Front store retail revenue for CVS Health declined 4.6% in the second quarter ended June 30, a victim of the pandemic.
Fewer customers visiting stores to buy medications because of the coronavirus stay-at-home mandates — which meant less shopping chances overall for those consumers. Even so, total revenue for the company’s Retail/LTC segment increased 1% year over year in Q2, topping $21.6 billion.
“We’re a health innovation company that is built to meet the evolving needs of the millions we serve every day,” said CEO and President Larry Merlo. “That’s been made clear as we continue to navigate the health, social and economic impacts of COVID-19. Our earnings in this environment demonstrate the strength of our strategy and the power of our diversified business model."
CVS released its Q2 financials on Wednesday, posting total revenue of $65.3 billion, up 3% year over year.
The chain’s Q2 net income increased nearly 55%, to $2.98 billion. Much of that increase stemmed from the chain’s healthcare operations, which during the pandemic has seen reduced “benefit costs due to the deferral of elective procedures and other discretionary utilization in the Health Care Benefits segment, partially offset by reduced volume and increased operating expenses associated with the Company’s COVID-19 pandemic response efforts in the Retail/LTC segment,” CVS said.
As for the retailer’s pharmacy services segment, revenue increased slightly to about $34.9 billion. “Growth in specialty pharmacy and brand inflation were largely offset by previously disclosed client losses and continued price compression,” the retailer said.
The second earnings come not only during the ongoing pandemic — both a challenge and opportunity for many retailers — but as CVS strives to improve its healthcare offerings. In the recent J.D. Power’s “U.S. Pharmacy Study,” Costco and CVS/pharmacy inside Target tied for second place in those rankings, behind Publix Supermarkets.
CVS gave no specific update about its coming work and improvements in healthcare when releasing its Q2 earnings but did say that it has invested $50 million so far during the pandemic to address the lack of telehealth services and food access to underserved communities, among other efforts.
The retailer also has offered COVID-19 testing at more 1,800 CVS drive-thru locations, with at least 50% located in communities with significant need for support according to the CDC Social Vulnerability Index. As well, CVS launched a program called Return Ready, a comprehensive customizable and integrated end-to-end COVID-19 testing solution to assist employers and universities with the safe return of their employees, students and staff.
“We have a strong foundation of clinical expertise, data analytics and digital capabilities, and unmatched consumer and community reach which has allowed us to rapidly bring our strategy to life at an unprecedented time,” Merlo said. “The environment surrounding COVID-19 is accelerating our transformation, giving us new opportunities to demonstrate the power of our integrated offerings and the ability to deliver care to consumers in the community, in the home and in the palm of their hand which has never been more important.”