This post was originally published on this site
Investing.com – CVS stock (NYSE:CVS) fell nearly 1% in Wednesday’s premarket the company’s decision to raise minimum wages to $15 an hour next year onwards outweighed the company’s forecast for a better 2021.
That the boost from Covid vaccinations that lifted the company’s second-quarter earnings may be over also weighed on the sentiment.
Companies, and particularly retailers like Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN) and CVS, who need a large workforce to run their operations, have been hard pressed to find labor in a booming economy. Firms have thus had to resort to wage hikes.
The company now expects 2021 revenue to come between $280.7 billion and $285.2 billion compared to the $279.2 billion to $283.7 billion range it gave earlier.
Adjusted earnings per share on a diluted basis is seen between $7.70 and $7.80.
The company said the improved outlook is due to the outperformance in the second quarter and that it expects gains from Covid vaccinations to moderate in the second half.
CVS’ revenue from its health-insurance business rose 11% but adjusted operating income more than halved to $1.61 billion as the company had to pay out more in claims from patients who attended to the medical issues they had delayed so far because of the pandemic.
The medical-benefit ratio—the proportion of premiums paid out in claims—rose to 84% from 70%.
Total revenue rose 11% to $72.6 billion as the company administered more than 6 million Covid-19 tests and nearly 17 million Covid-19 vaccines in the second quarter. Revenue surpassed the analysts’ expectation of $70.14 billion.
EPS at $2.42 also beat the estimated $2.06.
