CVS HEALTH Corp Quarterly Report for Q1 Ended Mar 31, 2010

Summary

CVS Caremark Corporation reported a modest increase in net revenues for the first quarter of 2010, reaching $23.76 billion, up from $23.39 billion in the same period of 2009. This growth was driven by the Pharmacy Services segment, partly due to accounting changes in contract revenue recognition for RxAmerica, and by same-store sales and new store openings in the Retail Pharmacy segment. While gross profit remained relatively stable year-over-year, operating expenses saw a decrease, contributing to a rise in operating profit to $1.41 billion from $1.38 billion. Net income attributable to CVS Caremark increased to $771 million, translating to diluted earnings per share of $0.55, up from $0.50 in the prior year. The company also demonstrated a strong operating cash flow of $1.06 billion, a significant improvement from $771 million in Q1 2009. Despite facing headwinds from client contract terminations and competitive pressures in the PBM market, CVS Caremark continues to execute its growth strategy, including share repurchases and dividend increases, while navigating a complex regulatory and legal environment.

Key Highlights

• 1Net revenues grew by 1.6% to $23.76 billion in Q1 2010 compared to $23.39 billion in Q1 2009.
• 2Income from continuing operations attributable to CVS Caremark increased by 3.9% to $772 million.
• 3Diluted earnings per common share rose to $0.55 from $0.50 in the prior year's quarter.
• 4Net cash provided by operating activities significantly increased to $1.06 billion from $771 million.
• 5Operating expenses decreased by $35 million, primarily due to lower litigation and integration costs.
• 6The company repurchased approximately $887 million of common stock in the first quarter of 2010.
• 7Dividends declared per common share increased to $0.08750 from $0.07625 year-over-year.

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