WOONSOCKET, R.I., Feb. 7, 2024 /PRNewswire/ -- CVS Health Corporation (NYSE: CVS) today announced operating results for the three months and year ended December 31, 2023.
FOURTH QUARTER HIGHLIGHTS
KEY FINANCIAL DATA
Three Months Ended December 31, | |||||
In millions, except per share amounts | 2023 | 2022 | Change | ||
Total revenues | $ 93,813 | $ 83,846 | $ 9,967 | ||
Operating income | 3,373 | 3,659 | (286) | ||
Adjusted operating income (1) | 4,227 | 4,079 | 148 | ||
Diluted earnings per share | $ 1.58 | $ 1.77 | $ (0.19) | ||
Adjusted EPS (2) | $ 2.12 | $ 2.04 | $ 0.08 |
FULL-YEAR HIGHLIGHTS
Note: Financial information as of and for the three months and year ended December 31, 2022 throughout this press release has been revised to conform with certain current period financial statement changes as described on page 17.
2024 FULL-YEAR GUIDANCE
Upon finalizing the medical cost trend analysis for the fourth quarter of 2023 and recognizing potential implications for elevated medical cost trends in 2024, the Company has:
CEO Commentary
"With a focus on delivering care and value, we had a strong fourth quarter and full year in 2023 as we build a world of health around every consumer. We will continue to drive affordable access to care when, where, and how people want, while we improve transparency throughout the health care system."
-Karen S. Lynch, CVS Health President and CEO
IN THE SPOTLIGHT |
Announced CVS CostVantageTM, which evolves our pharmacy reimbursement model and brings greater transparency and simplicity to the system. CVS CostVantage will define the drug cost and related reimbursement using a simplified formula built on the cost of the drug, a set markup and a fee that reflects the care and value of pharmacy services. CVS Pharmacy plans to launch CVS CostVantage to commercial payors in 2025. |
Introduced CVS Caremark TrueCostTM, a model innovation that offers client pricing reflecting the true net cost of prescription drugs, with visibility into administrative fees. Simplified pricing will allow members to have stable access to the Company's national pharmacy network. CVS Caremark plans to launch CVS Caremark TrueCost in 2025. |
Launched CVS HealthspireTM, the new name for the Health Services segment, which includes Caremark, CordavisTM, Oak Street Health, Signify Health and MinuteClinic®. CVS Healthspire will continue to focus on integration across the Company's assets to deliver connected patient care, pharmacy benefits and innovative provider support solutions. |
Announced a 10% increase to the quarterly shareholder dividend, which became effective with the February 1, 2024 dividend distribution. Returned $3.1 billion to shareholders through dividends in 2023. |
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 25 for explanations of non-GAAP financial measures presented in this press release. See pages 14 through 16 and page 24 for reconciliations of each non-GAAP financial measure used in this release to the most directly comparable GAAP financial measure.
Consolidated fourth quarter and full-year results
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
In millions, except per share amounts | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||
Total revenues | $ 93,813 | $ 83,846 | $ 9,967 | $ 357,776 | $ 322,467 | $ 35,309 | |||||
Operating income | 3,373 | 3,659 | (286) | 13,743 | 7,954 | 5,789 | |||||
Adjusted operating income (1) | 4,227 | 4,079 | 148 | 17,534 | 18,037 | (503) | |||||
Net income | 2,047 | 2,332 | (285) | 8,368 | 4,327 | 4,041 | |||||
Diluted earnings per share | $ 1.58 | $ 1.77 | $ (0.19) | $ 6.47 | $ 3.26 | $ 3.21 | |||||
Adjusted EPS (2) | $ 2.12 | $ 2.04 | $ 0.08 | $ 8.74 | $ 9.03 | $ (0.29) |
For the three months and year ended December 31, 2023 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 months and years ended December 31, 2023 and 2022 were as follows:
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
In millions, except percentages | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||
Total revenues | $ 26,726 | $ 23,019 | $ 3,707 | $ 105,646 | $ 91,350 | $ 14,296 | |||||
Adjusted operating income (1) | 676 | 913 | (237) | 5,577 | 6,338 | (761) | |||||
Medical benefit ratio ("MBR") (3) | 88.5 % | 85.8 % | 2.7 % | 86.2 % | 83.8 % | 2.4 % | |||||
Medical membership (4) | 25.7 | 24.4 | 1.3 |
See the supplemental information on page 19 for additional information regarding the performance of the Health Care Benefits segment.
Health Services segment
The Health Services segment provides a full range of pharmacy benefit management ("PBM") solutions, delivers health care services in its medical clinics, virtually, and in the home, and offers provider enablement solutions. The segment results for the three months and years ended December 31, 2023 and 2022 were as follows:
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
In millions | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||
Total revenues | $ 49,146 | $ 43,769 | $ 5,377 | $ 186,843 | $ 169,576 | $ 17,267 | |||||
Adjusted operating income (1) | 1,860 | 1,785 | 75 | 7,312 | 6,781 | 531 | |||||
Pharmacy claims processed (5) (6) | 600.8 | 600.2 | 0.6 | 2,344.3 | 2,335.1 | 9.2 |
See the supplemental information on page 20 for additional information regarding the performance of the Health Services segment.
Pharmacy & Consumer Wellness segment
The Pharmacy & Consumer Wellness segment dispenses prescriptions in its retail pharmacies and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, diagnostic testing and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise. The segment also provides pharmacy services to long-term care facilities and pharmacy fulfillment services to support the Health Services segment's specialty and mail order pharmacy offerings. The segment results for the three months and years ended December 31, 2023 and 2022 were as follows:
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
In millions | 2023 | 2022 | Change | 2023 | 2022 | Change | |||||
Total revenues | $ 31,185 | $ 28,715 | $ 2,470 | $ 116,763 | $ 108,596 | $ 8,167 | |||||
Adjusted operating income (1) | 2,027 | 1,847 | 180 | 5,963 | 6,531 | (568) | |||||
Prescriptions filled (5) (6) | 431.5 | 423.4 | 8.1 | 1,649.1 | 1,625.4 | 23.7 |
See the supplemental information on page 21 for additional information regarding the performance of the Pharmacy & Consumer Wellness segment.
2024 Full-year guidance
The Company revised its full-year 2024 GAAP diluted EPS guidance to at least $7.06 from at least $7.26 and its full-year 2024 Adjusted EPS guidance to at least $8.30 from at least $8.50. The Company also revised its full-year 2024 cash flow from operations guidance to at least $12.0 billion from at least $12.5 billion.
The Company's guidance revision follows a review of its recently finalized medical cost trend analysis for the fourth quarter of 2023 and the potential implications for elevated medical cost trends in 2024. Additional details of the guidance revision can be found in the Q4 2023 Earnings Presentation that can be found on the Investor Relations section of the CVS Health website at http://investors.cvshealth.com.
The adjustments between full-year 2024 GAAP diluted EPS and Adjusted EPS include amortization of intangible assets, acquisition-related integration costs and the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health.
Teleconference and webcast
The Company will be holding a conference call today for investors at 8:00 a.m. (Eastern Time) to discuss its fourth quarter and full-year 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 "2024 Full-year guidance" and "In the spotlight" and the information included in the reconciliations and endnotes. 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 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 Reports on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023 and September 30, 2023 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 December 31, | Year Ended December 31, | ||||||
In millions, except per share amounts | 2023 | 2022 | 2023 | 2022 | |||
Revenues: | |||||||
Products | $ 65,154 | $ 59,657 | $ 245,138 | $ 226,616 | |||
Premiums | 25,075 | 21,436 | 99,192 | 85,330 | |||
Services | 3,316 | 2,430 | 12,293 | 9,683 | |||
Net investment income | 268 | 323 | 1,153 | 838 | |||
Total revenues | 93,813 | 83,846 | 357,776 | 322,467 | |||
Operating costs: | |||||||
Cost of products sold | 57,419 | 51,728 | 217,098 | 196,892 | |||
Health care costs | 22,518 | 18,259 | 86,247 | 71,073 | |||
Restructuring charges | — | — | 507 | — | |||
Opioid litigation charges | — | 99 | — | 5,803 | |||
Loss on assets held for sale | — | 12 | 349 | 2,533 | |||
Operating expenses | 10,503 | 10,089 | 39,832 | 38,212 | |||
Total operating costs | 90,440 | 80,187 | 344,033 | 314,513 | |||
Operating income | 3,373 | 3,659 | 13,743 | 7,954 | |||
Interest expense | 690 | 552 | 2,658 | 2,287 | |||
Other income | (22) | (43) | (88) | (169) | |||
Income before income tax provision | 2,705 | 3,150 | 11,173 | 5,836 | |||
Income tax provision | 658 | 818 | 2,805 | 1,509 | |||
Net income | 2,047 | 2,332 | 8,368 | 4,327 | |||
Net (income) loss attributable to noncontrolling interests | (1) | 2 | (24) | (16) | |||
Net income attributable to CVS Health | $ 2,046 | $ 2,334 | $ 8,344 | $ 4,311 | |||
Net income per share attributable to CVS Health: | |||||||
Basic | $ 1.59 | $ 1.78 | $ 6.49 | $ 3.29 | |||
Diluted | $ 1.58 | $ 1.77 | $ 6.47 | $ 3.26 | |||
Weighted average shares outstanding: | |||||||
Basic | 1,288 | 1,310 | 1,285 | 1,312 | |||
Diluted | 1,293 | 1,319 | 1,290 | 1,323 | |||
Dividends declared per share | $ 0.605 | $ 0.55 | $ 2.42 | $ 2.20 |
CVS HEALTH CORPORATION | |||
Condensed Consolidated Balance Sheets | |||
(Unaudited) | |||
At December 31, | |||
In millions | 2023 | 2022 | |
Assets: | |||
Cash and cash equivalents | $ 8,196 | $ 12,945 | |
Investments | 3,259 | 2,778 | |
Accounts receivable, net | 35,227 | 27,276 | |
Inventories | 18,025 | 19,090 | |
Assets held for sale | — | 908 | |
Other current assets | 3,151 | 2,636 | |
Total current assets | 67,858 | 65,633 | |
Long-term investments | 23,019 | 21,096 | |
Property and equipment, net | 13,183 | 12,873 | |
Operating lease right-of-use assets | 17,252 | 17,872 | |
Goodwill | 91,272 | 78,150 | |
Intangible assets, net | 29,234 | 24,803 | |
Separate accounts assets | 3,250 | 3,228 | |
Other assets | 4,660 | 4,620 | |
Total assets | $ 249,728 | $ 228,275 | |
Liabilities: | |||
Accounts payable | $ 14,897 | $ 14,838 | |
Pharmacy claims and discounts payable | 22,874 | 19,423 | |
Health care costs payable | 12,049 | 10,142 | |
Policyholders' funds | 1,326 | 1,500 | |
Accrued expenses | 22,189 | 18,745 | |
Other insurance liabilities | 1,141 | 1,089 | |
Current portion of operating lease liabilities | 1,741 | 1,678 | |
Short-term debt | 200 | — | |
Current portion of long-term debt | 2,772 | 1,778 | |
Liabilities held for sale | — | 228 | |
Total current liabilities | 79,189 | 69,421 | |
Long-term operating lease liabilities | 16,034 | 16,800 | |
Long-term debt | 58,638 | 50,476 | |
Deferred income taxes | 4,311 | 4,016 | |
Separate accounts liabilities | 3,250 | 3,228 | |
Other long-term insurance liabilities | 5,459 | 5,835 | |
Other long-term liabilities | 6,211 | 6,730 | |
Total liabilities | 173,092 | 156,506 | |
Shareholders' equity: | |||
Preferred stock | — | — | |
Common stock and capital surplus | 48,992 | 48,193 | |
Treasury stock | (33,838) | (31,858) | |
Retained earnings | 61,604 | 56,398 | |
Accumulated other comprehensive loss | (297) | (1,264) | |
Total CVS Health shareholders' equity | 76,461 | 71,469 | |
Noncontrolling interests | 175 | 300 | |
Total shareholders' equity | 76,636 | 71,769 | |
Total liabilities and shareholders' equity | $ 249,728 | $ 228,275 |
CVS HEALTH CORPORATION | |||
Condensed Consolidated Statements of Cash Flows | |||
(Unaudited) | |||
Year Ended December 31, | |||
In millions | 2023 | 2022 | |
Cash flows from operating activities: | |||
Cash receipts from customers | $ 345,464 | $ 313,662 | |
Cash paid for inventory, prescriptions dispensed and health services rendered | (208,848) | (189,766) | |
Insurance benefits paid | (84,097) | (69,728) | |
Cash paid to other suppliers and employees | (34,735) | (32,662) | |
Interest and investment income received | 1,584 | 1,026 | |
Interest paid | (2,418) | (2,239) | |
Income taxes paid | (3,524) | (4,116) | |
Net cash provided by operating activities | 13,426 | 16,177 | |
Cash flows from investing activities: | |||
Proceeds from sales and maturities of investments | 7,729 | 6,729 | |
Purchases of investments | (9,043) | (7,746) | |
Purchases of property and equipment | (3,031) | (2,727) | |
Acquisitions (net of cash and restricted cash acquired) | (16,612) | (139) | |
Proceeds from sale of subsidiaries (net of cash and restricted cash sold of $2,854 in | — | (1,249) | |
Other | 68 | 85 | |
Net cash used in investing activities | (20,889) | (5,047) | |
Cash flows from financing activities: | |||
Commercial paper borrowings (repayments), net | 200 | — | |
Proceeds from issuance of short-term loan | 5,000 | — | |
Repayment of short-term loan | (5,000) | — | |
Proceeds from issuance of long-term debt | 10,898 | — | |
Repayments of long-term debt | (3,166) | (4,211) | |
Repurchase of common stock | (2,012) | (3,500) | |
Dividends paid | (3,132) | (2,907) | |
Proceeds from exercise of stock options | 277 | 551 | |
Payments for taxes related to net share settlement of equity awards | (181) | (370) | |
Other | (201) | (79) | |
Net cash provided by (used in) financing activities | 2,683 | (10,516) | |
Net increase (decrease) in cash, cash equivalents and restricted cash | (4,780) | 614 | |
Cash, cash equivalents and restricted cash at the beginning of the period | 13,305 | 12,691 | |
Cash, cash equivalents and restricted cash at the end of the period | $ 8,525 | $ 13,305 |
CVS HEALTH CORPORATION | |||
Condensed Consolidated Statements of Cash Flows | |||
(Unaudited) | |||
Year Ended December 31, | |||
In millions | 2023 | 2022 | |
Reconciliation of net income to net cash provided by operating activities: | |||
Net income | $ 8,368 | $ 4,327 | |
Adjustments required to reconcile net income to net cash provided by operating | |||
Depreciation and amortization | 4,366 | 4,224 | |
Loss on assets held for sale | 349 | 2,533 | |
Stock-based compensation | 588 | 447 | |
Gain on sale of subsidiaries | — | (475) | |
Deferred income taxes | (676) | (2,029) | |
Other noncash items | 416 | 332 | |
Change in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable, net | (6,260) | (2,971) | |
Inventories | 1,233 | (1,435) | |
Other assets | (510) | (491) | |
Accounts payable and pharmacy claims and discounts payable | 3,618 | 4,260 | |
Health care costs payable and other insurance liabilities | 394 | 992 | |
Other liabilities | 1,540 | 6,463 | |
Net cash provided by operating activities | $ 13,426 | $ 16,177 |
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. Effective January 1, 2023, the Company's non-GAAP financial measures also exclude the impact of net realized capital gains or losses, described in further detail below. Prior period financial information throughout this press release has been revised to conform with the current period presentation.
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 25 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 16 and page 24.
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 | |||||||||
Three Months Ended December 31, 2023 | |||||||||
In millions | Health Care Benefits | Health Services | Pharmacy & Consumer Wellness | Corporate/ Other | Consolidated Totals | ||||
Operating income (loss) (GAAP measure) | $ 266 | $ 1,710 | $ 1,961 | $ (564) | $ 3,373 | ||||
Amortization of intangible assets | 294 | 149 | 65 | 1 | 509 | ||||
Net realized capital losses | 106 | — | 1 | 45 | 152 | ||||
Acquisition-related transaction and integration | — | — | — | 193 | 193 | ||||
Office real estate optimization charges | 10 | 1 | — | (11) | — | ||||
Adjusted operating income (loss) (1) | $ 676 | $ 1,860 | $ 2,027 | $ (336) | $ 4,227 | ||||
Three Months Ended December 31, 2022 | |||||||||
In millions | Health Care Benefits | Health Services | Pharmacy & Consumer Wellness | Corporate/ Other | Consolidated Totals | ||||
Operating income (loss) (GAAP measure) | $ 758 | $ 1,742 | $ 1,767 | $ (608) | $ 3,659 | ||||
Amortization of intangible assets | 295 | 41 | 68 | 1 | 405 | ||||
Net realized capital losses | 13 | — | — | 24 | 37 | ||||
Office real estate optimization charges | 97 | 2 | — | 18 | 117 | ||||
Loss on assets held for sale | — | — | 12 | — | 12 | ||||
Opioid litigation charges | — | — | — | 99 | 99 | ||||
Gain on divestiture of subsidiary | (250) | — | — | — | (250) | ||||
Adjusted operating income (loss) (1) | $ 913 | $ 1,785 | $ 1,847 | $ (466) | $ 4,079 | ||||
Year Ended December 31, 2023 | |||||||||
In millions | Health Care Benefits | Health Services | Pharmacy & Consumer Wellness | Corporate/ Other | Consolidated Totals | ||||
Operating income (loss) (GAAP measure) | $ 3,949 | $ 6,842 | $ 5,349 | $ (2,397) | $ 13,743 | ||||
Amortization of intangible assets | 1,177 | 465 | 260 | 3 | 1,905 | ||||
Net realized capital losses | 402 | — | 5 | 90 | 497 | ||||
Acquisition-related transaction and integration | — | — | — | 487 | 487 | ||||
Restructuring charges | — | — | — | 507 | 507 | ||||
Office real estate optimization charges | 49 | 5 | — | (8) | 46 | ||||
Loss on assets held for sale | — | — | 349 | — | 349 | ||||
Adjusted operating income (loss) (1) | $ 5,577 | $ 7,312 | $ 5,963 | $ (1,318) | $ 17,534 | ||||
Year Ended December 31, 2022 | |||||||||
In millions | Health Care Benefits | Health Services | Pharmacy & Consumer Wellness | Corporate/ Other | Consolidated Totals | ||||
Operating income (loss) (GAAP measure) | $ 5,270 | $ 6,612 | $ 3,560 | $ (7,488) | $ 7,954 | ||||
Amortization of intangible assets | 1,180 | 167 | 435 | 3 | 1,785 | ||||
Net realized capital losses | 225 | — | 44 | 51 | 320 | ||||
Office real estate optimization charges | 97 | 2 | — | 18 | 117 | ||||
Loss on assets held for sale | 41 | — | 2,492 | — | 2,533 | ||||
Opioid litigation charges | — | — | — | 5,803 | 5,803 | ||||
Gain on divestiture of subsidiaries | (475) | — | — | — | (475) | ||||
Adjusted operating income (loss) (1) | $ 6,338 | $ 6,781 | $ 6,531 | $ (1,613) | $ 18,037 |
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 December 31, 2023 | Three Months Ended | ||||||
In millions, except per share amounts | Total | Per | Total | Per | |||
Net income attributable to CVS Health (GAAP measure) | $ 2,046 | $ 1.58 | $ 2,334 | $ 1.77 | |||
Amortization of intangible assets | 509 | 0.39 | 405 | 0.31 | |||
Net realized capital losses | 152 | 0.12 | 37 | 0.03 | |||
Acquisition-related transaction and integration costs | 193 | 0.15 | — | — | |||
Office real estate optimization charges | — | — | 117 | 0.09 | |||
Loss on assets held for sale | — | — | 12 | 0.01 | |||
Opioid litigation charges | — | — | 99 | 0.08 | |||
Gain on divestiture of subsidiary | — | — | (250) | (0.19) | |||
Tax impact of non-GAAP adjustments | (162) | (0.12) | (68) | (0.06) | |||
Adjusted income attributable to CVS Health (2) | $ 2,738 | $ 2.12 | $ 2,686 | $ 2.04 | |||
Weighted average diluted shares outstanding | 1,293 | 1,319 | |||||
Year Ended | Year Ended | ||||||
In millions, except per share amounts | Total | Per | Total | Per | |||
Net income attributable to CVS Health (GAAP measure) | $ 8,344 | $ 6.47 | $ 4,311 | $ 3.26 | |||
Amortization of intangible assets | 1,905 | 1.48 | 1,785 | 1.35 | |||
Net realized capital losses | 497 | 0.38 | 320 | 0.24 | |||
Acquisition-related transaction and integration costs | 487 | 0.38 | — | — | |||
Restructuring charges | 507 | 0.39 | — | — | |||
Office real estate optimization charges | 46 | 0.04 | 117 | 0.09 | |||
Loss on assets held for sale | 349 | 0.27 | 2,533 | 1.91 | |||
Opioid litigation charges | — | — | 5,803 | 4.39 | |||
Gain on divestiture of subsidiaries | — | — | (475) | (0.36) | |||
Tax impact of non-GAAP adjustments | (863) | (0.67) | (2,453) | (1.85) | |||
Adjusted income attributable to CVS Health (2) | $ 11,272 | $ 8.74 | $ 11,941 | $ 9.03 | |||
Weighted average diluted shares outstanding | 1,290 | 1,323 |
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. Adjusted operating income 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). Effective for the first quarter of 2023, adjusted operating income also excludes the impact of net realized capital gains or losses. 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.
Segment financial information as of and for the three months and year ended December 31, 2022 has been revised to conform with current period presentation for the following items:
The impact of these items on segment financial information for the three months and year ended December 31, 2022 is reflected in the "Adjustments" lines of the table on page 17.
The following is a reconciliation of financial measures of the Company's segments to the consolidated totals:
In millions | Health Benefits | Health | Pharmacy & Consumer Wellness | Corporate/ Other | Intersegment | Consolidated Totals | |||||
Three Months Ended | |||||||||||
December 31, 2023 | |||||||||||
Total revenues | $ 26,726 | $ 49,146 | $ 31,185 | $ 75 | $ (13,319) | $ 93,813 | |||||
Adjusted operating | 676 | 1,860 | 2,027 | (336) | — | 4,227 | |||||
December 31, 2022 | |||||||||||
Total revenues, as previously reported | $ 23,033 | $ 43,747 | $ 28,184 | $ 152 | $ (11,270) | $ 83,846 | |||||
Adjustments | (14) | 22 | 531 | — | (539) | — | |||||
Total revenues, as | $ 23,019 | $ 43,769 | $ 28,715 | $ 152 | $ (11,809) | $ 83,846 | |||||
Adjusted operating | $ 858 | $ 1,988 | $ 1,840 | $ (508) | $ (172) | $ 4,006 | |||||
Adjustments | 55 | (203) | 7 | 42 | 172 | 73 | |||||
Adjusted operating | $ 913 | $ 1,785 | $ 1,847 | $ (466) | $ — | $ 4,079 | |||||
Year Ended | |||||||||||
December 31, 2023 | |||||||||||
Total revenues | $ 105,646 | $ 186,843 | $ 116,763 | $ 451 | $ (51,927) | $ 357,776 | |||||
Adjusted operating | 5,577 | 7,312 | 5,963 | (1,318) | — | 17,534 | |||||
December 31, 2022 | |||||||||||
Total revenues, as previously reported | $ 91,409 | $ 169,236 | $ 106,594 | $ 530 | $ (45,302) | $ 322,467 | |||||
Adjustments | (59) | 340 | 2,002 | — | (2,283) | — | |||||
Total revenues, as | $ 91,350 | $ 169,576 | $ 108,596 | $ 530 | $ (47,585) | $ 322,467 | |||||
Adjusted operating | $ 5,984 | $ 7,356 | $ 6,705 | $ (1,785) | $ (728) | $ 17,532 | |||||
Adjustments | 354 | (575) | (174) | 172 | 728 | 505 | |||||
Adjusted operating | $ 6,338 | $ 6,781 | $ 6,531 | $ (1,613) | $ — | $ 18,037 |
(a) | Total revenues of the Health Services segment include approximately $3.0 billion and $2.8 billion of retail co-payments for the three months ended December 31, 2023 and 2022, respectively, and $13.7 billion and $12.6 billion of retail co-payments for the years ended December 31, 2023 and 2022, respectively. | ||||
(b) | Intersegment revenue eliminations relate to intersegment revenue generating activities that occur between the Health Care Benefits segment, the Health Services segment, and/or the Pharmacy & Consumer Wellness segment. Prior to January 1, 2023, intersegment adjusted operating income eliminations occurred when members of the Health Services segment's clients enrolled in Maintenance Choice elected to pick up maintenance prescriptions at one of the Company's retail pharmacies instead of receiving them through the mail. When this occurred, both the Health Services and Pharmacy & Consumer Wellness segments recorded the adjusted operating income on a stand-alone basis. Effective January 1, 2023, the adjusted operating income associated with such transactions is reported only in the Pharmacy & Consumer Wellness segment, therefore no adjusted operating income elimination is required. |
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 December 31, | Year Ended December 31, | Three Months Ended December 31, 2023 vs 2022 | Year Ended December 31, 2023 vs 2022 | ||||||||||||
In millions, except percentages and | 2023 | 2022 | 2023 | 2022 | $ | % | $ | % | |||||||
Revenues: | |||||||||||||||
Premiums | $ 25,065 | $ 21,426 | $ 99,144 | $ 85,274 | $ 3,639 | 17.0 % | $ 13,870 | 16.3 % | |||||||
Services | 1,452 | 1,395 | 5,737 | 5,600 | 57 | 4.1 % | 137 | 2.4 % | |||||||
Net investment income | 209 | 198 | 765 | 476 | 11 | 5.6 % | 289 | 60.7 % | |||||||
Total revenues | 26,726 | 23,019 | 105,646 | 91,350 | 3,707 | 16.1 % | 14,296 | 15.6 % | |||||||
Health care costs | 22,175 | 18,373 | 85,504 | 71,473 | 3,802 | 20.7 % | 14,031 | 19.6 % | |||||||
MBR (Health care costs as a % | 88.5 % | 85.8 % | 86.2 % | 83.8 % | 270 | bps | 240 | bps | |||||||
Loss on assets held for sale | $ — | $ — | $ — | $ 41 | $ — | — % | $ (41) | (100.0) % | |||||||
Operating expenses | 4,285 | 3,888 | 16,193 | 14,566 | 397 | 10.2 % | 1,627 | 11.2 % | |||||||
Operating expenses as a % of | 16.0 % | 16.9 % | 15.3 % | 15.9 % | |||||||||||
Operating income | $ 266 | $ 758 | $ 3,949 | $ 5,270 | $ (492) | (64.9) % | $ (1,321) | (25.1) % | |||||||
Operating income as a % of | 1.0 % | 3.3 % | 3.7 % | 5.8 % | |||||||||||
Adjusted operating income (1) | $ 676 | $ 913 | $ 5,577 | $ 6,338 | $ (237) | (26.0) % | $ (761) | (12.0) % | |||||||
Adjusted operating income as a | 2.5 % | 4.0 % | 5.3 % | 6.9 % | |||||||||||
Premium revenues (by business): | |||||||||||||||
Government | $ 17,414 | $ 15,762 | $ 70,094 | $ 63,141 | $ 1,652 | 10.5 % | $ 6,953 | 11.0 % | |||||||
Commercial | 7,651 | 5,664 | 29,050 | 22,133 | 1,987 | 35.1 % | 6,917 | 31.3 % |
The following table summarizes the Health Care Benefits segment's medical membership for the respective periods: |
December 31, 2023 | September 30, 2023 | December 31, 2022 | |||||||||||||||
In thousands | Insured | ASC | Total | Insured | ASC | Total | Insured | ASC | Total | ||||||||
Medical membership: (4) | |||||||||||||||||
Commercial | 4,252 | 14,087 | 18,339 | 4,198 | 14,075 | 18,273 | 3,136 | 13,896 | 17,032 | ||||||||
Medicare Advantage | 3,460 | — | 3,460 | 3,438 | — | 3,438 | 3,270 | — | 3,270 | ||||||||
Medicare Supplement | 1,343 | — | 1,343 | 1,352 | — | 1,352 | 1,363 | — | 1,363 | ||||||||
Medicaid | 2,073 | 444 | 2,517 | 2,173 | 452 | 2,625 | 2,234 | 497 | 2,731 | ||||||||
Total medical membership | 11,128 | 14,531 | 25,659 | 11,161 | 14,527 | 25,688 | 10,003 | 14,393 | 24,396 | ||||||||
Supplemental membership information: | |||||||||||||||||
Medicare Prescription Drug Plan (standalone) | 6,081 | 6,092 | 6,128 |
The following table summarizes the Health Care Benefits segment's days claims payable for the respective periods: |
December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||
Days Claims Payable (7) | 45.9 | 50.3 | 46.9 | 48.1 | 51.3 |
Supplemental Information | |||||||||||||||
(Unaudited) | |||||||||||||||
Health Services segment | |||||||||||||||
The following table summarizes the Health Services segment's performance for the respective periods: | |||||||||||||||
Change | |||||||||||||||
Three Months December 31, | Year Ended December 31, | Three Months Ended December 31, 2023 vs 2022 | Year Ended December 31, 2023 vs 2022 | ||||||||||||
In millions, except percentages | 2023 | 2022 | 2023 | 2022 | $ | % | $ | % | |||||||
Revenues: | |||||||||||||||
Products | $ 47,237 | $ 43,197 | $ 180,608 | $ 167,019 | $ 4,040 | 9.4 % | $ 13,589 | 8.1 % | |||||||
Services | 1,910 | 572 | 6,236 | 2,557 | 1,338 | 233.9 % | 3,679 | 143.9 % | |||||||
Net investment income (loss) | (1) | — | (1) | — | (1) | (100.0) % | (1) | (100.0) % | |||||||
Total revenues | 49,146 | 43,769 | 186,843 | 169,576 | 5,377 | 12.3 % | 17,267 | 10.2 % | |||||||
Cost of products sold | 45,999 | 41,463 | 175,424 | 160,738 | 4,536 | 10.9 % | 14,686 | 9.1 % | |||||||
Health care costs | 612 | — | 1,607 | — | 612 | 100.0 % | 1,607 | 100.0 % | |||||||
Gross profit (8) | 2,535 | 2,306 | 9,812 | 8,838 | 229 | 9.9 % | 974 | 11.0 % | |||||||
Gross margin (Gross profit as a | 5.2 % | 5.3 % | 5.3 % | 5.2 % | |||||||||||
Operating expenses | $ 825 | $ 564 | $ 2,970 | $ 2,226 | $ 261 | 46.3 % | $ 744 | 33.4 % | |||||||
Operating expenses as a % of | 1.7 % | 1.3 % | 1.6 % | 1.3 % | |||||||||||
Operating income | $ 1,710 | $ 1,742 | $ 6,842 | $ 6,612 | $ (32) | (1.8) % | $ 230 | 3.5 % | |||||||
Operating income as a % of total | 3.5 % | 4.0 % | 3.7 % | 3.9 % | |||||||||||
Adjusted operating income (1) | $ 1,860 | $ 1,785 | $ 7,312 | $ 6,781 | $ 75 | 4.2 % | $ 531 | 7.8 % | |||||||
Adjusted operating income as a | 3.8 % | 4.1 % | 3.9 % | 4.0 % | |||||||||||
Revenues (by distribution | |||||||||||||||
Pharmacy network (9) | $ 29,668 | $ 26,610 | $ 112,718 | $ 102,968 | $ 3,058 | 11.5 % | $ 9,750 | 9.5 % | |||||||
Mail & specialty (10) | 17,614 | 16,556 | 67,992 | 63,825 | 1,058 | 6.4 % | 4,167 | 6.5 % | |||||||
Other | 1,865 | 603 | 6,134 | 2,783 | 1,262 | 209.3 % | 3,351 | 120.4 % | |||||||
Net investment income (loss) | (1) | — | (1) | — | (1) | (100.0) % | (1) | (100.0) % | |||||||
Pharmacy claims processed: (5) (6) (a) | 600.8 | 600.2 | 2,344.3 | 2,335.1 | 0.6 | 0.1 % | 9.2 | 0.4 % | |||||||
Generic dispensing rate: (6) (11) (b) | 86.2 % | 86.4 % | 87.6 % | 87.4 % |
(a) | Excluding the impact of COVID-19 vaccinations, pharmacy claims processed increased 0.3% and 1.0% on a 30-day equivalent basis for the three months and year ended December 31, 2023, respectively, compared to the prior year. | ||||
(b) | Excluding the impact of COVID-19 vaccinations, the Health Services segment's total generic dispensing rate was 87.1% and 87.5% in the three months ended December 31, 2023 and 2022, respectively, and 87.9% and 88.3% in the years ended December 31, 2023 and 2022, respectively. |
Supplemental Information | |||||||||||||||
(Unaudited) | |||||||||||||||
Pharmacy & Consumer Wellness segment | |||||||||||||||
The following table summarizes the Pharmacy & Consumer Wellness segment's performance for the respective periods: | |||||||||||||||
Change | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | Three Months Ended December 31, 2023 vs 2022 | Year Ended December 31, 2023 vs 2022 | ||||||||||||
In millions, except percentages | 2023 | 2022 | 2023 | 2022 | $ | % | $ | % | |||||||
Revenues: | |||||||||||||||
Products | $ 30,534 | $ 27,726 | $ 113,976 | $ 104,878 | $ 2,808 | 10.1 % | $ 9,098 | 8.7 % | |||||||
Services | 652 | 989 | 2,792 | 3,762 | (337) | (34.1) % | (970) | (25.8) % | |||||||
Net investment income (loss) | (1) | — | (5) | (44) | (1) | (100.0) % | 39 | 88.6 % | |||||||
Total revenues | 31,185 | 28,715 | 116,763 | 108,596 | 2,470 | 8.6 % | 8,167 | 7.5 % | |||||||
Cost of products sold | 24,146 | 21,651 | 91,447 | 82,063 | 2,495 | 11.5 % | 9,384 | 11.4 % | |||||||
Gross profit (8) | 7,039 | 7,064 | 25,316 | 26,533 | (25) | (0.4) % | (1,217) | (4.6) % | |||||||
Gross margin (Gross profit as a | 22.6 % | 24.6 % | 21.7 % | 24.4 % | |||||||||||
Loss on assets held for sale | $ — | $ 12 | $ 349 | $ 2,492 | $ (12) | (100.0) % | $ (2,143) | (86.0) % | |||||||
Operating expenses | 5,078 | 5,285 | 19,618 | 20,481 | (207) | (3.9) % | (863) | (4.2) % | |||||||
Operating expenses as a % of | 16.3 % | 18.4 % | 16.8 % | 18.9 % | |||||||||||
Operating income | $ 1,961 | $ 1,767 | $ 5,349 | $ 3,560 | $ 194 | 11.0 % | $ 1,789 | 50.3 % | |||||||
Operating income as a % of | 6.3 % | 6.2 % | 4.6 % | 3.3 % | |||||||||||
Adjusted operating income (1) | $ 2,027 | $ 1,847 | $ 5,963 | $ 6,531 | $ 180 | 9.7 % | $ (568) | (8.7) % | |||||||
Adjusted operating income as a | 6.5 % | 6.4 % | 5.1 % | 6.0 % | |||||||||||
Revenues (by major | |||||||||||||||
Pharmacy | $ 24,740 | $ 21,984 | $ 92,111 | $ 83,480 | $ 2,756 | 12.5 % | $ 8,631 | 10.3 % | |||||||
Front Store | 5,861 | 6,150 | 22,458 | 22,780 | (289) | (4.7) % | (322) | (1.4) % | |||||||
Other | 585 | 581 | 2,199 | 2,380 | 4 | 0.7 % | (181) | (7.6) % | |||||||
Net investment income (loss) | (1) | — | (5) | (44) | (1) | (100.0) % | 39 | 88.6 % | |||||||
Prescriptions filled (5) (6) (a) | 431.5 | 423.4 | 1,649.1 | 1,625.4 | 8.1 | 1.9 % | 23.7 | 1.5 % | |||||||
Same store sales increase | |||||||||||||||
Total | 11.3 % | 7.8 % | 10.7 % | 9.1 % | |||||||||||
Pharmacy | 15.5 % | 9.1 % | 13.6 % | 9.5 % | |||||||||||
Front Store | (3.1) % | 3.5 % | 0.3 % | 7.8 % | |||||||||||
Prescription volume (6) | 4.4 % | 3.1 % | 3.9 % | 4.0 % | |||||||||||
Generic dispensing rate (6) (11) (b) | 86.6 % | 85.9 % | 88.4 % | 87.4 % |
(a) | Excluding the impact of COVID-19 vaccinations, prescriptions filled increased 2.2% and 2.5% on a 30-day equivalent basis for the three months and year ended December 31, 2023, respectively, compared to the prior year. | ||||
(b) | Excluding the impact of COVID-19 vaccinations, the Pharmacy & Consumer Wellness segment's total generic dispensing rate was 88.1% and 87.6% in the three months ended December 31, 2023 and 2022, respectively, and 89.0% in both the years ended December 31, 2023 and 2022. |
Supplemental Information | |||||||||||||||
(Unaudited) | |||||||||||||||
Corporate/Other segment | |||||||||||||||
The following table summarizes the Corporate/Other segment's performance for the respective periods: | |||||||||||||||
Change | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | Three Months Ended December 31, 2023 vs 2022 | Year Ended December 31, 2023 vs 2022 | ||||||||||||
In millions, except percentages | 2023 | 2022 | 2023 | 2022 | $ | % | $ | % | |||||||
Revenues: | |||||||||||||||
Premiums | $ 10 | $ 10 | $ 48 | $ 56 | $ — | — % | $ (8) | (14.3) % | |||||||
Services | 4 | 17 | 9 | 68 | (13) | (76.5) % | (59) | (86.8) % | |||||||
Net investment income | 61 | 125 | 394 | 406 | (64) | (51.2) % | (12) | (3.0) % | |||||||
Total revenues | 75 | 152 | 451 | 530 | (77) | (50.7) % | (79) | (14.9) % | |||||||
Cost of products sold | — | 11 | 1 | 42 | (11) | (100.0) % | (41) | (97.6) % | |||||||
Health care costs | 47 | 45 | 210 | 249 | 2 | 4.4 % | (39) | (15.7) % | |||||||
Restructuring charges | — | — | 507 | — | — | — % | 507 | 100.0 % | |||||||
Opioid litigation charges | — | 99 | — | 5,803 | (99) | (100.0) % | (5,803) | (100.0) % | |||||||
Operating expenses | 592 | 605 | 2,130 | 1,924 | (13) | (2.1) % | 206 | 10.7 % | |||||||
Operating loss | (564) | (608) | (2,397) | (7,488) | 44 | 7.2 % | 5,091 | 68.0 % | |||||||
Adjusted operating loss (1) | (336) | (466) | (1,318) | (1,613) | 130 | 27.9 % | 295 | 18.3 % |
Supplemental Information | |||
(Unaudited) | |||
The following table shows the components of the change in the consolidated health care costs payable during the | |||
Year Ended December 31, | |||
In millions | 2023 | 2022 | |
Health care costs payable, beginning of period | $ 10,142 | $ 8,678 | |
Less: Reinsurance recoverables | 5 | 8 | |
Less: Impact of discount rate on long-duration insurance reserves (a) | 8 | — | |
Health care costs payable, beginning of period, net | 10,129 | 8,670 | |
Acquisition, net | 1,098 | — | |
Add: Components of incurred health care costs | |||
Current year | 86,639 | 71,399 | |
Prior years (b) | (685) | (654) | |
Total incurred health care costs (c) | 85,954 | 70,745 | |
Less: Claims paid | |||
Current year | 75,529 | 61,640 | |
Prior years | 9,585 | 7,646 | |
Total claims paid | 85,114 | 69,286 | |
Health care costs payable, end of period, net | 12,067 | 10,129 | |
Add: Reinsurance recoverables | 5 | 5 | |
Add: Impact of discount rate on long-duration insurance reserves (a) | (23) | 8 | |
Health care costs payable, end of period | $ 12,049 | $ 10,142 |
(a) | Reflects the difference between the current discount rate and the locked-in discount rate on long-duration insurance reserves which is recorded within accumulated other comprehensive loss on the condensed consolidated balance sheets. Refer to Note 1 ''Significant Accounting Policies'' in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for further information related to the adoption of the long-duration insurance contracts accounting standard. | ||||
(b) | Negative amounts reported for incurred health care costs related to prior years result from claims being settled for amounts less than originally estimated. | ||||
(c) | Total incurred health care costs for the years ended December 31, 2023 and 2022 in the table above exclude $83 million and $79 million, respectively, of health care costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the condensed consolidated balance sheets and $210 million and $249 million, respectively, of health care costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the condensed consolidated balance sheets. |
Adjusted Earnings Per Share Guidance
(Unaudited)
The following reconciliation 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 most recently filed Quarterly Report on Form 10-Q. 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 | |||
At Least | |||
In millions, except per share amounts | Total | Per | |
Net income attributable to CVS Health (GAAP measure) | $ 8,910 | $ 7.06 | |
Non-GAAP adjustments: | |||
Amortization of intangible assets | 2,000 | 1.58 | |
Acquisition-related integration costs | 230 | 0.18 | |
Tax impact of non-GAAP adjustments | (662) | (0.52) | |
Adjusted income attributable to CVS Health (2) | $ 10,478 | $ 8.30 | |
Weighted average diluted shares outstanding | 1,263 |
Endnotes
(1) The Company defines adjusted operating income as operating income (GAAP measure) excluding the impact of amortization of intangible assets, net realized capital gains or losses 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 transaction and integration costs, restructuring charges, office real estate optimization charges, losses on assets held for sale, opioid litigation charges and gains/losses on divestitures. 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) GAAP diluted earnings per share and Adjusted EPS, respectively, are calculated by dividing net income attributable to CVS Health and 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, net realized capital gains or losses 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 transaction and integration costs, restructuring charges, office real estate optimization charges, losses on assets held for sale, opioid litigation charges, gains/losses on divestitures, as well as the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health and certain discrete tax items. 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 by dividing the Health Care Benefits segment's health care costs by premium revenues and represents the percentage of premium revenues spent on medical benefits for the segment'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 segment's insured Health Care Benefits products.
(4) Medical membership represents the number of members covered by the Health Care Benefits segment'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 the Health Care Benefits segment's total revenues and operating results.
(5) 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 the Company's mail and specialty pharmacies. Prescriptions filled represents the number of prescriptions dispensed through the Pharmacy & Consumer Wellness segment's retail and long-term care pharmacies and infusion services operations. 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) Days claims payable is calculated by dividing the Health Care Benefits segment's health care costs payable at the end of each quarter by its average health care costs per day during such quarter. Management and investors use this metric as an indicator of the adequacy of the Health Care Benefits segment's health care costs payable liability at the end of each quarter and as an indicator of changes in such adequacy over time.
(8) Gross profit is calculated as the segment's total revenues less its cost of products sold, and, for the Health Services segment, health care costs. 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 Health Services and Pharmacy & Consumer Wellness segments.
(9) Health Services pharmacy network revenues relate to claims filled at retail and specialty retail pharmacies, including the Company's retail pharmacies and LTC pharmacies. Effective January 1, 2023, pharmacy network revenues also include activity associated with Maintenance Choice, which 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. Maintenance Choice activity was previously reflected in mail & specialty revenues. Prior period financial information has been revised to conform with current period presentation.
(10) Health Services mail & specialty revenues relate to specialty mail claims inclusive of Specialty Connect® claims picked up at a retail pharmacy, as well as mail order and specialty claims fulfilled by the Pharmacy & Consumer Wellness segment. Effective January 1, 2023, mail & specialty revenues exclude Maintenance Choice activity, which is now reflected within pharmacy network revenues. Prior period financial information has been revised to conform with current period presentation.
(11) Generic dispensing rate is calculated by dividing the segment's generic drug claims processed or prescriptions filled by its total claims processed or prescriptions 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 and prescriptions from LTC and infusion services operations. Effective January 1, 2023, same store sales also include digital sales initiated online or through mobile applications and fulfilled through the Company's distribution centers. Prior period financial information has been revised to conform with current period presentation. 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.
Last Trade: | US$57.76 |
Daily Change: | -0.31 -0.53 |
Daily Volume: | 4,777,417 |
Market Cap: | US$72.770B |
August 27, 2024 August 01, 2024 |
Recursion Pharmaceuticals is a clinical stage TechBio company leading the space by decoding biology to industrialize drug discovery. Enabling its mission is the Recursion OS, a platform built across diverse technologies that continuously expands one of the world’s largest....
CLICK TO LEARN MOREAmneal Pharmaceuticals is a fully-integrated essential medicines company. We make healthy possible through the development, manufacturing, and distribution of generic and specialty pharmaceuticals. The Company has a diverse portfolio of over 250 products in its Generics segment and is expanding across...
CLICK TO LEARN MOREEnd of content
No more pages to load
COPYRIGHT ©2023 HEALTH STOCKS HUB