Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: ERN, ERP

CVS HEALTH REPORTS STRONG SECOND QUARTER RESULTS, RAISES 2022 FULL-YEAR EPS AND CASH FLOW FROM OPERATIONS GUIDANCE


WOONSOCKET, R.I., Aug. 3, 2022 /PRNewswire/ -- CVS Health Corporation (NYSE: CVS) today announced operating results for the three months ended June 30, 2022.

CVS HEALTH REPORTS STRONG SECOND QUARTER RESULTS, RAISES 2022 FULL-YEAR EPS AND CASH FLOW FROM OPERATIONS GUIDANCE

SECOND QUARTER HIGHLIGHTS

KEY FINANCIAL DATA


Three Months Ended

June 30,

In millions, except per share amounts

2022


2021


Change

Total revenues 

$   80,636


$   72,616


$     8,020

Operating income

4,569


4,326


243

Adjusted operating income (1)

4,810


4,887


(77)

Diluted earnings per share

$       2.23


$       2.10


$       0.13

Adjusted EPS (2)

$       2.40


$       2.42


$      (0.02)

YEAR-TO-DATE HIGHLIGHTS

2022 FULL-YEAR GUIDANCE

CEO Commentary

"Despite a challenging economic environment, our differentiated business model helped drive strong results this quarter, with significant revenue growth across all of our business segments. The continued success of our foundational businesses accelerated our strategy to expand access to health services and help consumers navigate to the best site of care. We remain a trusted community health destination for millions of individuals with health products and services that engage customers in all aspects of their health wherever and whenever they need it."
-Karen S. Lynch, CVS Health President and CEO

Q2 IN THE SPOTLIGHT


Paid down $1.5 billion of long-term debt, while returning $740 million to shareholders through dividends during the three months ended June 30, 2022. Since the close of the acquisition of Aetna Inc. in November 2018, the Company has repaid a net $22.5 billion of long-term debt.

Enrolled six million active users on the Company's individualized Health Dashboard since its launch earlier this year.

In June, CVS Health became the first health care provider to directly integrate with Carequality, the largest medical records exchange in the U.S., enabling the Company to improve care coordination and reduce the administrative burden on physicians.

Expanded free health screenings in underserved communities and support of community health partners as part of the Company's commitment to advancing health equity.

The Company presents both GAAP and non-GAAP financial measures in this press release to assist in the comparison of the Company's past financial performance with its current financial performance. See "Non-GAAP Financial Information" beginning on page 12 and endnotes beginning on page 23 for explanations of non-GAAP financial measures presented in this press release. See pages 14 through 15 and page 22 for reconciliations of each non-GAAP financial measure used in this release to the most directly comparable GAAP financial measure.

Consolidated Second Quarter Results


Three Months Ended

June 30,


Six Months Ended

June 30,

In millions, except per share amounts

2022


2021


Change


2022


2021


Change

Total revenues 

$  80,636


$  72,616


$    8,020


$ 157,462


$ 141,713


$  15,749

Operating income

4,569


4,326


243


8,059


7,903


156

Adjusted operating income (1)

4,810


4,887


(77)


9,293


9,092


201

Net income

2,961


2,791


170


5,274


5,015


259

Diluted earnings per share

$      2.23


$      2.10


$      0.13


$      3.97


$      3.78


$      0.19

Adjusted EPS (2)

$      2.40


$      2.42


$     (0.02)


$      4.62


$      4.46


$      0.16

For the three months ended June 30, 2022 compared to the prior year:

Health Care Benefits Segment

The Health Care Benefits segment offers a full range of insured and self-insured ("ASC") medical, pharmacy, dental and behavioral health products and services. The segment results for the three and six months ended June 30, 2022 and 2021 were as follows:


Three Months Ended

June 30,


Six Months Ended

June 30,

In millions, except percentages

2022


2021


Change


2022


2021


Change

Total revenues

$  22,756


$  20,525


$    2,231


$  45,865


$  41,008


$    4,857

Adjusted operating income (1)

1,831


1,614


217


3,582


3,396


186

Medical benefit ratio ("MBR") (3)

82.9 %


84.1 %


(1.2) %


83.2 %


83.6 %


(0.4) %

Medical membership (4)







24.4


23.5


0.9

See the supplemental information on page 17 for additional information regarding the performance of the Health Care Benefits segment.

Pharmacy Services Segment

The Pharmacy Services segment provides a full range of pharmacy benefit management solutions to employers, health plans, government employee groups and government sponsored programs. The segment results for the three and six months ended June 30, 2022 and 2021 were as follows:


Three Months Ended

June 30,


Six Months Ended

June 30,

In millions

2022


2021


Change


2022


2021


Change

Total revenues

$  42,812


$  38,314


$    4,498


$  82,273


$  74,635


$    7,638

Adjusted operating income (1)

1,855


1,755


100


3,491


3,262


229

Total pharmacy claims processed (5) (6)

584.3


562.2


22.1


1,151.3


1,098.1


53.2

Pharmacy network (7)

499.1


479.3


19.8


983.4


934.7


48.7

Mail choice (8)

85.2


82.9


2.3


167.9


163.4


4.5

See the supplemental information on page 19 for additional information regarding the performance of the Pharmacy Services segment.

Retail/LTC Segment

The Retail/LTC segment fulfills prescriptions for medications, provides patient care programs, sells a wide assortment of health and wellness products and general merchandise, provides health care services through walk-in medical clinics, provides medical diagnostic testing, administers vaccinations and provides pharmacy services to long-term care facilities. The segment results for the three and six months ended June 30, 2022 and 2021 were as follows:


Three Months Ended

June 30,


Six Months Ended

June 30,

In millions

2022


2021


Change


2022


2021


Change

Total revenues

$  26,286


$  24,728


$    1,558


$  51,704


$  48,002


$    3,702

Adjusted operating income (1)

1,862


2,049


(187)


3,467


3,443


24

Prescriptions filled (5) (6)

400.8


394.4


6.4


795.4


769.8


25.6

See the supplemental information on page 20 for additional information regarding the performance of the Retail/LTC segment.

2022 Full-Year Guidance

The Company raised its full-year 2022 GAAP diluted EPS guidance range to $7.23 to $7.43 from $6.93 to $7.13 and raised its full-year 2022 Adjusted EPS guidance range to $8.40 to $8.60 from $8.20 to $8.40. The Company also raised its full-year 2022 cash flow from operations guidance range to $12.5 billion to $13.5 billion from $12.0 billion to $13.0 billion.

The adjustments between full-year 2022 GAAP diluted EPS and Adjusted EPS include amortization of intangible assets, the gain on the divestiture of PayFlex, a legal settlement, a loss on assets held for sale, the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health and the impact of certain discrete tax items concluded in the first quarter of 2022.

Teleconference and Webcast

The Company will be holding a conference call today for investors at 8:00 a.m. (Eastern Time) to discuss its second quarter results. An audio webcast of the call will be broadcast simultaneously for all interested parties through the Investor Relations section of the CVS Health website at http://investors.cvshealth.com. This webcast will be archived and available on the website for a one-year period following the conference call.

About CVS Health

CVS Health is the leading health solutions company, delivering care like no one else can. We reach more people and improve the health of communities across America through our local presence, digital channels and over 300,000 dedicated colleagues ? including more than 40,000 physicians, pharmacists, nurses and nurse practitioners. Wherever and whenever people need us, we help them with their health ? whether that's managing chronic diseases, staying compliant with their medications or accessing affordable health and wellness services in the most convenient ways. We help people navigate the health care system ? and their personal health care ? by improving access, lowering costs and being a trusted partner for every meaningful moment of health. And we do it all with heart, each and every day. Follow @CVSHealth on social media.

Cautionary Statement Concerning Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. Statements in this press release that are forward-looking include, but are not limited to, Ms. Lynch's quotation, the information under the headings "2022 Full-Year Guidance" and "Q2 In The Spotlight" and the information included in the endnotes and reconciliations. By their nature, all forward-looking statements are not guarantees of future performance or results and are subject to risks and uncertainties that are difficult to predict and/or quantify. Actual results may differ materially from those contemplated by the forward-looking statements due to the risks and uncertainties related to the COVID-19 pandemic, including the potential emergence of additional variants, vaccine and testing protocols, government testing initiatives, the geographies impacted by and the severity and duration of the pandemic, the pandemic's impact on the U.S. and global economies and consumer behavior and health care utilization patterns, and the timing, scope and impact of stimulus legislation and other federal, state and local governmental responses to the pandemic, as well as the risks and uncertainties described in our Securities and Exchange Commission ("SEC") filings, including those set forth in the Risk Factors section and under the heading "Cautionary Statement Concerning Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 and our Current Reports on Form 8-K.

You are cautioned not to place undue reliance on CVS Health's forward-looking statements. CVS Health's forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. CVS Health does not assume any duty to update or revise forward-looking statements, whether as a result of new information, future events, uncertainties or otherwise.

- Tables Follow -

 

CVS HEALTH CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,

In millions, except per share amounts

2022


2021


2022


2021

Revenues:








Products

$      56,794


$      50,525


$    109,316


$      97,912

Premiums

21,260


18,983


42,891


37,943

Services

2,436


2,819


4,941


5,272

Net investment income

146


289


314


586

Total revenues

80,636


72,616


157,462


141,713

Operating costs:








Cost of products sold

49,290


43,520


94,799


84,414

Benefit costs

17,606


15,901


35,557


31,605

Operating expenses

9,171


8,869


19,047


17,791

Total operating costs

76,067


68,290


149,403


133,810

Operating income

4,569


4,326


8,059


7,903

Interest expense

583


636


1,169


1,293

Other income

(43)


(45)


(85)


(95)

Income before income tax provision

4,029


3,735


6,975


6,705

Income tax provision

1,068


944


1,701


1,690

Net income

2,961


2,791


5,274


5,015

Net income attributable to noncontrolling interests

(10)


(8)


(11)


(9)

Net income attributable to CVS Health

$        2,951


$        2,783


$        5,263


$        5,006









Net income per share attributable to CVS Health:








Basic

$         2.25


$         2.11


$         4.01


$         3.80

Diluted

$         2.23


$         2.10


$         3.97


$         3.78

Weighted average shares outstanding:








Basic

1,313


1,319


1,312


1,316

Diluted

1,321


1,327


1,325


1,325

Dividends declared per share

$         0.55


$         0.50


$         1.10


$         1.00

 

CVS HEALTH CORPORATION 

Condensed Consolidated Balance Sheets 

(Unaudited) 



In millions

June 30,
2022


December 31,
2021

Assets:




Cash and cash equivalents

$           12,116


$             9,408

Investments

2,877


3,117

Accounts receivable, net

27,233


24,431

Inventories

17,375


17,760

Other current assets

2,541


5,292

Total current assets

62,142


60,008

Long-term investments

21,124


23,025

Property and equipment, net

12,764


12,896

Operating lease right-of-use assets

18,562


19,122

Goodwill

78,560


79,121

Intangible assets, net

28,135


29,026

Separate accounts assets

4,140


5,087

Other assets

4,852


4,714

Total assets

$         230,279


$         232,999





Liabilities:




Accounts payable

$           13,238


$           12,544

Pharmacy claims and discounts payable

18,393


17,330

Health care costs payable

10,400


8,808

Policyholders' funds

1,628


4,301

Accrued expenses

17,728


17,670

Other insurance liabilities

1,197


1,303

Current portion of operating lease liabilities

1,854


1,646

Current portion of long-term debt

4,019


4,205

Total current liabilities

68,457


67,807

Long-term operating lease liabilities

17,502


18,177

Long-term debt

50,797


51,971

Deferred income taxes

5,450


6,270

Separate accounts liabilities

4,140


5,087

Other long-term insurance liabilities

6,287


6,402

Other long-term liabilities

2,140


1,904

Total liabilities

154,773


157,618





Shareholders' equity:




Preferred stock

?


?

Common stock and capital surplus

47,874


47,377

Treasury stock

(30,412)


(28,173)

Retained earnings

58,710


54,906

Accumulated other comprehensive income (loss)

(988)


965

Total CVS Health shareholders' equity

75,184


75,075

Noncontrolling interests

322


306

Total shareholders' equity

75,506


75,381

Total liabilities and shareholders' equity

$         230,279


$         232,999

 

CVS HEALTH CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Six Months Ended

June 30,

In millions

2022


2021

Cash flows from operating activities:




Cash receipts from customers

$      151,769


$      136,621

Cash paid for inventory and prescriptions dispensed by retail network pharmacies

(90,887)


(79,316)

Insurance benefits paid

(33,920)


(31,245)

Cash paid to other suppliers and employees

(15,119)


(14,900)

Interest and investment income received

200


394

Interest paid

(1,150)


(1,263)

Income taxes paid

(1,887)


(1,552)

Net cash provided by operating activities

9,006


8,739





Cash flows from investing activities:




Proceeds from sales and maturities of investments

4,360


3,947

Purchases of investments

(5,010)


(5,570)

Purchases of property and equipment

(1,459)


(1,315)

Acquisitions (net of cash acquired)

(125)


(108)

Proceeds from sale of subsidiaries (net of cash and restricted cash sold of $2,807)

(1,943)


?

Other

54


72

Net cash used in investing activities

(4,123)


(2,974)





Cash flows from financing activities:




Repayments of long-term debt

(1,529)


(5,423)

Repurchase of common stock

(2,000)


?

Dividends paid

(1,462)


(1,306)

Proceeds from exercise of stock options

348


330

Payments for taxes related to net share settlement of equity awards

(329)


(159)

Other

(139)


46

Net cash used in financing activities

(5,111)


(6,512)

Net decrease in cash, cash equivalents and restricted cash

(228)


(747)

Cash, cash equivalents and restricted cash at the beginning of the period

12,691


11,043

Cash, cash equivalents and restricted cash at the end of the period

$       12,463


$       10,296

 

CVS HEALTH CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Six Months Ended

June 30,

In millions

2022


2021

Reconciliation of net income to net cash provided by operating activities:




Net income

$        5,274


$        5,015

Adjustments required to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

2,142


2,263

Stock-based compensation

236


232

Gain on sale of subsidiary

(225)


?

Deferred income taxes and other noncash items

(281)


(370)

Change in operating assets and liabilities, net of effects from acquisitions:




Accounts receivable, net

(2,687)


(2,384)

Inventories

469


1,517

Other assets

(325)


(219)

Accounts payable and pharmacy claims and discounts payable

2,033


1,702

Health care costs payable and other insurance liabilities

1,467


104

Other liabilities

903


879

Net cash provided by operating activities

$        9,006


$        8,739

Non-GAAP Financial Information

The Company uses non-GAAP financial measures to analyze underlying business performance and trends. The Company believes that providing these non-GAAP financial measures enhances the Company's and investors' ability to compare the Company's past financial performance with its current performance. These non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. The Company's definitions of its non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies.

Non-GAAP financial measures such as consolidated adjusted operating income, adjusted earnings per share (EPS) and adjusted income attributable to CVS Health exclude from the relevant GAAP metrics, as applicable: amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance.

The Company's Non-GAAP adjusted effective income tax rate excludes from the relevant GAAP metric the corresponding tax benefit or expense related to the amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance and certain discrete tax items.

For the periods covered in this press release, the following items are excluded from the non-GAAP financial measures described above, as applicable, because the Company believes they neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance:

See endnotes (1) and (2) on page 23 for definitions of non-GAAP financial measures. Reconciliations of each non-GAAP financial measure to the most directly comparable GAAP financial measure are presented on pages 14 through 15 and page 22.

Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures


Adjusted Operating Income

(Unaudited)


The following are reconciliations of consolidated operating income (GAAP measure) to consolidated adjusted operating income, as well as reconciliations of segment GAAP operating income to segment adjusted operating income:



Three Months Ended June 30, 2022

In millions

Health Care

Benefits


Pharmacy

Services


Retail/

LTC


Corporate/

Other


Intersegment

Eliminations


Consolidated

Totals

Operating income (loss) (GAAP measure)

$          1,754


$       1,814


$     1,740


$          (556)


$              (183)


$            4,569

Amortization of intangible assets

302


41


122


1


?


466

Gain on divestiture of subsidiary

(225)


?


?


?


?


(225)

Adjusted operating income (loss) (1)

$          1,831


$       1,855


$     1,862


$          (555)


$              (183)


$            4,810

 


Three Months Ended June 30, 2021

In millions

Health Care

Benefits


Pharmacy

Services


Retail/

LTC


Corporate/

Other


Intersegment

Eliminations


Consolidated

Totals

Operating income (loss) (GAAP measure)

$          1,273


$       1,705


$     1,919


$          (409)


$         (162)


$            4,326

Amortization of intangible assets

402


50


130


?


?


582

Acquisition-related integration costs

?


?


?


40


?


40

Acquisition purchase price adjustment outside of measurement period

(61)


?


?


?


?


(61)

Adjusted operating income (loss) (1)

$          1,614


$       1,755


$     2,049


$          (369)


$               (162)


$            4,887

 


Six Months Ended June 30, 2022

In millions

Health Care

Benefits


Pharmacy

Services


Retail/

LTC


Corporate/

Other


Intersegment

Eliminations


Consolidated

Totals

Operating income (loss) (GAAP measure)

$          3,163


$       3,406


$     3,223


$       (1,346)


$              (387)


$            8,059

Amortization of intangible assets

603


85


244


2


?


934

Gain on divestiture of subsidiary

(225)


?


?


?


?


(225)

Legal settlement

?


?


?


484


?


484

Loss on assets held for sale

41


?


?


?


?


41

Adjusted operating income (loss) (1)

$          3,582


$       3,491


$     3,467


$          (860)


$              (387)


$            9,293














 


Six Months Ended June 30, 2021

In millions

Health Care

Benefits


Pharmacy

Services


Retail/

LTC


Corporate/

Other


Intersegment

Eliminations


Consolidated

Totals

Operating income (loss) (GAAP measure)

$          2,653


$       3,157


$     3,184


$          (754)


$              (337)


$            7,903

Amortization of intangible assets

804


105


259


1


?


1,169

Acquisition-related integration costs

?


?


?


81


?


81

Acquisition purchase price adjustment outside of measurement period

(61)


?


?


?


?


(61)

Adjusted operating income (loss) (1)

$          3,396


$       3,262


$     3,443


$          (672)


$              (337)


$            9,092

 

Adjusted Earnings Per Share

(Unaudited)


The following are reconciliations of net income attributable to CVS Health to adjusted income attributable to CVS Health and calculations of GAAP diluted EPS and Adjusted EPS:



Three Months Ended

June 30, 2022


Three Months Ended

June 30, 2021

In millions, except per share amounts

Total
Company


Per
Common
Share


Total
Company


Per
Common
Share

Net income attributable to CVS Health (GAAP measure)

$      2,951


$        2.23


$      2,783


$        2.10

Amortization of intangible assets

466


0.35


582


0.44

Gain on divestiture of subsidiary

(225)


(0.17)


?


?

Acquisition-related integration costs

?


?


40


0.03

Acquisition purchase price adjustment outside of measurement period

?


?


(61)


(0.05)

Tax impact of non-GAAP adjustments

(17)


(0.01)


(138)


(0.10)

Adjusted income attributable to CVS Health (2)

$      3,175


$        2.40


$      3,206


$        2.42









Weighted average diluted shares outstanding



1,321




1,327

 


Six Months Ended

June 30, 2022


Six Months Ended

June 30, 2021

In millions, except per share amounts

Total
Company


Per
Common
Share


Total
Company


Per
Common
Share

Net income attributable to CVS Health (GAAP measure)

$      5,263


$        3.97


$      5,006


$        3.78

Amortization of intangible assets

934


0.71


1,169


0.88

Gain on divestiture of subsidiary

(225)


(0.17)


?


?

Legal settlement

484


0.36


?


?

Loss on assets held for sale

41


0.03


?


?

Acquisition-related integration costs

?


?


81


0.06

Acquisition purchase price adjustment outside of measurement period

?


?


(61)


(0.05)

Tax impact of non-GAAP adjustments

(380)


(0.28)


(292)


(0.21)

Adjusted income attributable to CVS Health (2)

$      6,117


$        4.62


$      5,903


$        4.46









Weighted average diluted shares outstanding



1,325




1,325

Supplemental Information
(Unaudited)

The Company's segments maintain separate financial information, and the Company's chief operating decision maker (the "CODM") evaluates the segments' operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company's segments based on adjusted operating income, which is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance as further described in endnote (1). The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company's ability to compare past financial performance with current performance and analyze underlying business performance and trends.

The following is a reconciliation of financial measures of the Company's segments to the consolidated totals:

In millions

Health Care

Benefits


Pharmacy

Services (a)


Retail/

LTC


Corporate/

Other


Intersegment

Eliminations (b)


Consolidated

Totals

Three Months Ended












June 30, 2022












Total revenues

$     22,756


$   42,812


$ 26,286


$        110


$        (11,328)


$      80,636

Adjusted operating income (loss) (1)

1,831


1,855


1,862


(555)


(183)


4,810

June 30, 2021












Total revenues

20,525


38,314


24,728


182


(11,133)


72,616

Adjusted operating income (loss) (1)

1,614


1,755


2,049


(369)


(162)


4,887













Six Months Ended












June 30, 2022












Total revenues

$     45,865


$   82,273


$ 51,704


$        236


$        (22,616)


$     157,462

Adjusted operating income (loss) (1)

3,582


3,491


3,467


(860)


(387)


9,293

June 30, 2021












Total revenues

41,008


74,635


48,002


317


(22,249)


141,713

Adjusted operating income (loss) (1)

3,396


3,262


3,443


(672)


(337)


9,092

 






(a)

Total revenues of the Pharmacy Services segment include approximately $3.1 billion and $2.8 billion of retail co-payments for the three months ended June 30, 2022 and 2021, respectively, and $6.9 billion and $6.2 billion of retail co-payments for the six months ended June 30, 2022 and 2021, respectively.

(b)

Intersegment revenue eliminations relate to intersegment revenue generating activities that occur between the Health Care Benefits segment, the Pharmacy Services segment, and/or the Retail/LTC segment. Intersegment adjusted operating income eliminations occur when members of Pharmacy Services Segment clients ("PSS members") enrolled in Maintenance Choice® elect to pick up maintenance prescriptions at one of the Company's retail pharmacies instead of receiving them through the mail. When this occurs, both the Pharmacy Services and Retail/LTC segments record the adjusted operating income on a stand-alone basis.

 

Supplemental Information

(Unaudited)


Health Care Benefits Segment


The following table summarizes the Health Care Benefits segment's performance for the respective periods:






Change


Three Months Ended

June 30,


Six Months Ended

June 30,


Three Months Ended

June 30,

2022 vs 2021


Six Months Ended

June 30,

2022 vs 2021

In millions, except percentages and basis points ("bps")

2022


2021


2022


2021


$


%


$


%

Revenues:
















Premiums

$ 21,245


$  18,968


$ 42,859


$ 37,910


$    2,277


12.0 %


$    4,949


13.1 %

Services

1,423


1,420


2,829


2,813


3


0.2 %


16


0.6 %

Net investment income

88


137


177


285


(49)


(35.8) %


(108)


(37.9) %

Total revenues

22,756


20,525


45,865


41,008


2,231


10.9 %


4,857


11.8 %

Benefit costs

17,611


15,954


35,660


31,711


1,657


10.4 %


3,949


12.5 %

MBR (Benefit costs as a % of premium revenues) (3)

82.9 %


84.1 %


83.2 %


83.6 %


(120)

bps


(40)

bps

Operating expenses

$    3,391


$    3,298


$    7,042


$    6,644


$         93


2.8 %


$       398


6.0 %

Operating expenses as a % of total revenues

14.9 %


16.1 %


15.4 %


16.2 %









Operating income

$    1,754


$    1,273


$    3,163


$    2,653


$       481


37.8 %


$       510


19.2 %

Operating income as a % of total revenues

7.7 %


6.2 %


6.9 %


6.5 %









Adjusted operating income (1)

$    1,831


$    1,614


$    3,582


$    3,396


$       217


13.4 %


$       186


5.5 %

Adjusted operating income as a % of total revenues

8.0 %


7.9 %


7.8 %


8.3 %









Premium revenues (by business):
















Government

$ 15,751


$  13,897


$ 31,946


$ 27,814


$    1,854


13.3 %


$    4,132


14.9 %

Commercial

5,494


5,071


10,913


10,096


423


8.3 %


817


8.1 %

 

The following table summarizes the Health Care Benefits segment's medical membership for the respective periods:



June 30, 2022


March 31, 2022


December 31, 2021


June 30, 2021

In thousands

Insured


ASC


Total


Insured


ASC


Total


Insured


ASC


Total


Insured


ASC


Total

Medical membership: (4)
























Commercial

3,158


13,835


16,993


3,285


13,924


17,209


3,258


13,530


16,788


3,183


13,541


16,724

Medicare Advantage

3,216


?


3,216


3,169


?


3,169


2,971


?


2,971


2,911


?


2,911

Medicare Supplement

1,314


?


1,314


1,292


?


1,292


1,285


?


1,285


1,193


?


1,193

Medicaid

2,425


484


2,909


2,375


477


2,852


2,333


471


2,804


2,231


451


2,682

Total medical membership

10,113


14,319


24,432


10,121


14,401


24,522


9,847


14,001


23,848


9,518


13,992


23,510

























Supplemental membership information:





















Medicare Prescription Drug Plan (standalone)

6,051






6,022






5,777






5,704

 

Supplemental Information

(Unaudited)


The following table shows the components of the change in health care costs payable during the six months ended June 30, 2022 and 2021:



Six Months Ended

June 30,

In millions

2022


2021

Health care costs payable, beginning of period

$         8,808


$         7,936

Less: Reinsurance recoverables

8


10

Health care costs payable, beginning of period, net

8,800


7,926

Add: Components of incurred health care costs




Current year

35,960


32,183

Prior years (a)

(666)


(709)

Total incurred health care costs (b)

35,294


31,474

Less: Claims paid




Current year

26,971


24,600

Prior years

6,732


6,409

Total claims paid

33,703


31,009

Add: Premium deficiency reserve

5


5

Health care costs payable, end of period, net

10,396


8,396

Add: Reinsurance recoverables

4


18

Health care costs payable, end of period

$       10,400


$         8,414

 






(a)

Negative amounts reported for incurred health care costs related to prior years result from claims being settled for amounts less than originally estimated.

(b)

Total incurred health care costs for the six months ended June 30, 2022 and 2021 in the table above exclude (i) $5 million and $5 million, respectively, for premium deficiency reserves related to the Company's Medicaid products, (ii) $37 million and $27 million, respectively, of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the  unaudited condensed consolidated balance sheets and (iii) $221 million and $99 million, respectively, of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheets.

 

The following table summarizes the Health Care Benefits segment's days claims payable for the respective periods:



June 30, 2022


March 31, 2022


December 31, 2021


June 30, 2021

Days Claims Payable (9)

54.3


51.7


49.1


48.4

 

Supplemental Information

(Unaudited)


Pharmacy Services Segment


The following table summarizes the Pharmacy Services segment's performance for the respective periods:









Change


Three Months Ended

June 30,


Six Months Ended

June 30,


Three Months Ended

June 30,

2022 vs 2021


Six Months Ended

June 30,

2022 vs 2021

In millions, except percentages

2022


2021


2022


2021


$


%


$


%

Revenues:
















Products

$  42,554


$  38,010


$  81,718


$  74,077


$    4,544


12.0 %


$   7,641


10.3 %

Services

258


304


555


558


(46)


(15.1) %


(3)


(0.5) %

Total revenues

42,812


38,314


82,273


74,635


4,498


11.7 %


7,638


10.2 %

Cost of products sold

40,540


36,266


78,030


70,789


4,274


11.8 %


7,241


10.2 %

Gross profit (10)

2,272


2,048


4,243


3,846


224


10.9 %


397


10.3 %

Gross margin (Gross profit as a % of total revenues) (10)

5.3 %


5.3 %


5.2 %


5.2 %









Operating expenses

$       458


$       343


$       837


$       689


$       115


33.5 %


$       148


21.5 %

Operating expenses as a % of total revenues

1.1 %


0.9 %


1.0 %


0.9 %









Operating income

$    1,814


$    1,705


$    3,406


$    3,157


$       109


6.4 %


$       249


7.9 %

Operating income as a % of total revenues

4.2 %


4.5 %


4.1 %


4.2 %









Adjusted operating income (1)

$    1,855


$    1,755


$    3,491


$    3,262


$       100


5.7 %


$       229


7.0 %

Adjusted operating income as a % of total revenues

4.3 %


4.6 %


4.2 %


4.4 %









Revenues (by distribution channel):
















Pharmacy network (7)

$  24,537


$  22,918


$  47,361


$  44,811


$    1,619


7.1 %


$   2,550


5.7 %

Mail choice (8)

18,030


15,235


34,404


29,483


2,795


18.3 %


4,921


16.7 %

Other

245


161


508


341


84


52.2 %


167


49.0 %

Pharmacy claims processed: (5) (6)
















Total (a)

584.3


562.2


1,151.3


1,098.1


22.1


3.9 %


53.2


4.8 %

Pharmacy network (7)

499.1


479.3


983.4


934.7


19.8


4.1 %


48.7


5.2 %

Mail choice (8)

85.2


82.9


167.9


163.4


2.3


2.8 %


4.5


2.8 %

Generic dispensing rate: (6) (11)
















Total (b)

88.0 %


86.7 %


87.9 %


87.4 %









Pharmacy network (7)

88.4 %


86.9 %


88.3 %


87.7 %









Mail choice (8)

85.7 %


85.5 %


85.6 %


85.6 %









 






(a)

Excluding the impact of COVID-19 vaccinations, total pharmacy claims processed increased 5.7% and 5.6% on a 30-day equivalent basis for the three and six months ended June 30, 2022, respectively, compared to the prior year.

(b)

Excluding the impact of COVID-19 vaccinations, the Pharmacy Services segment's total generic dispensing rate was 88.8% and 89.0% in the three months ended June 30, 2022 and 2021, respectively, and 88.8% and 89.0% in the six months ended June 30, 2022 and 2021, respectively.

 

Supplemental Information

(Unaudited)


Retail/LTC Segment


The following table summarizes the Retail/LTC segment's performance for the respective periods:









Change


Three Months Ended

June 30,


Six Months Ended

June 30,


Three Months Ended

June 30,

2022 vs 2021


Six Months Ended

June 30,

2022 vs 2021

In millions, except percentages

2022


2021


2022


2021


$


%


$


%

Revenues:
















Products

$  25,528


$  23,609


$  50,133


$  46,003


$    1,919


8.1 %


$    4,130


9.0 %

Services

776


1,119


1,605


1,953


(343)


(30.7) %


(348)


(17.8) %

Net investment income (loss)

(18)


?


(34)


46


(18)


(100.0) %


(80)


(173.9) %

Total revenues

26,286


24,728


51,704


48,002


1,558


6.3 %


3,702


7.7 %

Cost of products sold

19,554


17,952


38,319


34,994


1,602


8.9 %


3,325


9.5 %

Gross profit (10)

6,732


6,776


13,385


13,008


(44)


(0.6) %


377


2.9 %

Gross margin (Gross profit as a % of total revenues) (10)

25.6 %


27.4 %


25.9 %


27.1 %









Operating expenses

$    4,992


$    4,857


$  10,162


$    9,824


$       135


2.8 %


$       338


3.4 %

Operating expenses as a % of total revenues

19.0 %


19.6 %


19.7 %


20.5 %









Operating income

$    1,740


$    1,919


$    3,223


$    3,184


$      (179)


(9.3) %


$         39


1.2 %

Operating income as a % of total revenues

6.6 %


7.8 %


6.2 %


6.6 %









Adjusted operating income (1)

$    1,862


$    2,049


$    3,467


$    3,443


$      (187)


(9.1) %


$         24


0.7 %

Adjusted operating income as a % of total revenues

7.1 %


8.3 %


6.7 %


7.2 %









Revenues (by major goods/service lines):
















Pharmacy

$  20,017


$  18,873


$  39,549


$  36,758


$    1,144


6.1 %


$    2,791


7.6 %

Front Store

5,736


5,254


11,049


9,896


482


9.2 %


1,153


11.7 %

Other

551


601


1,140


1,302


(50)


(8.3) %


(162)


(12.4) %

Net investment income (loss)

(18)


?


(34)


46


(18)


(100.0) %


(80)


(173.9) %

Prescriptions filled (5) (6) (a)

400.8


394.4


795.4


769.8


6.4


1.6 %


25.6


3.3 %

Same store sales increase (decrease): (12)
















Total

8.0 %


12.3 %


9.3 %


6.2 %









Pharmacy

7.6 %


12.4 %


8.8 %


8.2 %









Front Store

9.4 %


12.0 %


11.2 %


(0.4) %









Prescription volume (6)

3.1 %


14.8 %


4.5 %


7.6 %









Generic dispensing rate (6) (11) (b)

88.5 %


85.7 %


88.0 %


86.5 %









 






(a)

Excluding the impact of COVID-19 vaccinations, prescriptions filled increased 4.6% and 5.1% on a 30-day equivalent basis for the three and six months ended June 30, 2022, respectively, compared to the prior year.

(b)

Excluding the impact of COVID-19 vaccinations, the Retail/LTC segment's total generic dispensing rate was 89.9% and 89.5% in the three months ended June 30, 2022 and 2021, respectively, and 89.9% and 89.6% in the six months ended June 30, 2022 and 2021, respectively.

 

Supplemental Information

(Unaudited)


Corporate/Other Segment


The following table summarizes the Corporate/Other segment's performance for the respective periods:









Change


Three Months Ended

June 30,


Six Months Ended

June 30,


Three Months Ended

June 30,

2022 vs 2021


Six Months Ended

June 30,

2022 vs 2021

In millions, except percentages

2022


2021


2022


2021


$


%


$


%

Revenues:
















Premiums

$          15


$          15


$          32


$          33


$          ?


? %


$          (1)


(3.0) %

Services

19


15


33


29


4


26.7 %


4


13.8 %

Net investment income

76


152


171


255


(76)


(50.0) %


(84)


(32.9) %

Total revenues

110


182


236


317


(72)


(39.6) %


(81)


(25.6) %

Cost of products sold

10


8


20


16


2


25.0 %


4


25.0 %

Benefit costs

162


54


221


99


108


200.0 %


122


123.2 %

Operating expenses

494


529


1,341


956


(35)


(6.6) %


385


40.3 %

Operating loss

(556)


(409)


(1,346)


(754)


(147)


(35.9) %


(592)


(78.5) %

Adjusted operating loss (1)

(555)


(369)


(860)


(672)


(186)


(50.4) %


(188)


(28.0) %

Adjusted Earnings Per Share Guidance
(Unaudited)

The following reconciliations of projected net income attributable to CVS Health to projected adjusted income attributable to CVS Health and calculations of projected GAAP diluted EPS and projected Adjusted EPS contain forward-looking information. All forward-looking information involves risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking information for a number of reasons as described in our SEC filings, including those set forth in the Risk Factors section and under the heading "Cautionary Statement Concerning Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022. See "Non-GAAP Financial Information" earlier in this press release and endnote (2) later in this press release for more information on how we calculate Adjusted EPS.


Year Ending December 31, 2022


Low


High

In millions, except per share amounts

Total
Company


Per
Common
Share


Total
Company


Per
Common
Share

Net income attributable to CVS Health (GAAP measure)

$     9,620


$       7.23


$     9,885


$       7.43

Non-GAAP adjustments:








Amortization of intangible assets

1,870


1.41


1,870


1.41

Gain on divestiture of subsidiary

(225)


(0.17)


(225)


(0.17)

Legal settlement

484


0.36


484


0.36

Loss on assets held for sale

41


0.03


41


0.03

Tax impact of non-GAAP adjustments

(615)


(0.46)


(615)


(0.46)

Adjusted income attributable to CVS Health (2)

$   11,175


$       8.40


$   11,440


$       8.60









Weighted average diluted shares outstanding



1,330




1,330

Endnotes

(1)  The Company defines adjusted operating income as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance, such as gains/losses on divestitures, certain legal settlements, losses on assets held for sale, acquisition-related integration costs and acquisition purchase price adjustments outside of the acquisition accounting measurement period. The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company's ability to compare past financial performance with current performance and analyze underlying business performance and trends. The consolidated measure is not determined in accordance with GAAP and should not be considered a substitute for, or superior to, the most directly comparable GAAP measure, consolidated operating income. See "Non-GAAP Financial Information" earlier in this press release for additional information regarding the items excluded from consolidated operating income in determining consolidated adjusted operating income.

(2)  Adjusted EPS is calculated by dividing adjusted income attributable to CVS Health by the Company's weighted average diluted shares outstanding. The Company defines adjusted income attributable to CVS Health as net income attributable to CVS Health (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance, such as gains/losses on divestitures, certain legal settlements, losses on assets held for sale, acquisition-related integration costs, acquisition purchase price adjustments outside of the acquisition accounting measurement period and the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health. See "Non-GAAP Financial Information" earlier in this press release for additional information regarding the items excluded from net income attributable to CVS Health in determining adjusted income attributable to CVS Health.

(3)  Medical benefit ratio is calculated as benefit costs divided by premium revenues and represents the percentage of premium revenues spent on medical benefits for the Company's insured members. Management uses MBR to assess the underlying business performance and underwriting of its insurance products, understand variances between actual results and expected results and identify trends in period-over-period results. MBR provides management and investors with information useful in assessing the operating results of the Company's insured Health Care Benefits products.

(4)  Medical membership represents the number of members covered by the Company's insured and ASC medical products and related services at a specified point in time. Management uses this metric to understand variances between actual medical membership and expected amounts as well as trends in period-over-period results. This metric provides management and investors with information useful in understanding the impact of medical membership on segment total revenues and operating results.

(5)  Total pharmacy claims processed represents the number of prescription claims processed through the Company's pharmacy benefits manager and dispensed by either its retail network pharmacies or its own mail and specialty pharmacies. Prescriptions filled represents the number of prescriptions dispensed through the Retail/LTC segment's pharmacies. Management uses these metrics to understand variances between actual claims processed and prescriptions dispensed, respectively, and expected amounts as well as trends in period-over-period results. These metrics provide management and investors with information useful in understanding the impact of pharmacy claim volume and prescription volume, respectively, on segment total revenues and operating results.

(6)  Includes an adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription. 

(7)  Pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company's retail pharmacies and long-term care pharmacies, but excluding Maintenance Choice activity, which is included within the mail choice category. Maintenance Choice permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS pharmacy retail store for the same price as mail order.

(8)  Mail choice is defined as claims filled at a Pharmacy Services mail order facility, which includes specialty mail claims inclusive of Specialty Connect® claims picked up at a retail pharmacy, as well as prescriptions filled at the Company's retail pharmacies under the Maintenance Choice program. 

(9)  Days claims payable is calculated by dividing the health care costs payable at the end of each quarter by the average health care costs per day during such quarter. Management and investors use this metric as an indicator of the adequacy of the Company's health care costs payable liability at the end of each quarter and as an indicator of changes in such adequacy over time.

(10)  Gross profit is calculated as the segment's total revenues less its cost of products sold. Gross margin is calculated by dividing the segment's gross profit by its total revenues and represents the percentage of total revenues that remains after incurring direct costs associated with the segment's products sold and services provided. Gross margin provides investors with information that may be useful in assessing the operating results of the Company's Pharmacy Services and Retail/LTC segments.

(11)  Generic dispensing rate is calculated by dividing the segment's generic drug prescriptions processed or filled by its total prescriptions processed or filled. Management uses this metric to evaluate the effectiveness of the business at encouraging the use of generic drugs when they are available and clinically appropriate, which aids in decreasing costs for client members and retail customers. This metric provides management and investors with information useful in understanding trends in segment total revenues and operating results. 

(12)  Same store sales and prescription volume represent the change in revenues and prescriptions filled in the Company's retail pharmacy stores that have been operating for greater than one year, expressed as a percentage that indicates the increase or decrease relative to the comparable prior period. Same store metrics exclude revenues from MinuteClinic and revenues and prescriptions from LTC operations. Management uses these metrics to evaluate the performance of existing stores on a comparable basis and to inform future decisions regarding existing stores and new locations. Same-store metrics provide management and investors with information useful in understanding the portion of current revenues and prescriptions resulting from organic growth in existing locations versus the portion resulting from opening new stores.

CVS Health logo (PRNewsFoto/CVS Health)

 

SOURCE CVS Health Corporation


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