10-QPeriod: Q1 FY2022

CVS HEALTH Corp Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 4, 2022For Securities:CVS

Summary

CVS Health Corporation reported solid revenue growth for the first quarter of 2022, with total revenues increasing by 11.2% year-over-year to $76.8 billion. This growth was primarily driven by strong performance across all segments, including Pharmacy Services and Retail/LTC, bolstered by increased prescription volume, specialty pharmacy growth, and front-store sales. While overall revenue saw a healthy increase, operating income experienced a slight decline of 2.4% to $3.5 billion. This decrease was largely attributable to a significant legal settlement accrual of $484 million related to opioid claims with the State of Florida. Despite this, the company demonstrated effective cost management, with operating expenses as a percentage of revenue remaining stable. The company also returned capital to shareholders through share repurchases and dividends, reflecting confidence in its ongoing operational strength.

Financial Highlights

55 data points
Beta

Revenue

$76.83B

40.8% Gross Margin

Net Income

$2.35B

3.1% Net Margin

EPS (Diluted)

$1.77

Total Assets

$232.87B

Cash & Equivalents

$8.44B

Free Cash Flow

$2.51B

Financial Statements
Beta
Revenue$76.83B
Cost of Revenue$45.51B
Gross Profit$31.32B
Operating Expenses$73.28B
Operating Income$3.54B
Interest Expense$586.00M
Net Income$2.35B
EPS (Basic)$1.79
EPS (Diluted)$1.77
Shares Outstanding (Basic)1.31B
Shares Outstanding (Diluted)1.33B

Key Highlights

  • 1Total revenues increased by 11.2% to $76.8 billion, driven by strong performance across all business segments.
  • 2Operating income saw a slight decrease of 2.4% to $3.5 billion, primarily due to a $484 million legal settlement accrual for opioid claims.
  • 3Pharmacy Services segment revenues grew 8.6% to $39.5 billion, supported by increased claims volume and specialty pharmacy growth.
  • 4Retail/LTC segment revenues increased by 9.2% to $25.4 billion, driven by higher prescription and front-store sales, including COVID-19 test kits.
  • 5Health Care Benefits segment revenues rose 12.8% to $23.1 billion, with growth across all product lines and a slight increase in the medical benefit ratio.
  • 6The company repurchased approximately $2.0 billion of common stock during the quarter.
  • 7Net income attributable to CVS Health increased by 4.0% to $2.3 billion.

Frequently Asked Questions

The primary driver of the decrease in operating income was a $484 million legal settlement accrual related to a pending agreement with the State of Florida to resolve opioid claims against the company and its subsidiaries.

All segments showed revenue growth. The Health Care Benefits segment's revenues increased by 12.8% to $23.1 billion, Pharmacy Services revenue grew by 8.6% to $39.5 billion, and the Retail/LTC segment saw a 9.2% increase to $25.4 billion. Net investment income, however, decreased significantly.

CVS Health repurchased approximately $2.0 billion of its common stock during the quarter and declared a quarterly cash dividend of $0.55 per share. The company has an ongoing $10.0 billion repurchase program.

Despite an increase in absolute dollar terms, operating expenses as a percentage of total revenues remained stable at 12.9% for the first quarter of 2022 compared to the prior year, indicating effective cost management relative to revenue growth.