everyday routines."

CVS's Aetna unit saw a drop-off of around 30% in use of health-care services in April, as much of the health-care system paused elective procedures to brace for coronavirus surges.

But Mr. Merlo said in an interview that the Aetna business has picked up slightly in response to shelter-in-place orders being lifted in certain locations. The company expects "the trough, the low point will be in the second quarter, and we will see some pickup in the second half of the year," but it is too soon to tell how soon or how much, Mr. Merlo said.

While people weren't starting new drug therapies for health conditions, Mr. Merlo said it appeared that patients with chronic conditions were keeping up their existing prescriptions.

Prescription volume for the quarter ended March 31 grew more than 8%, as customers rushed to stock up on medications amid the pandemic, either by refilling prescriptions early or switching to 90-day prescriptions. Same-store sales grew 8% and shoppers scooped up health-related items and other goods.

"We're uniquely positioned to understand consumer and patient needs and how to address them," Mr. Merlo said in a statement.

CVS reported first-quarter net income of $2 billion, or $1.53 a share, compared with $1.4 billion, or $1.09 a share, in the comparable quarter a year before. Adjusted earnings were $1.91 a share.

Analysts were looking for earnings of $1.22 a share, or $1.62 a share on an adjusted basis.

CVS said its revenue rose 8.3% to $66.8 billion from the same period the year before as revenue grew across all segments. Analysts were targeting $64.1 billion.

Revenue in its retail segment, which fulfills prescription medications and sells a range of merchandise, was $22.7 billion, up 7.7% compared with the year-earlier period. CVS has faced pressure in its retail-pharmacy business but has begun to fare better than rival Walgreens Boots Alliance Inc.

Walgreens also generated stronger-than-expected sales during its latest quarter, though the company's operating income fell 19%, in part because of reimbursement pressure on prescription drugs. Like CVS, Walgreens said sales in April dropped off following a surge in March.

CVS's health-care benefits business, which includes Aetna, posted revenue of $19.2 billion, an increase of 7.4%. The company last year sold its Medicare Part D prescription business to a WellCare Health Plans Inc., but said it generated more revenue in the quarter from government products.

Revenue grew 4.2%, to $35 billion, in the pharmacy-services segment.

CVS said its expectations for full-year earnings and cash flow remain unchanged while withdrawing guidance for all other metrics due to uncertainty around coronavirus.

CVS shares were up nearly 1% in afternoon trading.

--Anna Mathews contributed to this article.

Write to Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

May 06, 2020 14:54 ET (18:54 GMT)

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