WOONSOCKET, R.I., May 4, 2021 /PRNewswire/ -- CVS Health
Corporation (NYSE: CVS) today announced operating results for the
three months ended March 31, 2021.
First Quarter Highlights:
- Total revenues increased to $69.1
billion, up 3.5% compared to prior year
- GAAP diluted EPS of $1.68, up
9.8% compared to prior year
- Adjusted EPS of $2.04, up 6.8%
compared to prior year
- Generated cash flow from operations of $2.9 billion
2021 Full Year Guidance:
- Raised GAAP diluted EPS guidance range to $6.24 to $6.36 from
$6.06 to $6.22
- Raised Adjusted EPS guidance range to $7.56 to $7.68 from
$7.39 to $7.55
- Confirmed cash flow from operations guidance range of
$12.0 billion to $12.5 billion
"We delivered strong first quarter results and improved our
outlook for the year," said CVS Health President and CEO
Karen S. Lynch. "We continue to
execute on our strategy while simultaneously managing through a
pandemic, helping the country on the road to recovery. Our
unmatched assets and strength of our brand are driving results as
we work toward improving care delivery and driving growth."
_____________________________________________
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 11 and endnotes
beginning on page 21 for explanations of non-GAAP financial
measures presented in this press release. See pages 12, 13 and 20
for reconciliations of each non-GAAP financial measure used in this
release to the most directly comparable GAAP financial measure.
Consolidated First Quarter Results
|
Three Months
Ended
March
31,
|
In millions, except per share amounts
|
2021
|
|
2020
|
|
Change
|
Total
revenues
|
$
|
69,097
|
|
|
$
|
66,755
|
|
|
$
|
2,342
|
|
Operating
income
|
3,577
|
|
|
3,458
|
|
|
119
|
|
Adjusted operating
income (1)
|
4,205
|
|
|
4,113
|
|
|
92
|
|
Net income
|
2,224
|
|
|
2,012
|
|
|
212
|
|
Diluted earnings per
share
|
$
|
1.68
|
|
|
$
|
1.53
|
|
|
$
|
0.15
|
|
Adjusted EPS
(2)
|
$
|
2.04
|
|
|
$
|
1.91
|
|
|
$
|
0.13
|
|
Enterprise
prescriptions (3) (4)
|
738.4
|
|
|
746.6
|
|
|
(8.2)
|
|
- Total revenues increased 3.5% for the three months ended
March 31, 2021 compared to the prior
year driven by growth across all segments.
- Operating income and adjusted operating income increased 3.4%
and 2.2%, respectively, for the three months ended March 31, 2021 compared to the prior year. The
increase in both operating income and adjusted operating income was
primarily due to growth in the Pharmacy Services and Health Care
Benefits segments, partially offset by declines in the Retail/LTC
segment.
- Interest expense decreased 10.4% for the three months ended
March 31, 2021 compared to the prior
year primarily due to lower debt in the three months ended
March 31, 2021.
- The effective income tax rate was 25.1% for the three months
ended March 31, 2021 compared to
27.6% for the three months ended March 31,
2020. The decrease in the effective income tax rate was
primarily due to the repeal of the non-deductible health insurer
fee ("HIF") for 2021.
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
months ended March 31, 2021 and 2020 were as follows:
|
Three Months
Ended
March
31,
|
In millions, except
percentages
|
2021
|
|
2020
|
|
Change
|
Total
revenues
|
$
|
20,483
|
|
$
|
19,198
|
|
$
|
1,285
|
Adjusted operating
income (1)
|
1,782
|
|
1,491
|
|
291
|
Medical benefit ratio
("MBR") (5)
|
83.2%
|
|
82.4%
|
|
0.8%
|
Medical membership
(6)
|
23.6
|
|
23.5
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
- Total revenues increased 6.7% for the three months ended
March 31, 2021 compared to the prior
year primarily driven by growth in the Government Services
business, partially offset by the unfavorable impact of the repeal
of the HIF for 2021.
- Adjusted operating income increased 19.5% for the three months
ended March 31, 2021 compared to the
prior year. The increase in adjusted operating income was primarily
driven by improved performance in the Government Services business
and the impact of cost savings initiatives.
- The MBR increased 80 basis points for the three months ended
March 31, 2021 compared to the prior
year primarily driven by the repeal of the HIF for 2021 and lower
Medicare risk adjustment revenue. These increases were partially
offset by improved performance in the Company's Medicaid products
and favorable development of prior-years' health care cost
estimates.
- Medical membership as of March 31,
2021 of 23.6 million increased 214,000 members compared with
December 31, 2020, primarily
reflecting increases in Medicare and Medicaid products, partially
offset by a decline in Commercial products.
- The segment experienced favorable development of prior-years'
health care cost estimates in its Commercial and Government
Services businesses during the three months ended March 31, 2021, primarily attributable to fourth
quarter 2020 performance.
- Prior years' health care costs payable estimates developed
favorably by $652 million during the
three months ended March 31, 2021.
This development is reported on a basis consistent with the prior
years' development reported in the health care costs payable table
in the Company's annual audited financial statements and does not
directly correspond to an increase in 2021 operating results.
See the supplemental information on page 15 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 months ended March 31, 2021 and 2020
were as follows:
|
Three Months
Ended
March
31,
|
In millions
|
2021
|
|
2020
|
|
Change
|
Total
revenues
|
$
|
36,321
|
|
|
$
|
34,983
|
|
|
$
|
1,338
|
|
Adjusted operating
income (1)
|
1,507
|
|
|
1,181
|
|
|
326
|
|
Total pharmacy claims
processed (4) (7)
|
535.9
|
|
|
541.4
|
|
|
(5.5)
|
|
Pharmacy network
(8)
|
455.4
|
|
|
461.1
|
|
|
(5.7)
|
|
Mail choice
(9)
|
80.5
|
|
|
80.3
|
|
|
0.2
|
|
- Total revenues increased 3.8% for the three months ended
March 31, 2021 compared to the prior
year primarily driven by net new business, growth in specialty
pharmacy, product mix and brand inflation, partially offset by
continued price compression and a weak cough, cold and flu
season.
- Adjusted operating income increased 27.6% for the three months
ended March 31, 2021 compared to the
prior year primarily driven by improved purchasing economics and
growth in specialty pharmacy, partially offset by continued price
compression.
- Total pharmacy claims processed decreased 1.0% on a 30-day
equivalent basis for the three months ended March 31, 2021 compared to the prior year
primarily driven by a weak cough, cold and flu season, partially
offset by net new business in the three months ended March 31, 2021.
See the supplemental information on page 17 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 services
to long-term care facilities. The segment results for the three
months ended March 31, 2021 and 2020 were as follows:
|
Three Months
Ended
March
31,
|
In millions
|
2021
|
|
2020
|
|
Change
|
Total
revenues
|
$
|
23,274
|
|
|
$
|
22,749
|
|
|
$
|
525
|
|
Adjusted operating
income (1)
|
1,394
|
|
|
1,902
|
|
|
(508)
|
|
Prescriptions filled
(4) (7)
|
375.4
|
|
|
375.1
|
|
|
0.3
|
|
- Total revenues increased 2.3% for the three months ended
March 31, 2021 compared to the prior
year primarily driven by increased COVID-19 diagnostic testing and
vaccinations and brand inflation. These increases were partially
offset by lower front store revenues, primarily due to the
acceleration of demand in March 2020
as consumers prepared for the COVID-19 pandemic and a weak cough,
cold and flu season; continued reimbursement pressure and the
impact of recent generic introductions.
- Adjusted operating income decreased 26.7% for the three months
ended March 31, 2021 compared to the
prior year primarily driven by continued reimbursement pressure and
the lower front store volume described above. These decreases were
partially offset by increased COVID-19 diagnostic testing in the
three months ended March 31,
2021.
- Prescriptions filled remained relatively consistent on a 30-day
equivalent basis for the three months ended March 31, 2021 compared to the prior year, with
COVID-19 vaccinations and the continued adoption of patient care
programs largely offset by the impact of a weak cough, cold and flu
season, the acceleration of demand in March
2020 as consumers prepared for the COVID-19 pandemic and
decreased long-term care prescription volume.
See the supplemental information on page 18 for additional
information regarding the performance of the Retail/LTC
segment.
2021 Full Year Guidance
The Company raised its full year 2021 GAAP diluted EPS guidance
range to $6.24 to $6.36 from $6.06 to
$6.22 and its full year 2021 Adjusted
EPS guidance range to $7.56 to
$7.68 from $7.39 to $7.55 and confirmed its full year 2021 cash
flow from operations guidance range of $12.0
billion to $12.5 billion.
The adjustments between GAAP diluted EPS and Adjusted EPS
include, as applicable, adding back amortization of intangible
assets, as well as integration costs related to the Company's
acquisition (the "Aetna Acquisition") of Aetna Inc. ("Aetna").
Teleconference and Webcast
The Company will be holding a conference call today for
investors at 8:00 a.m. (Eastern Time)
to discuss its first 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
We are a diversified health services company with more than
300,000 employees united around a common purpose of helping people
on their path to better health. In an increasingly connected and
digital world, we are meeting people wherever they are and changing
health care to meet their needs. Built on a foundation of unmatched
community presence, our diversified model makes us an integral part
of people's everyday health. From our innovative new services at
HealthHUBTM locations, to transformative programs that
help manage chronic conditions, we are making health care more
accessible, more affordable and simply better. Learn more about how
we're transforming health at www.cvshealth.com.
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 heading "2021 Full Year
Guidance" 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 for a number of
reasons as 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 and our Quarterly Report on Form 10-Q for the
quarterly period ended March 31,
2021.
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
March
31,
|
In millions, except per share amounts
|
2021
|
|
2020
|
Revenues:
|
|
|
|
Products
|
$
|
47,387
|
|
|
$
|
47,003
|
|
Premiums
|
18,960
|
|
|
17,640
|
|
Services
|
2,453
|
|
|
1,950
|
|
Net investment
income
|
297
|
|
|
162
|
|
Total
revenues
|
69,097
|
|
|
66,755
|
|
Operating
costs:
|
|
|
|
Cost of products
sold
|
40,894
|
|
|
40,347
|
|
Benefit
costs
|
15,704
|
|
|
14,387
|
|
Operating
expenses
|
8,922
|
|
|
8,563
|
|
Total operating
costs
|
65,520
|
|
|
63,297
|
|
Operating
income
|
3,577
|
|
|
3,458
|
|
Interest
expense
|
657
|
|
|
733
|
|
Other
income
|
(50)
|
|
|
(54)
|
|
Income before income
tax provision
|
2,970
|
|
|
2,779
|
|
Income tax
provision
|
746
|
|
|
767
|
|
Net income
|
2,224
|
|
|
2,012
|
|
Net income
attributable to noncontrolling interests
|
(1)
|
|
|
(5)
|
|
Net income
attributable to CVS Health
|
$
|
2,223
|
|
|
$
|
2,007
|
|
|
|
|
|
Net income per share
attributable to CVS Health:
|
|
|
|
Basic
|
$
|
1.69
|
|
|
$
|
1.54
|
|
Diluted
|
$
|
1.68
|
|
|
$
|
1.53
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
1,313
|
|
|
1,306
|
|
Diluted
|
1,322
|
|
|
1,312
|
|
Dividends declared
per share
|
$
|
0.50
|
|
|
$
|
0.50
|
|
CVS HEALTH
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
In millions
|
March 31,
2021
|
|
December
31,
2020
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
5,598
|
|
|
$
|
7,854
|
|
Investments
|
3,190
|
|
|
3,000
|
|
Accounts receivable,
net
|
23,855
|
|
|
21,742
|
|
Inventories
|
17,618
|
|
|
18,496
|
|
Other current
assets
|
5,458
|
|
|
5,277
|
|
Total current
assets
|
55,719
|
|
|
56,369
|
|
Long-term
investments
|
21,025
|
|
|
20,812
|
|
Property and
equipment, net
|
12,611
|
|
|
12,606
|
|
Operating lease
right-of-use assets
|
20,542
|
|
|
20,729
|
|
Goodwill
|
79,552
|
|
|
79,552
|
|
Intangible assets,
net
|
30,639
|
|
|
31,142
|
|
Separate accounts
assets
|
4,692
|
|
|
4,881
|
|
Other
assets
|
4,826
|
|
|
4,624
|
|
Total
assets
|
$
|
229,606
|
|
|
$
|
230,715
|
|
|
|
|
|
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
10,804
|
|
|
$
|
11,138
|
|
Pharmacy claims and
discounts payable
|
16,282
|
|
|
15,795
|
|
Health care costs
payable
|
8,272
|
|
|
7,936
|
|
Policyholders'
funds
|
4,440
|
|
|
4,270
|
|
Accrued
expenses
|
14,312
|
|
|
14,243
|
|
Other insurance
liabilities
|
1,534
|
|
|
1,557
|
|
Current portion of
operating lease liabilities
|
1,786
|
|
|
1,638
|
|
Short-term
debt
|
252
|
|
|
—
|
|
Current portion of
long-term debt
|
2,422
|
|
|
5,440
|
|
Total current
liabilities
|
60,104
|
|
|
62,017
|
|
Long-term operating
lease liabilities
|
18,587
|
|
|
18,757
|
|
Long-term
debt
|
59,270
|
|
|
59,207
|
|
Deferred income
taxes
|
6,610
|
|
|
6,794
|
|
Separate accounts
liabilities
|
4,692
|
|
|
4,881
|
|
Other long-term
insurance liabilities
|
6,870
|
|
|
7,007
|
|
Other long-term
liabilities
|
2,309
|
|
|
2,351
|
|
Total
liabilities
|
158,442
|
|
|
161,014
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
Common stock and
capital surplus
|
46,727
|
|
|
46,513
|
|
Treasury
stock
|
(28,102)
|
|
|
(28,178)
|
|
Retained
earnings
|
51,203
|
|
|
49,640
|
|
Accumulated other
comprehensive income
|
1,022
|
|
|
1,414
|
|
Total CVS Health
shareholders' equity
|
70,850
|
|
|
69,389
|
|
Noncontrolling
interests
|
314
|
|
|
312
|
|
Total shareholders'
equity
|
71,164
|
|
|
69,701
|
|
Total liabilities and
shareholders' equity
|
$
|
229,606
|
|
|
$
|
230,715
|
|
CVS HEALTH
CORPORATION
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Three Months
Ended
March
31,
|
In millions
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Cash receipts from
customers
|
$
|
66,487
|
|
|
$
|
63,751
|
|
Cash paid for
inventory and prescriptions dispensed by retail network
pharmacies
|
(39,171)
|
|
|
(36,969)
|
|
Insurance benefits
paid
|
(15,456)
|
|
|
(14,303)
|
|
Cash paid to other
suppliers and employees
|
(8,270)
|
|
|
(8,187)
|
|
Interest and
investment income received
|
222
|
|
|
206
|
|
Interest
paid
|
(876)
|
|
|
(1,128)
|
|
Income taxes
paid
|
(44)
|
|
|
(65)
|
|
Net cash provided by
operating activities
|
2,892
|
|
|
3,305
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Proceeds from sales
and maturities of investments
|
2,177
|
|
|
1,288
|
|
Purchases of
investments
|
(3,131)
|
|
|
(1,535)
|
|
Purchases of property
and equipment
|
(829)
|
|
|
(742)
|
|
Acquisitions (net of
cash acquired)
|
(84)
|
|
|
(613)
|
|
Other
|
—
|
|
|
5
|
|
Net cash used in
investing activities
|
(1,867)
|
|
|
(1,597)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Net borrowings of
short-term debt
|
252
|
|
|
255
|
|
Proceeds from issuance
of long-term debt
|
—
|
|
|
3,946
|
|
Repayments of
long-term debt
|
(3,049)
|
|
|
(1,008)
|
|
Dividends
paid
|
(656)
|
|
|
(652)
|
|
Proceeds from exercise
of stock options
|
212
|
|
|
154
|
|
Payments for taxes
related to net share settlement of equity awards
|
(3)
|
|
|
(16)
|
|
Other
|
—
|
|
|
(4)
|
|
Net cash provided by
(used in) financing activities
|
(3,244)
|
|
|
2,675
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
(2,219)
|
|
|
4,383
|
|
Cash, cash
equivalents and restricted cash at the beginning of the
period
|
8,130
|
|
|
5,954
|
|
Cash, cash
equivalents and restricted cash at the end of the period
|
$
|
5,911
|
|
|
$
|
10,337
|
|
CVS HEALTH
CORPORATION
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Three Months
Ended
March
31,
|
In millions
|
2021
|
|
2020
|
Reconciliation of net
income to net cash provided by operating activities:
|
|
|
|
Net income
|
$
|
2,224
|
|
|
$
|
2,012
|
|
Adjustments required
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
1,126
|
|
|
1,086
|
|
Stock-based
compensation
|
87
|
|
|
96
|
|
Deferred income taxes
and other noncash items
|
(166)
|
|
|
(35)
|
|
Change in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
Accounts receivable,
net
|
(2,093)
|
|
|
(2,715)
|
|
Inventories
|
879
|
|
|
541
|
|
Other
assets
|
(223)
|
|
|
(1,119)
|
|
Accounts payable and
pharmacy claims and discounts payable
|
576
|
|
|
1,928
|
|
Health care costs
payable and other insurance liabilities
|
294
|
|
|
139
|
|
Other
liabilities
|
188
|
|
|
1,372
|
|
Net cash provided by
operating activities
|
$
|
2,892
|
|
|
$
|
3,305
|
|
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.
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:
- The Company's acquisition activities have resulted in the
recognition of intangible assets as required under the acquisition
method of accounting which consist primarily of trademarks,
customer contracts/relationships, covenants not to compete,
technology, provider networks and value of business acquired.
Definite-lived intangible assets are amortized over their estimated
useful lives and are tested for impairment when events indicate
that the carrying value may not be recoverable. The amortization of
intangible assets is reflected in the Company's unaudited GAAP
condensed consolidated statements of operations in operating
expenses within each segment. Although intangible assets contribute
to the Company's revenue generation, the amortization of intangible
assets does not directly relate to the underwriting of the
Company's insurance products, the services performed for the
Company's customers or the sale of the Company's products or
services. Additionally, intangible asset amortization expense
typically fluctuates based on the size and timing of the Company's
acquisition activity. Accordingly, the Company believes excluding
the amortization of intangible assets enhances the Company's and
investors' ability to compare the Company's past financial
performance with its current performance and to analyze underlying
business performance and trends. Intangible asset amortization
excluded from the related non-GAAP financial measure represents the
entire amount recorded within the Company's GAAP financial
statements, and the revenue generated by the associated intangible
assets has not been excluded from the related non-GAAP financial
measure. Intangible asset amortization is excluded from the related
non-GAAP financial measure because the amortization, unlike the
related revenue, is not affected by operations of any particular
period unless an intangible asset becomes impaired or the estimated
useful life of an intangible asset is revised.
- During the three months ended March 31,
2021 and 2020, acquisition-related integration costs relate
to the Aetna Acquisition. The acquisition-related integration costs
are reflected in the Company's unaudited GAAP condensed
consolidated statements of operations in operating expenses within
the Corporate/Other segment.
- The corresponding tax benefit or expense related to the items
excluded from adjusted income attributable to CVS Health and
Adjusted EPS above. The nature of each non-GAAP adjustment is
evaluated to determine whether a discrete adjustment should be made
to the adjusted income tax provision.
See endnotes (1) and (2) on page 21 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 12, 13 and 20.
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
March 31, 2021
|
In millions
|
Health
Care
Benefits
|
|
Pharmacy
Services
|
|
Retail/
LTC
|
|
Corporate/
Other
|
|
Intersegment
Eliminations
|
|
Consolidated
Totals
|
Operating income
(loss) (GAAP measure)
|
$
|
1,380
|
|
|
$
|
1,452
|
|
|
$
|
1,265
|
|
|
$
|
(345)
|
|
|
$
|
(175)
|
|
|
$
|
3,577
|
|
Amortization of
intangible assets
|
402
|
|
|
55
|
|
|
129
|
|
|
1
|
|
|
—
|
|
|
587
|
|
Acquisition-related
integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
Adjusted operating
income (loss) (1)
|
$
|
1,782
|
|
|
$
|
1,507
|
|
|
$
|
1,394
|
|
|
$
|
(303)
|
|
|
$
|
(175)
|
|
|
$
|
4,205
|
|
|
Three Months Ended
March 31, 2020
|
In millions
|
Health
Care
Benefits
|
|
Pharmacy
Services
|
|
Retail/
LTC
|
|
Corporate/
Other
|
|
Intersegment
Eliminations
|
|
Consolidated
Totals
|
Operating income
(loss) (GAAP measure)
|
$
|
1,095
|
|
|
$
|
1,114
|
|
|
$
|
1,780
|
|
|
$
|
(355)
|
|
|
$
|
(176)
|
|
|
$
|
3,458
|
|
Amortization of
intangible assets
|
396
|
|
|
67
|
|
|
122
|
|
|
1
|
|
|
—
|
|
|
586
|
|
Acquisition-related
integration costs
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
69
|
|
Adjusted operating
income (loss) (1)
|
$
|
1,491
|
|
|
$
|
1,181
|
|
|
$
|
1,902
|
|
|
$
|
(285)
|
|
|
$
|
(176)
|
|
|
$
|
4,113
|
|
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
March 31,
2021
|
|
Three Months
Ended
March 31,
2020
|
In millions, except per share amounts
|
Total
Company
|
|
Per Common
Share
|
|
Total
Company
|
|
Per
Common
Share
|
Net income
attributable to CVS Health (GAAP measure)
|
$
|
2,223
|
|
|
$
|
1.68
|
|
|
$
|
2,007
|
|
|
$
|
1.53
|
|
Amortization of
intangible assets
|
587
|
|
|
0.44
|
|
|
586
|
|
|
0.45
|
|
Acquisition-related
integration costs
|
41
|
|
|
0.03
|
|
|
69
|
|
|
0.05
|
|
Tax impact of non-GAAP
adjustments
|
(154)
|
|
|
(0.11)
|
|
|
(160)
|
|
|
(0.12)
|
|
Adjusted income
attributable to CVS Health (2)
|
$
|
2,697
|
|
|
$
|
2.04
|
|
|
$
|
2,502
|
|
|
$
|
1.91
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
|
|
1,322
|
|
|
|
|
1,312
|
|
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
|
|
Consolidated
Totals
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2021
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
20,483
|
|
|
$
|
36,321
|
|
|
$
|
23,274
|
|
|
$
|
135
|
|
|
$
|
(11,116)
|
|
|
$
|
69,097
|
|
Adjusted operating
income (loss) (1)
|
1,782
|
|
|
1,507
|
|
|
1,394
|
|
|
(303)
|
|
|
(175)
|
|
|
4,205
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
19,198
|
|
|
34,983
|
|
|
22,749
|
|
|
90
|
|
|
(10,265)
|
|
|
66,755
|
|
Adjusted operating
income (loss) (1)
|
1,491
|
|
|
1,181
|
|
|
1,902
|
|
|
(285)
|
|
|
(176)
|
|
|
4,113
|
|
_____________________________________________
|
(a)
|
Total revenues of the
Pharmacy Services segment include approximately $3.4 billion of
retail co-payments in each of the three-month periods ended
March 31, 2021 and 2020.
|
Supplemental
Information
|
(Unaudited)
|
|
Health Care
Benefits Segment
|
|
The following table
summarizes the Health Care Benefits segment's performance for the
respective periods:
|
|
|
Three Months
Ended
March
31,
|
|
Change
|
In millions, except percentages and basis
points ("bps")
|
2021
|
|
2020
|
|
$
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
Premiums
|
$
|
18,942
|
|
$
|
17,621
|
|
$
|
1,321
|
|
|
7.5
|
%
|
Services
|
1,393
|
|
1,484
|
|
(91)
|
|
|
(6.1)
|
%
|
Net investment
income
|
148
|
|
93
|
|
55
|
|
|
59.1
|
%
|
Total
revenues
|
20,483
|
|
19,198
|
|
1,285
|
|
|
6.7
|
%
|
Benefit
costs
|
15,757
|
|
14,516
|
|
1,241
|
|
|
8.5
|
%
|
MBR (Benefit costs as
a % of premium revenues) (5)
|
83.2%
|
|
82.4%
|
|
80
|
|
bps
|
Operating
expenses
|
$
|
3,346
|
|
$
|
3,587
|
|
$
|
(241)
|
|
|
(6.7)
|
%
|
Operating expenses as
a % of total revenues
|
16.3%
|
|
18.7%
|
|
|
|
|
Operating
income
|
$
|
1,380
|
|
$
|
1,095
|
|
$
|
285
|
|
|
26.0
|
%
|
Operating income as a
% of total revenues
|
6.7%
|
|
5.7%
|
|
|
|
|
Adjusted operating
income (1)
|
$
|
1,782
|
|
$
|
1,491
|
|
$
|
291
|
|
|
19.5
|
%
|
Adjusted operating
income as a % of total revenues
|
8.7%
|
|
7.8%
|
|
|
|
|
Premium revenues (by
business):
|
|
|
|
|
|
|
|
Government
|
$
|
13,917
|
|
$
|
12,469
|
|
$
|
1,448
|
|
|
11.6
|
%
|
Commercial
|
5,025
|
|
5,152
|
|
(127)
|
|
|
(2.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
summarizes the Health Care Benefits segment's medical membership
for the respective periods:
|
|
|
March 31,
2021
|
|
December 31,
2020
|
|
March 31,
2020
|
In thousands
|
Insured
|
|
ASC
|
|
Total
|
|
Insured
|
|
ASC
|
|
Total
|
|
Insured
|
|
ASC
|
|
Total
|
Medical membership:
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
3,201
|
|
|
13,584
|
|
|
16,785
|
|
|
3,258
|
|
|
13,644
|
|
|
16,902
|
|
|
3,372
|
|
|
14,206
|
|
|
17,578
|
|
Medicare
Advantage
|
2,874
|
|
|
—
|
|
|
2,874
|
|
|
2,705
|
|
|
—
|
|
|
2,705
|
|
|
2,584
|
|
|
—
|
|
|
2,584
|
|
Medicare
Supplement
|
1,146
|
|
|
—
|
|
|
1,146
|
|
|
1,082
|
|
|
—
|
|
|
1,082
|
|
|
913
|
|
|
—
|
|
|
913
|
|
Medicaid
|
2,184
|
|
|
637
|
|
|
2,821
|
|
|
2,100
|
|
|
623
|
|
|
2,723
|
|
|
1,835
|
|
|
552
|
|
|
2,387
|
|
Total medical
membership
|
9,405
|
|
|
14,221
|
|
|
23,626
|
|
|
9,145
|
|
|
14,267
|
|
|
23,412
|
|
|
8,704
|
|
|
14,758
|
|
|
23,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
membership information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare Prescription
Drug Plan (standalone)
|
5,694
|
|
|
|
|
|
|
5,490
|
|
|
|
|
|
|
5,624
|
|
Supplemental
Information
|
(Unaudited)
|
|
The following table
shows the components of the change in health care costs payable
during the three months ended March 31, 2021 and 2020:
|
|
|
Three Months
Ended
March
31,
|
In millions
|
2021
|
|
2020
|
Health care costs
payable, beginning of period
|
$
|
7,936
|
|
|
$
|
6,879
|
|
Less: Reinsurance
recoverables
|
10
|
|
|
5
|
|
Health care costs
payable, beginning of period, net
|
7,926
|
|
|
6,874
|
|
Acquisition
|
—
|
|
|
412
|
|
Add: Components of
incurred health care costs
|
|
|
|
Current
year
|
16,291
|
|
|
14,764
|
|
Prior years
(a)
|
(652)
|
|
|
(464)
|
|
Total incurred health
care costs (b)
|
15,639
|
|
|
14,300
|
|
Less: Claims
paid
|
|
|
|
Current
year
|
9,538
|
|
|
8,773
|
|
Prior years
|
5,767
|
|
|
5,242
|
|
Total claims
paid
|
15,305
|
|
|
14,015
|
|
Add: Premium
deficiency reserve
|
7
|
|
|
10
|
|
Health care costs
payable, end of period, net
|
8,267
|
|
|
7,581
|
|
Add: Reinsurance
recoverables
|
5
|
|
|
4
|
|
Health care costs
payable, end of period
|
$
|
8,272
|
|
|
$
|
7,585
|
|
_____________________________________________
|
(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 three months ended March 31, 2021 and 2020 in
the table above exclude (i) $7 million and $10 million,
respectively, related to a premium deficiency reserve related to
the Company's Medicaid products, (ii) $13 million and $9 million,
respectively, of benefit costs recorded in the Health Care Benefits
segment that are included in other insurance liabilities on the
Company's unaudited condensed consolidated balance sheets and (iii)
$45 million and $68 million, respectively, of benefit costs
recorded in the Corporate/Other segment that are included in other
insurance liabilities on the Company's unaudited condensed
consolidated balance sheets.
|
The following table
summarizes the Health Care Benefits segment's days claims payable
for the respective periods:
|
|
|
March 31,
2021
|
|
December 31,
2020
|
|
March 31,
2020
|
Days Claims Payable
(10)
|
48
|
|
48
|
|
48
|
|
|
|
|
|
|
|
|
|
Supplemental
Information
|
(Unaudited)
|
|
Pharmacy Services
Segment
|
|
The following table
summarizes the Pharmacy Services segment's performance for the
respective periods:
|
|
|
Three Months
Ended
March
31,
|
|
Change
|
In millions, except
percentages
|
2021
|
|
2020
|
|
$
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
Products
|
$
|
36,067
|
|
$
|
34,746
|
|
$
|
1,321
|
|
|
3.8
|
%
|
Services
|
254
|
|
237
|
|
17
|
|
|
7.2
|
%
|
Total
revenues
|
36,321
|
|
34,983
|
|
1,338
|
|
|
3.8
|
%
|
Cost of products
sold
|
34,523
|
|
33,503
|
|
1,020
|
|
|
3.0
|
%
|
Gross profit
(11)
|
1,798
|
|
1,480
|
|
318
|
|
|
21.5
|
%
|
Gross margin (Gross
profit as a % of total revenues) (11)
|
5.0%
|
|
4.2%
|
|
|
|
|
Operating
expenses
|
$
|
346
|
|
$
|
366
|
|
$
|
(20)
|
|
|
(5.5)
|
%
|
Operating expenses as
a % of total revenues
|
1.0%
|
|
1.0%
|
|
|
|
|
Operating
income
|
$
|
1,452
|
|
$
|
1,114
|
|
$
|
338
|
|
|
30.3
|
%
|
Operating income as a
% of total revenues
|
4.0%
|
|
3.2%
|
|
|
|
|
Adjusted operating
income (1)
|
$
|
1,507
|
|
$
|
1,181
|
|
$
|
326
|
|
|
27.6
|
%
|
Adjusted operating
income as a % of total revenues
|
4.1%
|
|
3.4%
|
|
|
|
|
Revenues (by
distribution channel):
|
|
|
|
|
|
|
|
Pharmacy network
(8)
|
$
|
21,893
|
|
$
|
21,100
|
|
$
|
793
|
|
|
3.8
|
%
|
Mail choice
(9)
|
14,248
|
|
13,674
|
|
574
|
|
|
4.2
|
%
|
Other
|
180
|
|
209
|
|
(29)
|
|
|
(13.9)
|
%
|
Pharmacy claims
processed: (4) (7)
|
|
|
|
|
|
|
|
Total
|
535.9
|
|
541.4
|
|
(5.5)
|
|
|
(1.0)
|
%
|
Pharmacy network
(8)
|
455.4
|
|
461.1
|
|
(5.7)
|
|
|
(1.2)
|
%
|
Mail choice
(9)
|
80.5
|
|
80.3
|
|
0.2
|
|
|
0.2
|
%
|
Generic dispensing
rate: (4) (12)
|
|
|
|
|
|
|
|
Total
|
88.1%
|
|
89.0%
|
|
|
|
|
Pharmacy network
(8)
|
88.5%
|
|
89.5%
|
|
|
|
|
Mail choice
(9)
|
85.7%
|
|
85.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information
|
(Unaudited)
|
|
Retail/LTC
Segment
|
|
The following table
summarizes the Retail/LTC segment's performance for the respective
periods:
|
|
|
Three Months
Ended
March
31,
|
|
Change
|
In millions, except
percentages
|
2021
|
|
2020
|
|
$
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
Products
|
$
|
22,394
|
|
$
|
22,522
|
|
$
|
(128)
|
|
|
(0.6)
|
%
|
Services
|
834
|
|
227
|
|
607
|
|
|
267.4
|
%
|
Net investment
income
|
46
|
|
—
|
|
46
|
|
|
100.0
|
%
|
Total
revenues
|
23,274
|
|
22,749
|
|
525
|
|
|
2.3
|
%
|
Cost of products
sold
|
17,042
|
|
16,578
|
|
464
|
|
|
2.8
|
%
|
Gross profit
(11)
|
6,232
|
|
6,171
|
|
61
|
|
|
1.0
|
%
|
Gross margin (Gross
profit as a % of total revenues) (11)
|
26.8%
|
|
27.1%
|
|
|
|
|
Operating
expenses
|
$
|
4,967
|
|
$
|
4,391
|
|
$
|
576
|
|
|
13.1
|
%
|
Operating expenses as
a % of total revenues
|
21.3%
|
|
19.3%
|
|
|
|
|
Operating
income
|
$
|
1,265
|
|
$
|
1,780
|
|
$
|
(515)
|
|
|
(28.9)
|
%
|
Operating income as a
% of total revenues
|
5.4%
|
|
7.8%
|
|
|
|
|
Adjusted operating
income (1)
|
$
|
1,394
|
|
$
|
1,902
|
|
$
|
(508)
|
|
|
(26.7)
|
%
|
Adjusted operating
income as a % of total revenues
|
6.0%
|
|
8.4%
|
|
|
|
|
Revenues (by major
goods/service lines):
|
|
|
|
|
|
|
|
Pharmacy
|
$
|
17,885
|
|
$
|
17,355
|
|
$
|
530
|
|
|
3.1
|
%
|
Front Store
|
4,642
|
|
5,208
|
|
(566)
|
|
|
(10.9)
|
%
|
Other
|
701
|
|
186
|
|
515
|
|
|
276.9
|
%
|
Net investment
income
|
46
|
|
—
|
|
46
|
|
|
100.0
|
%
|
Prescriptions filled
(4) (7)
|
375.4
|
|
375.1
|
|
0.3
|
|
|
0.1
|
%
|
Same store sales
increase (decrease): (13)
|
|
|
|
|
|
|
|
Total
|
0.4%
|
|
9.0%
|
|
|
|
|
Pharmacy
|
4.1%
|
|
9.3%
|
|
|
|
|
Front Store
|
(11.4)%
|
|
8.0%
|
|
|
|
|
Prescription volume
(4)
|
1.0%
|
|
9.8%
|
|
|
|
|
Generic dispensing
rate (4) (12)
|
87.4%
|
|
89.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information
|
(Unaudited)
|
|
Corporate/Other
Segment
|
|
The following table
summarizes the Corporate/Other segment's performance for the
respective periods:
|
|
|
Three Months
Ended
March
31,
|
|
Change
|
In millions,
except percentages
|
2021
|
|
2020
|
|
$
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
Premiums
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
(1)
|
|
|
(5.3)
|
%
|
Services
|
14
|
|
|
2
|
|
|
12
|
|
|
600.0
|
%
|
Net investment
income
|
103
|
|
|
69
|
|
|
34
|
|
|
49.3
|
%
|
Total
revenues
|
135
|
|
|
90
|
|
|
45
|
|
|
50.0
|
%
|
Cost of products
sold
|
8
|
|
|
—
|
|
|
8
|
|
|
100.0
|
%
|
Benefit
costs
|
45
|
|
|
68
|
|
|
(23)
|
|
|
(33.8)
|
%
|
Operating
expenses
|
427
|
|
|
377
|
|
|
50
|
|
|
13.3
|
%
|
Operating
loss
|
(345)
|
|
|
(355)
|
|
|
10
|
|
|
2.8
|
%
|
Adjusted operating
loss (1)
|
(303)
|
|
|
(285)
|
|
|
(18)
|
|
|
(6.3)
|
%
|
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 March 31, 2021. 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, 2021
|
|
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)
|
$
|
8,295
|
|
|
$
|
6.24
|
|
|
$
|
8,455
|
|
|
$
|
6.36
|
|
Amortization of
intangible assets
|
2,300
|
|
|
1.73
|
|
|
2,300
|
|
|
1.73
|
|
Acquisition-related
integration costs
|
130
|
|
|
0.10
|
|
|
130
|
|
|
0.10
|
|
Tax impact of non-GAAP
adjustments
|
(675)
|
|
|
(0.51)
|
|
|
(675)
|
|
|
(0.51)
|
|
Adjusted income
attributable to CVS Health (2)
|
$
|
10,050
|
|
|
$
|
7.56
|
|
|
$
|
10,210
|
|
|
$
|
7.68
|
|
|
|
|
|
|
|
|
|
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 acquisition-related integration costs. 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 acquisition-related integration costs 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)
|
Enterprise
prescriptions include prescriptions dispensed through the Company's
retail pharmacies, long-term care pharmacies, and mail order
pharmacies as well as prescription claims managed through our
pharmacy benefits manager, with an elimination for managed
prescription claims filled through CVS Health dispensing channels.
Management uses this metric to analyze the total prescription
volume across the Company including variances between actual
prescriptions 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
prescription volume on total revenues and operating
results.
|
(4)
|
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.
|
(5)
|
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.
|
(6)
|
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.
|
(7)
|
Total pharmacy claims
processed represents the number of prescription claims processed
through our pharmacy benefits manager and dispensed by either our
retail network pharmacies or our 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.
|
(8)
|
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.
|
(9)
|
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.
|
(10)
|
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.
|
(11)
|
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.
|
(12)
|
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.
|
(13)
|
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.
|
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SOURCE CVS Health Corporation