CVS Health Corp. said demand for COVID-19 tests and vaccines is expected to fade this year, eroding a source of growth that helped insulate it from other pressures on its business.
The drugstore giant expects to administer about half as many virus tests and up to 80% fewer shots this year compared with 2021, it said in a news release Wednesday announcing its fourth-quarter financial results. Testing and vaccinations were responsible for almost half of CVS’s retail growth last year, it said.
Shares of CVS fell 2.6% to $107.93 at 9:35 a.m. in New York.
The pandemic reinvigorated ailing drugstores, drawing millions of people searching for shots, tests and other supplies over the past two years. For CVS, that eased concerns about operating almost 10,000 pharmacies across the U.S. However, the virus now appears to be receding after the Omicron variant infected millions of people in recent months. For CVS, that means questions about how it plans to revitalize its retail business have regained urgency.
CVS envisions opening doctors’ offices in some of its stores, focusing first on seniors covered by Medicare, Chief Executive Officer Karen Lynch said Wednesday during a call with analysts. The company plans to pursue deals to break into the increasingly crowded space. It’s turning other stores into Health Hubs where people can receive services like diabetes care and mental-health counseling.
CVS is already reducing its footprint. The company plans to close about 900 stores in the next few years. In the fourth quarter, CVS booked a $1.4-billion charge related to the closures.
Separately, the Department of Justice served CVS with a civil investigative demand related to opioids and other controlled substances, the company disclosed Wednesday in a regulatory filing. CVS said it’s providing documents and information in response.
The company re-entered the Affordable Care Act individual marketplace this year and is selling plans in eight states. Enrollment was lower than expected, Lynch said, adding the company plans a gradual expansion to more states.
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