CVS Health Shows Growth Through PBM Partnerships

One day after Aetna released its first quarter earnings report, CVS followed suit with a strong open to 2018. 

CVS Health Corp. released its first-quarter earnings report Wednesday, showing an increase in net revenues by 2.6%, totalling $45.7 billion, along with retail and long term care same store prescription volume growth of 8.5%.

Notably, CVS saw revenues from its pharmacy services grow by 3.2%, totalling $32.2 billion, mostly due to growth in specialty claim volume and brand inflation. The organization's GAAP diluted earnings per share from continuing operations was $0.98, while adjusted earnings per share reached $1.48, reflecting an additional adjustment for net interest expense from the proposed Aetna acquisition.

CVS' earnings report was released one day after Aetna's, highlighting the coordinated approach between the two healthcare giants ahead of their proposed merger. During a conference call with investors, Larry Merlo, CEO of CVS Health, said the organization expects the deal with Aetna to close during the second half of this year.

Related: CVS Health Effort to Acquire Aetna Shakes Up Traditional Health Silos

"We generated solid results in the quarter, benefiting from higher prescription volumes within our retail pharmacy business and a lower effective income tax rate," Merlo said in a statement. "At the same time, we continue to focus on long-term growth initiatives and to invest in process improvements and technology enhancements that will position us well to expand our reach in providing access to high-quality and more affordable care."

Below are highlights from the CVS Health first quarter earnings report:

• Net cash from operating activities totalled $2.4 billion.

• Quarterly revenues in the retail and long term care division increased by 5.6%, totalling $20.4 billion.

• This improvement was due to continued adoption of patient care programs, partnerships with PBMs and inclusion of additional Medicare Part D networks.

• Same store sales increased 5.8%, slightly above internal expectations, and pharmacy same store sales increased 7.3% during Q1.

• Seasonal adjusted scripts grew by 4 million year-over-year due to the strong flu season.  

• For the full year guidance, CVS expects GAAP operating profit growth from a loss of 0.25% to a gain of 2.75%.

• Similarly, the organization projects an adjusted operating profit growth from a loss of 1.5% to a gain of 1.5%.

• GAAP diluted earnings per share from continuing operations are expected to rise from $5.11 to $5.32.

• Reflecting an additional adjustment for net interest expense from the proposed Aetna acquisition, adjusted earnings per share are expected to rise from $6.87 to $7.08.