10-KPeriod: FY2021

CVS HEALTH Corp Annual Report, Year Ended Dec 31, 2021

Filed February 9, 2022For Securities:CVS

Summary

CVS Health Corporation (CVS) reported a strong financial performance for the fiscal year ending December 30, 2021, with total revenues increasing by 8.7% to $292.1 billion. This growth was driven by robust performance across all three operating segments: Health Care Benefits, Pharmacy Services, and Retail/Long-Term Care (LTC). The company saw increased prescription volumes, growth in specialty pharmacy, and significant contributions from COVID-19 testing and vaccination services, which helped offset pressures like pharmacy reimbursement rates. Despite a notable store impairment charge of $1.4 billion and a goodwill impairment charge of $431 million related to the LTC business, the company demonstrated resilience. The Health Care Benefits segment experienced a rise in MBR due to increased COVID-19 related costs, but growth in government services partially mitigated this. The company also announced a 10% increase in its quarterly cash dividend and is actively managing its capital structure, including debt repayment and share repurchases. Looking ahead, CVS Health anticipates continued growth, particularly in its Medicare offerings and digital capabilities, while navigating ongoing regulatory and economic uncertainties.

Financial Highlights

56 data points
Beta

Revenue

$292.11B

39.8% Gross Margin

Net Income

$7.99B

2.7% Net Margin

EPS (Diluted)

$6.02

Total Assets

$233.00B

Cash & Equivalents

$9.41B

Free Cash Flow

$15.74B

Financial Statements
Beta
Revenue$292.11B
Cost of Revenue$175.80B
Gross Profit$116.31B
Operating Expenses$278.80B
Operating Income$13.31B
Interest Expense$2.50B
Net Income$7.99B
EPS (Basic)$6.07
EPS (Diluted)$6.02
Shares Outstanding (Basic)1.32B
Shares Outstanding (Diluted)1.33B

Key Highlights

  • 1Total revenues increased by 8.7% to $292.1 billion, driven by growth across all segments.
  • 2The company administered over 59 million COVID-19 vaccines and 32 million COVID-19 tests in 2021.
  • 3Despite a $1.4 billion store impairment charge and a $431 million goodwill impairment charge, adjusted operating income increased by 8.1% to $17.3 billion.
  • 4The Health Care Benefits segment saw an increase in medical membership to 23.8 million, driven by Medicare and Medicaid growth.
  • 5Pharmacy Services segment's adjusted operating income increased by 20.6% to $6.9 billion, benefiting from improved purchasing economics and specialty pharmacy growth.
  • 6Retail/LTC segment's adjusted operating income increased by 24.0% to $7.6 billion, boosted by COVID-19 related services and increased prescription and front store volume.
  • 7CVS Health announced a 10% increase in its quarterly cash dividend to $0.55 per share, effective in 2022.

Frequently Asked Questions

CVS Health reported strong growth in total revenues, which increased by 8.7% to $292.1 billion in 2021. This was driven by significant contributions from all three operating segments: Health Care Benefits, Pharmacy Services, and Retail/LTC. The company also managed to increase its adjusted operating income by 8.1% to $17.3 billion, despite incurring impairment charges.

COVID-19 had a mixed impact. The company played a significant role in the national response by administering over 59 million vaccines and 32 million tests, which contributed positively to revenues, particularly in the Retail/LTC segment. However, the Health Care Benefits segment experienced higher COVID-19 related costs, impacting its Medical Benefit Ratio (MBR).

CVS Health is focusing on expanding its Medicare Advantage and Medicaid offerings, enhancing its digital and technology capabilities for a more seamless consumer experience, and continuing enterprise-wide cost-saving initiatives. Key challenges include ongoing pharmacy reimbursement pressures, regulatory scrutiny, and potential impacts from adverse economic conditions and evolving healthcare policies.

Yes, CVS Health returned capital to shareholders through dividends and share repurchases. The company declared a quarterly cash dividend of $0.50 per share throughout most of 2021 and announced a 10% increase to $0.55 per share effective in 2022. Additionally, the company entered into a $1.5 billion accelerated share repurchase program.