CVS Health sees higher revenue, swings to net profit in third quarter

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CVS Health booked higher revenue while swinging to a net profit in the third quarter of FY23, mainly attributed to the absence of a $5.2 billion opioid litigation charge.

Revenue during the three-month period ended September 30 grew 10.6 per cent to $89.8 billion while net income stood at $2.3 billion.

The company also attributed the financial performance to the $2.5 billion loss on assets held for sale related to the write-down of the company’s Omnicare long-term care business.

Neil Saunders, MD at GlobalData, said that the improvement – along with CVS Health’s job-cutting efforts to streamline the business – will put the company on track to deliver a healthy bottom line in FY23 and support profitability over the final quarter.

However, Saunders pointed to CVS Health’s 3.8 per cent decline to $5.4 billion in front-store sales, partly due to the loss of trade from Covid-19 testing kits.

“While some of the purchases made within retail are essential, there are plenty of alternative destinations where consumers can get what they need and, from our data, people are shopping around more to get the best prices,” said Saunders.

‘When it comes to discretionary buys like beauty and treats, CVS is losing out as more budget-conscious shoppers are reluctant to add things they don’t need to their baskets.”

Meanwhile, the company’s pharmacy revenue increased 9.0 per cent to $23 billion.

“To be fair to CVS, retail is just not the focus of the business; the company’s eyes are firmly set on driving the healthcare and health benefits divisions. Management has done a good job on this front and is making strong advances in terms of both sales and profitability,” said Saunders, citing CVS Health’s acquisition of Oak Street Health and Signify.

In the first nine months of FY23, the company’s revenue jumped 10.6 per cent to $263.96 billion while net income surged 216.8 per cent to $6.3 billion.

“Despite a challenging business environment, we continue adapting to the changing needs of our consumers by connecting our care delivery capabilities in communities across the country, broadening access to care and lowering costs,” said Karen S Lynch, president and CEO at CVS Health.

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