Summary
CVS Health Corporation (CVS) reported strong financial performance for the third quarter and the first nine months of 2009, with significant increases in net revenues, gross profit, and operating profit. This growth was largely driven by the acquisition of Longs Drug Stores and the continued integration of its pharmacy benefit management (PBM) services. The company also benefited from a one-time income tax benefit related to previously unrecognized tax benefits from business combinations. Despite ongoing legal and regulatory investigations, including those concerning pseudoephedrine distribution and Medicaid claims processing, management remains confident in its business practices and does not anticipate a material adverse impact on its financial condition. The company also announced a new $2.0 billion share repurchase program, signaling confidence in its future prospects and commitment to returning value to shareholders.
Financial Highlights
57 data points| Revenue | $24.64B |
| Cost of Revenue | $19.63B |
| Gross Profit | $5.01B |
| Operating Expenses | $3.45B |
| Operating Income | $1.57B |
| Interest Expense | $124.00M |
| Net Income | $1.02B |
| EPS (Basic) | $0.71 |
| EPS (Diluted) | $0.71 |
| Shares Outstanding (Basic) | 1.43B |
| Shares Outstanding (Diluted) | 1.45B |
Key Highlights
- 1Net revenues increased significantly, up $3.8 billion in Q3 2009 and $9.6 billion year-to-date, driven by the Longs Drug Stores acquisition and PBM integration.
- 2Gross profit saw a substantial increase of $611.1 million in Q3 2009 and $1.7 billion year-to-date, also bolstered by the Longs acquisition.
- 3Operating profit grew by $99.7 million in Q3 2009 and $228.5 million year-to-date, reflecting improved operational performance and integration.
- 4A one-time income tax benefit of approximately $155.7 million ($0.11 per diluted share) positively impacted net income, stemming from the recognition of previously unrecognized tax benefits.
- 5The company maintained a robust generic dispensing rate, increasing to 68.3% in Q3 2009 for Pharmacy Services and 70.1% for Retail Pharmacy.
- 6CVS Health announced a new $2.0 billion share repurchase program, effective immediately and expiring at the end of 2011.
- 7Despite several ongoing legal and regulatory investigations, management expressed confidence that these matters will not have a material adverse effect on the company's financial condition or results of operations.