CVS Health FY20: impacted by store traffic

Date : 23 February 2021

Sabira Habib

Retail Analyst

We review CVS Health’s performance for its fourth quarter and 2020 financial year for the year ending 31 December 2020.

FY2020 and Q4 key numbers

  • Total revenue for full year 2020 increased by 4.6% to US$268.7 bn (2019: US$256.8 bn)
  • In the fourth quarter, revenue increased by 4% to US$69.6 bn (2019: US$66.9 bn)
  • In the Retail / Long-Term Care segment, revenue increased by 6.6% to US$24.1 bn in Q4 and 5.3% to US$91.2 bn for FY20
  • Front store sales decreased by 1.6% in the fourth quarter, due to less customer traffic and reduced volume sales in cough and cold product
  • However, front store sales for the full financial year increased by 1.2% due to a rise in sales of consumer health and general merchandise products
  • Adjusted income decreased in both the fourth quarter and the full financial year by 13.9% and 12.6%, respectively. The decline for both periods was attributed to the COVID-19 pandemic, which led to a fall in customer traffic in the segment’s retail pharmacies and its walk-in clinics, MinuteClinic
  • For 2021, CVS expects growth in adjusted operating income, driven by a rise in sales of pharmacy products, COVID-19 diagnostic testing and vaccinations and cost cutting initiatives. Front store sales are also expected to grow as the effects of COVID-19 lessen

Karen S. Lynch, CVS Health’s CEO commented,

“The COVID-19 pandemic presented unique challenges to our business and to the entire health care industry. We utilized the full depth and breadth of our capabilities and our presence in local communities across the country to play a leadership role in COVID-19 testing and vaccine administration. Our ability to deliver 2020 full year results above expectations is a testament to the strength of our strategy and the flexibility of our diversified health services model.”

Progress in its COVID-19 vaccination programme  

CVS reported administering over three million COVID-19 vaccines in more than 400,000 long-term care facilities across the country. Rolling out COVID-19 vaccination has been a priority for the retailer as US President, Joe Biden highlighted the crucial role pharmacies play in driving the vaccination programme forward. CVS reported its Q1 performance in FY21 will be affected by the investment to advance its vaccination programme.

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