By Anna Wilde Mathews

CVS Health Corp. said it would re-enter the Affordable Care Act insurance marketplaces next year, as its major role in Covid-19 testing and vaccination allows it to forge ties to a growing number of consumers.

The pharmacy and insurance giant reported fourth-quarter results that beat Wall Street estimates and offered guidance for 2021 that, at the high end, matched analysts' expectations. For 2021, CVS expects earnings per share of $6.06 to $6.22. It predicted adjusted earnings per share of $7.39 to $7.55, compared with the FactSet consensus of $7.54.

CVS said it expected that the pandemic would have only an immaterial impact on its 2021 earnings. New CVS Chief Executive, Karen Lynch, the former leader of the company's Aetna insurance unit, said that the company expected some deferred healthcare use in the first quarter, and then consumers would likely "head back to a normal level of utilization" later in the year.

In morning trading, shares of CVS were down 2% at $72.71.

"In-line numbers, in-line guidance, no major surprises....Everything seems to be moving along solidly," said Matthew Borsch, an analyst with BMO Capital Markets.

In the fourth quarter of 2020, net income fell to $973 million, or 74 cents a share, from $1.75 billion, or $1.34 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share declined to $1.30 from $1.73, but beat the FactSet consensus of $1.24.

Total revenue rose 4% to $69.55 billion, above the FactSet consensus of $68.73 billion. All of CVS's business segments beat expectations, with pharmacy services revenue falling 1.9% to $36.36 billion amid continued price compression; retail/long-term-care revenue rising 6.6% to $24.06 billion; and healthcare benefits revenue climbing 11.4% to $19.10 billion.

CVS, which has been a major provider of Covid-19 vaccination in long-term-care facilities and is expected to play a significant role in the broader rollout of the shots, said it already had administered more than 3 million Covid-19 vaccines in over 40,000 long-term-care facilities.

The company said that its testing efforts have connected it to around 8 million new customers. Vaccination will link it to many more. Because sign-up for testing is done digitally, CVS will retain a link to these consumers going forward, and the company noted that it gains customers' emails and phone numbers. The company also said that as consumers are monitored in the store after they receive their vaccine shots, they will be offered services and encouraged to shop and browse.

Ms. Lynch said she was "very pleased with the level of results we're getting from our digital team and the experience our customers are having."

The decision by CVS's Aetna unit to sell plans next year in the ACA's exchanges using the CVS brand name marks the latest sign that those markets, once a money loser for insurers, have stabilized and are now seen as a growth opportunity as the Biden administration looks to promote their use. Indeed, the administration is now opening up an offseason enrollment window to encourage sign-ups.

Aetna, like other insurers, sharply reduced its early role in the exchanges in 2017, withdrawing from additional states in 2018. At the time, the insurer flagged continuing financial losses and structural issues. Ms. Lynch said the exchanges had stabilized, and "it is now time for us to participate in these markets." CVS's combination of assets gives it "a unique opportunity to put a competitive product into the market," she said.

CVS didn't disclose how many states it would enter.

In a research note, analyst Scott Fidel of Stephens said that competition has sharply increased recently in the marketplaces, and Aetna's return will add to that.

--Tomi Kilgore contributed to this article.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

02-16-21 1011ET