Summary
CVS Health Corporation (CVS) reported mixed results for the first quarter ended March 31, 2013. While net revenues remained relatively flat year-over-year, decreasing by a slight 0.1% to $30.8 billion, the company demonstrated improved profitability. Net income attributable to CVS Caremark increased significantly by 23.3% to $956 million, leading to a substantial 30% rise in basic earnings per share from continuing operations to $0.78 and diluted EPS from continuing operations to $0.77. This earnings growth was driven by a robust increase in gross profit, up 9.1%, primarily due to a higher generic dispensing rate across both the Pharmacy Services and Retail Pharmacy segments, and improved gross margins in the Retail Pharmacy segment. Despite the positive earnings trend, operating expenses increased by 4.7% driven by higher store operating costs and legal expenses. The company also saw a decrease in net cash provided by operating activities, largely due to a timing difference in Medicare Part D payments. CVS Health continued its share repurchase program, buying back approximately $393 million of common stock. The company faces ongoing legal proceedings and investigations, though management believes these will not have a material adverse effect. Overall, the quarter shows operational improvements leading to enhanced profitability, but investors should note the increased operating expenses and cash flow dynamics.
Financial Highlights
55 data points| Revenue | $30.75B |
| Cost of Revenue | $25.17B |
| Gross Profit | $5.58B |
| Operating Expenses | $3.88B |
| Operating Income | $1.69B |
| Interest Expense | $127.00M |
| Net Income | $954.00M |
| EPS (Basic) | $0.77 |
| EPS (Diluted) | $0.77 |
| Shares Outstanding (Basic) | 1.23B |
| Shares Outstanding (Diluted) | 1.24B |
Key Highlights
- 1Net income attributable to CVS Caremark increased by 23.3% to $956 million.
- 2Basic earnings per common share from continuing operations rose to $0.78, a 30% increase from the prior year.
- 3Gross profit increased by 9.1% to $5.58 billion, driven by higher generic dispensing rates.
- 4Net revenues remained stable, decreasing by only 0.1% to $30.76 billion.
- 5Operating expenses increased by 4.7% to $3.88 billion, primarily due to higher store operating costs and legal expenses.
- 6Net cash provided by operating activities decreased by $1.15 billion to $1.64 billion, mainly due to timing of Medicare Part D payments.
- 7The company repurchased approximately $393 million of its common stock under its share repurchase program.