CVS Health records $2.3 billion in profit in the first quarter
The company also saw revenue climb 11.2% over that time, hitting $76.8 billion during the quarter, according to the earnings report.
Photo courtesy of CVS Health
CVS Health beat industry expectations by bringing in $2.3 billion in profit in the first quarter of this year, a slight increase over the $2.2 billion profit posted during the same time last year, according to an earnings report filed this week.
The company also saw revenue climb 11.2% over that time, hitting $76.8 billion during the quarter compared to $69.1 billion in Q1 2021.
Operating income decreased 2.4% in the quarter, primarily due to a pending legal settlement with the state of Florida to settle all opioid claims against the company for $484 million, which will be paid over a period of 18 years.
The decrease in operating income was partially offset by the increase in adjusted operating income. Adjusted operating income increased 6.6% mostly because of increased prescription and front store volume, including the sale of COVID-19 over-the-counter test kits. COVID-19 vaccinations in the company's retail segment, and growth in its specialty pharmacy, also had an impact.
WHAT'S THE IMPACT
CVS Health provided a breakdown of its business segments, showing that Aetna, the company's health plan, saw revenues grow 12.8% to $23.1 billion. Medical membership as of March 31 stood at about 24.5 million, an increase of about 674,000 members since December, which reflects increases among all of its product lines.
Caremark also saw increased revenue, climbing 8.6% to $39.4 billion and contributing to strong performance in CVS Health's pharmacy services segment. The company attributed this to increased pharmacy claims volume, growth in specialty pharmacy and brand inflation, which CVS said was partially offset by continued client price improvements.
Adjusted operating income for its pharmacy services also increased 8.6% in the quarter, which the company attributed to improved purchasing economics, including increased contributions from the products and services of its group purchasing organization and specialty pharmacy.
Total pharmacy claims processed increased 5.8% on a 30-day equivalent basis in Q1, primarily driven by net new business, increased utilization and the impact of a weaker cough, cold and flu season in 2021. Prescriptions filled increased 5.1%.
Revenues from the retail segment increased 9.2% in the quarter due to increased prescription and front store volume, including the sale of COVID-19 over-the-counter test kits. These increases were offset somewhat by the recent introduction of generics, decreased COVID-19 diagnostic testing and continued pressure on pharmacy reimbursement. Adjusted operating income for the retail segment increased 15.1% in the quarter.
THE LARGER TREND
In December, CVS Health projected that revenue for 2022 would likely fall between $304 and $309 billion.
The growth in revenue projections is due in part to a company strategy of investing in high-growth areas of the business and introducing new health products, services and technologies, which CVS said will enhance shareholder value.
The company will focus on a number of priorities meant to enhance this strategic growth, including advancing primary care delivery capabilities. CVS said this will guide consumers across the care continuum to sites and to providers that meet their needs – both in person and virtually.
This approach is geared to complement the traditional provider network, and to continue to expand ways to use risk-based arrangements and value-based care.
CVS will also focus on optimizing the retail portfolio to serve as community health destinations by pivoting the store footprint to focus on advanced primary care centers, enhanced HealthHUB locations and traditional CVS Pharmacy stores. As announced in November, the company will close about 900 stores over the next three years to "reduce store density."
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
