CVS Health says the peak of Covid vaccinations has already happened

• CVS Health said Wednesday that the peak of Covid-19 vaccinations is behind the company, even as some customers come in for first doses.
• The company revised its forecast for vaccines administered this year, saying it will be lower than expected.
• The drugstore chain and health insurer is trying to figure out if the delta coronavirus variant will lead to booster shots or canceled elective surgeries.

CVS Health Chief Executive Karen Lynch said Wednesday that the peak of Covid-19 vaccinations is behind the company.

On an earnings call, she said the drugstore chain has administered 30 million shots and continues to provide them in stores across the country. Yet she said vaccination rates have slowed since April — even as the delta coronavirus variant has led to a new surge of cases in parts of the country with large unvaccinated populations.

The company lowered its outlook for the number of vaccines it plans to administer this year, after the number that it provided dropped off in May and June, CVS' chief financial officer, Shawn Guertin, said on the call. He said the company now expects to give between 32 million and 36 million doses this year. That's lower than the 29 million to 44 million doses that it said it anticipated in February.

However, the retailer raised its earnings forecast for the year.

CVS gave a vaccination update and shared second-quarter results during an inflection point in the coronavirus pandemic. More than 70% of U.S. adults have now gotten at least one dose of a Covid vaccine, but cases are rapidly rising in states like Florida and Texas where the vaccination rates remain low. The seven-day average of daily coronavirus cases in the country is now higher than last summer's peak — a time when the U.S. did not yet have an approved Covid vaccine.

The rising cases, fueled by the delta coronavirus variant, have prompted some retailers to reinstate mask mandates, companies to require vaccinations and politicians to announce new safety measures. It has also created new uncertainty as companies try to get workforces back to the office and make earnings forecasts.

Drugstore competitor Walgreens Boots Alliance said Wednesday it has seen a surge in vaccination rates in recent weeks in states that had lagged behind, such as Alabama, Florida, Georgia and Kentucky. It said it has administered more than 29 million Covid vaccines at its stores.

Guertin said CVS is still trying to understand what the delta variant may mean for its business, which includes Aetna, the health insurer that it acquired. He said it did not factor booster shots into its full-year outlook and included a limited contribution from pediatric vaccines.

CVS had higher profits in the second quarter of last year compared with the most recent one as health-care facilities canceled elective surgeries to free up hospital beds. Some have begun to cancel those medical procedures again — but it is too premature to tell how widespread that will be, Guertin said.

He said vaccinations were down in July compared with the month prior, but there has been an uptick as the delta variant inspires some people to get first doses. Covid testing and retail sales at stores have remained strong, he said.

However, he said the company's Covid-related costs have also been higher than expected on the health benefits side of its business — an expense that will persist if more people need treatment.

Ashtyn Evans, an equity research analyst at Edward Jones, said she doesn't expect CVS to see the same level of cost savings and sales growth during this wave of the pandemic. For instance, she said, customers are unlikely to repeat heavy stockpiling of prescriptions and health supplies. Plus, Evans said, even if elective surgeries slow, they can only be put off for so long. She said the company will also have to absorb higher medical costs, if more people are hospitalized because of Covid-19.

Going forward, Evans said, CVS will have to drive growth and lift profits in other ways — such as turning people who came for a Covid test or shot into a lasting customer and adding health-care services that keep them coming back.

— Reuters contributed to this report.

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