USA – According to an earnings report filed, CVS Health has outperformed the industry by earning US$2.3 billion in profit in the first quarter of this year, a slight increase over the US$2.2 billion profit earned during the same period last year.
In addition, revenue increased 11.2% during that time period, reaching US$76.8 billion during the quarter compared to US$69.1 billion in Q1 2021.
Operating income decreased 2.4%in the quarter, primarily due to a pending legal settlement with the state of Florida to settle all opioid claims against the company for US$484 million, which will be paid over a period of 18 years.
The decline in operating income was offset in part by an increase in adjusted operating income. Adjusted operating income increased 6.6% mostly because of increased prescription and front store volume, including the sale of COVID-19 over-the-counter test kits.
COVID-19 vaccinations in the company’s retail segment, as well as growth in the company’s specialty pharmacy, had an impact.
CVS Health provided a breakdown of its business segments, revealing that revenues at Aetna, the company’s health plan, increased 12.8% to US$23.1 billion.
As of March 31, medical membership stood at approximately 24.5 million, an increase of approximately 674,000 members since December, reflecting increases across all product lines.
Caremark’s revenue increased 8.6% to US$39.4 billion, contributing to CVS Health’s pharmacy services segment’s strong performance.
This was attributed to increased pharmacy claims volume, growth in specialty pharmacy, and brand inflation, which CVS said was offset in part by continued client price improvements.
Adjusted operating income for its pharmacy services increased 8.6% in the quarter, which the company attributed to improved purchasing economics, including increased contributions from its group purchasing organization and specialty pharmacy products and services.
Total pharmacy claims processed increased 5.8% on a 30-day equivalent basis in the first quarter, primarily due to net new business, increased utilization, and the impact of a weaker cough, cold, and flu season in 2021. Prescriptions filled increased 5.1%.
Retail revenue increased 9.2% in the quarter due to increased prescription and front-of-store volume, including the sale of COVID-19 over-the-counter test kits.
These increases were partially offset by the recent introduction of generics, lower COVID-19 diagnostic testing, and continued pressure on pharmacy reimbursement. The retail segment’s adjusted operating income increased 15.1% in the quarter.
The increase in revenue projections is due, in part, to CVS’s strategy of investing in high-growth areas of the business and introducing new health products, services, and technologies, which CVS claims will increase shareholder value.
The company will concentrate on a number of priorities aimed at enhancing this strategic growth, such as improving primary care delivery capabilities.
According to CVS, this will direct consumers across the care continuum to sites and providers that meet their needs – both in person and virtually.
This strategy is intended to supplement the traditional provider network while also expanding the use of risk-based arrangements and value-based care.
CVS will also focus on optimizing its retail portfolio to serve as community health destinations by refocusing its store footprint on advanced primary care centers, enhanced HealthHUB locations, and traditional CVS Pharmacy stores.
The company announced in November that it would close approximately 900 stores over the next three years in order to reduce store density.