CVS Health said its revenues jumped 10.6% in the third quarter, reflecting growth across all of its businesses.
In a conference call with analysts, the company didn’t directly address the ongoing talk of labor unrest among pharmacy workers, although President and CEO Karen Lynch did say the company was investing heavily in its work environment.
“As a company, we are committed to providing the best place to work for all of our colleagues, including our pharmacists and our pharmacy techs,” she said, citing wage investments that are expected to total more than $1 billion by year-end.
In addition, Lynch said CVS is continuing to invest in technologies to support its teams and create “streamlined workflows and smoother operations.”
“It's a tight labor market, but we’ve been having very good success in hiring,” she said. “Our attrition numbers are stable, and we are actively developing new training programs as well for the ongoing development of our colleagues.”
Prem Shah, executive vice president, chief pharmacy officer, and president, pharmacy and consumer wellness, said the company continues to examine its operating model to streamline the workload in its pharmacies. That includes scaling innovative technology solutions and sharing work across stores, among other initiatives planned for 2024.
Retail sales up 6%
The Woonsocket, R.I.-based retailer said that in its pharmacy and consumer wellness segment, which includes its drugstore operations, revenues increased 6% over year-ago results, to $28.9 billion, while adjusted net income was flat at about $1.4 billion, compared with the third quarter of 2022.
Same-store pharmacy sales increased nearly 12% in the third quarter, and same-store prescription growth, excluding the impact of COVID, grew by 3.5%, the company said, compared with year-ago results.
Revenue gains were driven by the pharmacy drug mix, increased prescription volume, and inflation, partially offset by continued pharmacy reimbursement pressure, the impact of recent generic introductions, a decrease in store count, and decreased sales of over-the-counter COVID-19 test kits. Adjusted net income was impacted primarily by pharmacy reimbursement pressure and decreased contributions from COVID-19 vaccinations, diagnostic testing and OTC test kits, and largely offset by improved drug purchasing, increased prescription volume, and lower operating expenses.
In response to a question, Interim Chief Financial Officer Tom Cowhey said the company administered just under 8 million vaccines in the quarter, about half of which were for the flu and about a quarter of which were for COVID. The remainder included the RSV vaccine, which saw strong growth, he said.
Cowhey also said the company has performed well in its efforts to retain prescription and front-of-store sales, even as it closes locations. CVS has closed 564 stores, out of 900 planned closures, he said.
Same-store sales in the front-of-store categories were down 2.2% for the quarter, he said, which he attributed primarily to declines in sales of cough, cold and flu products, and OTC test kits. Excluding the impact of the test kits, same-store front-of-store sales were in line with the third quarter of a year ago, he said.
“Our front store business continues to exhibit resiliency in the face of industry challenges, underscoring the value we offer consumers,” Cowhey said.
Lynch said the retailer continues to see gains in its digital initiatives. Its digital reach now includes more than 55 million unique customers, an increase of nearly 20% over last year, she said.
“This strong growth has been powered by our focus on innovating and delivering on experiences that matter most for our customers,” Lynch said.
Overall, CVS posted revenues of $89.8 billion for the three-month span, which ended Sept. 30. Adjusted operating income, however, was down 6.4% for the quarter, to about $4.5 billion, which the company said reflected increased utilization in Medicare Advantage, partially offset by higher investment income.