CVS surpasses earnings and revenues as the company reduces expenses. Wednesday, CVS Health reported second-quarter earnings and revenue that exceeded expectations, despite cutting costs and laying off thousands of employees.
After its $8 billion acquisition of Signify Health and $10.6 billion acquisition of Oak Street Health, CVS has implemented a cost-cutting program as it expands its healthcare services business.
On Tuesday that this initiative includes the elimination of 5,000 positions. Based on a survey of analysts by Refinitiv, here are CVS’s second-quarter results in comparison to Wall Street’s expectations:
- Earnings per share: $2.21, versus $2.11 anticipated
- Revenue: $88.9 billion versus the anticipated $86.5 billion
The healthcare giant reported a quarterly net income of $1.91 billion, or $1.48 per share, a 37% decrease from the same quarter in 2022 when CVS reported a net income of $3.04 billion, or $2.29 per share. CVS said $2.21 per share for the period, excluding one-time expenses.
The company’s quarterly revenue was $88.9 billion, a 10% increase from last year.
CVS maintained its full-year adjusted earnings guidance of $8.50 to $8.70 per share after lowering its projections by 20 cents due to acquisition-related expenses in the previous quarter. The health services segment of the company generated $46.22 billion in revenue, an increase of 7.6% compared to the same quarter in 2022. The division comprises the pharmacy benefit manager CVS Caremark and a medical clinic, telehealth, and home health care services.
The retail pharmacy division of CVS generated $28.78 billion in revenue, which was 7.6% higher than last year due to increased prescription volume. Excluding Covid-19 vaccinations, the number of prescriptions completed increased 2.4% month-over-month. With the exclusion of Covid vaccines, same-store prescription volume increased by nearly 5%.
The health insurance segment of the company generated $26.75 billion in revenue, a 17.6% increase over the second quarter of 2022. This division comprises Aetna plans for the Affordable Care Act, Medicare Advantage, Medicaid, dental and vision plans, and dental and vision services.
The medical benefit ratio for the insurance segment increased to 86.2% in the quarter, up from 82.2% in the same period of the prior year. Typically, a lesser ratio indicates that a company collected more premiums than it paid in benefits, resulting in greater profitability.