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CVS Health raises 2020 earnings guidance as plan to offer wide range of medical services pays off

CVS reported a better-than-expected 3.5% jump in third-quarter revenue, as its plan to remake the drugstore chain into a health service company paid off….

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A CVS Pharmacy store is seen in the Manhattan borough of New York City, New York.

Shannon Stapleton | Reuters

CVS Health reported a better-than-expected 3.5% jump in third-quarter revenue and raised its 2020 earnings guidance on Friday as its plan to remake the drugstore chain into a health services company paid off.

Offering everything from insurance to Covid-19 testing, the health-care company also named a new CEO. Karen Lynch will become CEO on Feb. 1. She is currently executive vice president of CVS Health and president of Aetna, the health insurer that CVS acquired in 2018.

The company’s longtime CEO Larry Merlo will step down from the role, but serve on CVS’ board of directors.

Shares of the company were up nearly 6% to $64.95 at market close.

CVS has sought to become singular health-care destination, as competitors encroach on its turf by filling prescriptions and selling drugstore items online. The company is redesigning hundreds of its stores to turn them into a one-stop shops with medical services and products, such as blood testing and sleep apnea machines.

By end of year, Merlo said CVS will have about 600 of the HealthHUBs. It currently has nearly 450 of the stores in 30 states. Starting January, it will add in-person behavioral health services at those stores.

On an earnings call, Merlo said the addition of Covid-19 testing is “a very tangible proof point of our strategy coming to life in a very meaningful way.” 

“If we told you a year ago that to date 6 million people would have gone to their local CVS pharmacy for a diagnostic test related to some virus, I would probably get an eyeball roll,” he said. “The reality is that’s happened, and it really speaks to the strategy that we’ve talked about in terms of meeting people where they are.”

Here’s how the company reported for the quarter ended Sept. 30, compared with what analysts were expecting, based on a survey of analysts by Refinitiv:

  • Adjusted earnings per share: $1.66 adjusted vs. $1.33 expected
  • Revenue: $67.06 billion, vs. $66.66 billion expected

On an unadjusted basis, the health-care company and drugstore chain reported fiscal third-quarter net income of $1.22 billion, or 93 cents per share, down from $1.53 billion, or $1.17 per share, a year earlier.

Revenue rose 3.5% to $67.06 billion, from $64.81 billion a year prior. It also outpaced the $66.66 billion expected by analysts.

At the company’s drugstores, sales rose in both the pharmacy and the front of the store as customers filled more prescriptions, got Covid-19 tests and filled up bigger baskets of items of over-the-counter items.

Prescriptions filled increased 4.6% on a 30-day equivalent basis in the quarter compared with the prior year. Front store revenues increase 2.7% in the quarter compared with the prior year.

CVS raised its full-year guidance for earnings per share to between $5.60 to $5.70 from $5.16 to $5.29 and its full-year 2020 adjusted earnings per share guidance range to $7.35 to $7.45 from $7.14 to $7.27.

It said its cash flow for the full year would range from $12.75 billion to $13.25 billion, higher than its previous outlook of between $11 billion to $11.5 billion.

The company cautioned that there was still some uncertainty because of the Covid-19 pandemic.

CVS has expanded Covid-19 testing, administered flu shots and prepared for the rollout of the coronavirus vaccine during the pandemic. It has more than 4,000 drive-thru test sites at its pharmacies and has administered more than 6 million tests. The company said it plans to have nearly 1,000 sites for rapid testing by the end of the year.

In mid-October, CVS and its rival Walgreens announced a deal with the government to administer coronavirus vaccines to the elderly and staff in long-term care facilities when they become available.

Since March, CVS has hired about 76,000 full-time, part-time and temporary employees. It has about 300,000 employees.

Last month, it said it planned to add even more workers. It said it would immediately hire 15,000 people — the majority made up of pharmacy technicians — to prepare for an expected increase in Covid-19 and flu cases this fall and winter.

Source: https://www.cnbc.com/2020/11/05/cvs-health-cvs-earnings-q3-2020.html

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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