Summary
CVS Health Corporation's (CVS) Q2 2019 filing reveals significant revenue growth, primarily driven by the integration of the Aetna acquisition which closed in late 2018. Total revenues for the quarter increased by 35.2% year-over-year, reaching $63.4 billion, with the Health Care Benefits segment showing the most dramatic expansion due to Aetna's inclusion. Despite this top-line growth, operating expenses also surged by 65.2%, largely attributable to acquisition-related costs, including intangible asset amortization. The company reported a net income of $1.94 billion for the quarter, a substantial turnaround from a net loss of $2.56 billion in the same period last year. This improvement is largely due to the absence of a significant goodwill impairment charge ($3.9 billion) that impacted the prior year's results. The Pharmacy Services and Retail/LTC segments demonstrated modest revenue growth, driven by increased prescription volumes, though both faced ongoing pressures from price compression and reimbursement challenges.
Financial Highlights
56 data points| Revenue | $63.43B |
| Cost of Revenue | $38.97B |
| Gross Profit | $24.46B |
| Operating Expenses | $60.10B |
| Operating Income | $3.33B |
| Interest Expense | $772.00M |
| Net Income | $1.94B |
| EPS (Basic) | $1.49 |
| EPS (Diluted) | $1.49 |
| Shares Outstanding (Basic) | 1.30B |
| Shares Outstanding (Diluted) | 1.30B |
Key Highlights
- 1Total revenues increased by 35.2% to $63.4 billion in Q2 2019 compared to Q2 2018, primarily due to the Aetna acquisition.
- 2Net income turned positive at $1.94 billion, a significant improvement from a net loss of $2.56 billion in Q2 2018, largely due to the absence of a prior year goodwill impairment charge.
- 3The Health Care Benefits segment experienced substantial revenue growth following the Aetna acquisition, with premiums and services revenue showing significant year-over-year increases.
- 4Pharmacy Services segment revenue grew by 4.2% year-over-year, driven by increased claims volume and improved purchasing economics, despite continued price compression.
- 5Retail/LTC segment revenue increased by 3.7% year-over-year, supported by higher prescription volumes and front store sales, though ongoing reimbursement pressure remains a challenge.
- 6Operating expenses rose by 65.2% due to the Aetna acquisition, including intangible asset amortization and integration costs.
- 7The company maintained its quarterly dividend of $0.50 per share and has $13.9 billion remaining authorization under its share repurchase program.