CVS Sales Up 11%, Lifted by Covid-19 Demand

Demand for Covid-19 testing surged during the start of the year as the wave of cases driven by the Omicron variant swept through the U.S. The company’s same-store sales, which include stores open at least 12 months plus digital channels, grew by 10.7% in the first quarter from a year earlier, shortly after the first vaccines had been authorized.

CVS logged $76.83 billion in revenue in the period, which included a 9.2% sales increase in the retail segment, as consumers scooped up take-home test kits. At the same time, in-store Covid-19 testing decreased.

CVS executives warned in February that they didn’t expect the authorization of a new Covid-19 booster shot this year and that the benefits from Covid-19-related sales could wane, especially in the second half of 2022.

The drugstore chain has won over new customers throughout the pandemic and executives expect some of those shoppers to stick around.

CVS, drugstore rival

Walgreens Boots Alliance Inc.,

grocery chains and big-box stores such as

Walmart Inc.

have played prominent roles in the U.S. effort to distribute Covid-19 vaccinations across the country. Many have also been key to the federal effort to make available rapid, at-home Covid-19 tests.

Before the pandemic, CVS and other drugstores were struggling to fend off a growing number of online rivals. Covid-19 has proved a welcome tailwind. Now, CVS is in the midst of trying to remake itself as a broad healthcare provider. The retailer said last year it would close about 900 of its around 10,000 stores over three years and open more primary-care clinics.

Staffing shortages have stressed both CVS and Walgreens as pharmacists and pharmacy technicians have scrambled to juggle Covid-19 testing and vaccines with filling prescriptions and serving customers.

CVS has seen its costs rise, in part due to wage increases, over the past year. Total cost of products sold rose to $45.51 billion in the quarter, up from $40.90 billion a year earlier.

In the three months ended March 31, CVS posted a quarterly profit of $2.32 billion, or $1.74 a share, up from $2.22 billion, or $1.68 a share, in the year-ago period.

Stripping out one-time items, adjusted earnings were $2.22 a share. Analysts surveyed by FactSet expected $2.17 a share. Sales also came in ahead of consensus views.

Sales rose nearly 13% in its healthcare benefits segment. In the pharmacy services segment, sales rose almost 9%. And in the retail segment, sales rose more than 9%.

The company raised its 2022 earnings outlook slightly, now expecting per-share earnings between $8.20 a share and $8.40 a share, an increase of 10 cents on either end.

Write to Will Feuer at will.feuer@wsj.com