Strong Q1 Has CVS Raising Profit Guidance
CVS Health Corp. entered 2022 with significant momentum, reporting strong first-quarter results. The company’s total revenues increased to $76.8 billion, up 11.2% compared with the prior year, driven by growth across all segments.
Same-store sales at CVS grew 10.7% in the first quarter ended March 31, compared with the year-ago period. In the pharmacy segment, same-store sales rose 10.1%, while in the front-store segment, same-store sales rose 13.2%.
Adjusted operating income increased 6.6%, primarily due to more prescription and front-store volume, including the sale of COVID-19 over-the-counter test kits, and the impact of COVID-19 vaccinations in the retail/LTC (long-term care) segment. CVS administered more than 6 million COVID-19 tests and more than 8 million COVID-19 vaccines in the first quarter. Adjusted operating income was also affected by improved purchasing economics and growth in specialty pharmacy in the pharmacy services segment, which increased total revenues by 8.6% compared with last year. In the retail/LTC segment, total revenues increased 9.2%.
The retail/LTC segment is expected to continue to benefit from increased prescription volume and improved generic drug purchasing, partly offset by continued pharmacy reimbursement pressure and incremental operating expenses associated with the company’s minimum-wage investment. CVS expects that COVID-19 vaccinations, including the impact of a possible fourth COVID-19 booster, and diagnostic testing will continue in 2022, albeit at lower levels than in 2021.
Effective Feb. 1, CVS increased its quarterly dividend by 10%, resulting in the return of $722 million to shareholders in the first quarter. The company repurchased approximately 19.1 million shares of common stock, marking the first time that CVS has repurchased stock since 2017.
The company revised its full-year 2022 GAAP diluted EPS guidance range to $6.93 to $7.13, from $7.04 to $7.24, and raised its full-year 2022 adjusted EPS guidance range to $8.20 to $8.40, from $8.10 to $8.30. CVS also confirmed its full-year 2022 cash flow from operations guidance range of $12.0 billion to $13.0 billion.
“Our strategy improves access to affordable, convenient and personalized health care, which benefits consumers and shareholders,” said Karen S. Lynch, CVS Health president and CEO. “We once again showed the power of our purpose and potential, building on our strong momentum and raising full-year guidance as a result.”
Going forward, CVS plans to unify its business around the consumer health experience and scale new sources of value, primarily by focusing on five strategic pillars:
- Advance all-payer primary care delivery capabilities.
- Optimize the retail portfolio to serve as community health destinations.
- Diversify our growth portfolio with new health services.
- Drive a digital-first, technology-forward approach.
- Enhance omnichannel health experiences.
Meanwhile, in March, CVS Health entered into an agreement with the state of Florida to resolve claims dating back more than a decade related to prescriptions for opioid medications that were filled at Florida CVS Pharmacy locations. Under the agreement, the company will settle all opioid claims against it by Florida for $484 million, to be paid over a period of 18 years.
With its CVS Pharmacy subsidiary operating almost 10,000 locations nationwide, Woonsocket, R.I.-based CVS Health is No. 7 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America.
