CVS Health Corp. on Wednesday raised its annual profit forecast after strength in its insurance business and sales of COVID-19 over-the-counter test kits helped it beat estimates for quarterly results.
Shares in the largest U.S. pharmacy chain rose nearly 4% before the bell.
Pharmacy chain operators such as CVS have benefited from distributing COVID vaccines and tests during the pandemic, with an Omicron-driven surge in infections driving up demand for its antigen tests in the quarter.
CVS retail and long-term care segment revenue rose 6.3% as sales of OTC antigen COVID test kits and the impact of the flu season helped offset the effect of lower coronavirus vaccinations and diagnostic testing.
Demand for lab tests and vaccinations slowed as overall cases in the United States remained steady, with more than two-thirds of the people fully vaccinated and about 48% having received a booster dose, according to government data.
Revenue at the company's health insurance unit rose 11% while the medical benefit ratio, or costs as a percentage of premiums, fell to 82.9% from 84.1%, reflecting a slower-than-expected recovery in demand for non-urgent medical care.
CVS raised its adjusted profit outlook to $8.40-$8.60 per share from $8.20-$8.40 per share forecast earlier.
Excluding one-off items, the company reported second-quarter earnings per share of $2.40, beating analysts' average estimate of $2.17, as per Refinitiv IBES data.
Total revenue rose to $80.64 billion, compared with estimates of $76.37 billion.
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