CVS Health(US:CVS)2022-05-04 10:35Revenue Growth - Total revenues increased by $7.7 billion, or 11.2%, to $76.826 billion for the three months ended March 31, 2022, compared to the prior year, driven by growth across all segments [148]. - Total revenues increased by $2.6 billion, or 12.8%, to $23.1 billion for the three months ended March 31, 2022, compared to the prior year [162]. - Total revenues for the Pharmacy Services segment increased by $3.1 billion, or 8.6%, to $39.5 billion for the three months ended March 31, 2022, driven by increased pharmacy claims volume and brand inflation [171]. - Total revenues for the Retail/LTC segment increased by $2.1 billion, or 9.2%, to $25.4 billion for the three months ended March 31, 2022, driven by increased prescription and front store volume [179]. Premiums and Membership - Premiums rose by $2.671 billion, or 14.1%, to $21.631 billion, while product revenues increased by $5.135 billion, or 10.8%, to $52.522 billion [147]. - Premium revenues rose to $21.6 billion, a 14.1% increase from $18.9 billion in the same period last year [160]. - Total medical membership reached 24.522 million as of March 31, 2022, an increase from 23.626 million a year earlier [166]. - Medical membership increased by 674,000 members to 24.5 million as of March 31, 2022, compared to December 31, 2021, reflecting growth across all product lines [167]. Operating Income and Expenses - Operating income decreased by $87 million, or 2.4%, to $3.490 billion, primarily due to a $484 million legal settlement accrual related to opioid claims [150]. - Operating expenses increased by $954 million, or 10.7%, to $9.876 billion, with operating expenses as a percentage of total revenues remaining consistent at 12.9% [149]. - Adjusted operating income decreased slightly to $1.751 billion in Q1 2022, down from $1.782 billion in Q1 2021, primarily due to net realized capital losses [165]. - Operating expenses increased by $305 million, or 9.1%, to $3.651 billion in Q1 2022, driven by business growth [164]. - Operating income for the Health Care Benefits segment was $1.409 billion, a 2.1% increase from $1.380 billion in the same period last year [160]. Tax and Legal Matters - The effective income tax rate decreased to 21.5% for the three months ended March 31, 2022, compared to 25.1% for the same period in 2021 [153]. - The legal settlement accrual related to opioid claims amounted to $484 million, to be paid over 18 years, impacting the Corporate/Other segment [159]. Market and Economic Conditions - The Company continues to face uncertainties related to the COVID-19 pandemic, which may adversely impact its businesses and financial condition [143]. - The Company expects continued competitive pressures in the PBM industry to impact adjusted operating income due to larger portions of rebates shared with clients [173]. - Forward-looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially [204]. - There is no assurance that the company has identified all risks affecting its business [204]. Cash and Investments - Net cash provided by operating activities increased by $671 million in the three months ended March 31, 2022, compared to the prior year, due to timing of payments [191]. - The Company had approximately $8.4 billion in cash and cash equivalents as of March 31, 2022, with about $3.0 billion held by the parent company or nonrestricted subsidiaries [189]. - During the three months ended March 31, 2022, the Company repurchased approximately 19.1 million shares of common stock for approximately $2.0 billion [197]. - The Company maintains a $2.0 billion, five-year unsecured back-up revolving credit facility, with no borrowings outstanding as of March 31, 2022 [192]. Pharmacy Services Performance - The Pharmacy Services segment anticipates continued growth in specialty pharmacy and improvements in purchasing economics, despite client price pressures [143]. - Total pharmacy claims processed increased by 5.5% on a 30-day equivalent basis for the three months ended March 31, 2022, excluding the impact of COVID-19 vaccinations [174]. - The generic dispensing rate for the Pharmacy Services segment decreased to 87.7% for the three months ended March 31, 2022, down from 88.1% in the prior year, primarily due to an increase in brand prescriptions [175]. - Adjusted operating income for the Pharmacy Services segment rose by $129 million, or 8.6%, to $1.636 billion for the three months ended March 31, 2022, primarily due to improved purchasing economics [173]. Retail Performance - Pharmacy same store sales increased by 10.1% for the three months ended March 31, 2022, primarily due to a 6.1% increase in pharmacy same store prescription volume [179]. - Front store same store sales increased by 13.2% in the three months ended March 31, 2022, compared to the prior year, driven by strong consumer health sales, including COVID-19 OTC test kits [180]. - Adjusted operating income rose by $211 million, or 15.1%, in the three months ended March 31, 2022, mainly due to increased prescription and front store volume [182].