(Reuters) -CVS Health Corp on Tuesday boosted its 2021 adjusted profit forecast as it expects to record higher earnings from its health insurance and pharmacy benefits management (PBM) units this year, and its shares jumped more than 4%.
The company, best known for its national chain of retail drugstores, said it now expects 2021 adjusted profit of $7.56 to $7.68 per share, from its previous view of $7.39 to $7.55.
“Even though investor expectations were high, the company’s guidance raise was even higher,” CFRA research analyst Kevin Huang said.
CVS said its PBM business, which negotiates drug discounts for health insurers and employers, had not been hurt by the COVID-19 pandemic, unlike its retail segment, which took a sales hit during lockdowns and other restrictions imposed last year.
The company’s largest segment performed better as it managed rising drug costs and specialty drug use, Chief Executive Karen Lynch said of the PBM business in an interview.
PBM revenue rose 3.8% to $36.32 billion in the first quarter, and CVS raised its full-year adjusted operating income forecast for the unit.
CVS also raised its full-year adjusted operating income target for its Aetna health insurance unit after a near 20% jump in adjusted operating income in the first quarter.
The company said it sees a return to normal demand for non-COVID-19 healthcare services and expects that and expenses related to COVID-19 testing and vaccine administration to marginally drive up medical costs for Aetna.
CVS has been offering COVID-19 tests and administering vaccines at its pharmacies across the United States as part of the ongoing federal program. The company said it has so far put over 17 million vaccines into people’s arms.
While the U.S. government is paying for vaccinating Americans, insurers are covering the costs of administering the shots.
Excluding items, CVS earned $2.04 per share in the first quarter, topping analysts’ estimates by 32 cents, according to Refinitiv IBES data.
CVS shares were up 4.4% at $81.14.
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