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
- Total revenues increased to $93.8
billion, up 11.9% compared to prior year
- GAAP diluted EPS of $1.58 and
Adjusted EPS of $2.12
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
- Total revenues increased to $357.8
billion, up 10.9% compared to prior year
- GAAP diluted EPS of $6.47 and
Adjusted EPS of $8.74
- Generated cash flow from operations of $13.4 billion
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:
- Revised GAAP diluted EPS guidance to at least $7.06 from at least $7.26
- Revised Adjusted EPS guidance to at least $8.30 from at least $8.50
- Revised cash flow from operations guidance to at least
$12.0 billion from at least
$12.5 billion
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:
- Total revenues increased 11.9% and 10.9%, respectively, driven
by growth across all segments.
- Operating income decreased 7.8% in the three months ended
December 31, 2023 compared to the
prior year primarily due to $193
million of acquisition-related transaction and integration
costs recorded in the current year and the absence of a pre-tax
gain of $250 million on the sale of
the Company's wholly-owned subsidiary bswift LLC ("bswift")
recorded in the prior year. These decreases were partially offset
by the increases in adjusted operating income described below.
- Operating income increased 72.8% for the year ended
December 31, 2023 compared to the
prior year primarily due to the absence of $5.8 billion of opioid litigation charges and a
$2.5 billion loss on assets held for
sale related to the write-down of the Company's
Omnicare® long-term care business ("LTC business"), both
of which were recorded in the prior year. These increases were
partially offset by $507 million of
restructuring charges and $487
million of acquisition-related transaction and integration
costs recorded in the current year, the absence of pre-tax gains of
$250 million on the sale of bswift
and $225 million on the sale of
PayFlex Holdings, Inc. ("PayFlex") recorded in the prior year, as
well as the decreases in adjusted operating income described
below.
- Adjusted operating income increased 3.6% in the three months
ended December 31, 2023 compared to
the prior year primarily driven by increases in the Pharmacy &
Consumer Wellness, Health Services and Corporate/Other segments,
partially offset by a decline in the Health Care Benefits segment.
Adjusted operating income decreased 2.8% in the year ended
December 31, 2023 compared to the
prior year primarily driven by decreases in the Health Care
Benefits and Pharmacy & Consumer Wellness segments, partially
offset by increases in the Health Services and Corporate/Other
segments. See pages 4 through 6 for additional discussion of
adjusted operating income performance of the Company's
segments.
- Interest expense increased $138
million, or 25.0%, and $371
million, or 16.2%, respectively, due to higher debt in the
three months and year ended December 31,
2023 to fund the acquisitions of Signify Health, Inc.
("Signify Health") and Oak Street Health, Inc. ("Oak Street
Health").
- The effective income tax rate in the fourth quarter decreased
to 24.3% compared to 26.0% in the prior year primarily due to the
impact of certain discrete tax items in the fourth quarter of 2023.
The effective income tax rate for the full year decreased to 25.1%
compared to 25.9% in the prior year primarily due to the absence of
certain nondeductible legal charges and basis differences on the
sale of bswift and PayFlex in 2022. These decreases were partially
offset by the absence of the impact of certain discrete tax items
concluded in the year ended December 31,
2022.
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
|
- Total revenues increased 16.1% and 15.6% for the three months
and year ended December 31, 2023,
respectively, compared to the prior year driven by growth across
all product lines.
- Adjusted operating income decreased 26.0% for the three months
ended December 31, 2023 compared to
the prior year primarily driven by growth in the individual
exchange business, including the related impact of seasonality, and
increased utilization in Medicare Advantage. These decreases were
partially offset by higher net investment income in the three
months ended December 31, 2023
compared to the prior year.
- Adjusted operating income decreased 12.0% for the year ended
December 31, 2023 compared to the
prior year primarily driven by increased utilization in Medicare
Advantage when compared with pandemic influenced utilization levels
in the prior year, as well as incremental investments in the
business, including investments in service capabilities and member
experience. These decreases were partially offset by higher net
investment income in the year ended December
31, 2023 compared to the prior year.
- The MBR increased from 85.8% to 88.5% in the three months ended
December 31, 2023 compared to the
prior year and increased from 83.8% to 86.2% in the year ended
December 31, 2023 compared to the
prior year. These increases were primarily driven by increased
utilization in Medicare Advantage, including outpatient and
supplemental benefits, when compared with pandemic influenced
utilization levels in the prior year, as well as Commercial and
Medicaid trends returning to normalized levels, consistent with
pricing expectations.
- Medical membership as of December 31,
2023 of 25.7 million remained relatively consistent compared
with September 30, 2023, as declines
in the Medicaid product line were largely offset by increases in
the Commercial and Medicare product lines.
- Medical membership as of December 31,
2023 of 25.7 million increased 1.3 million members compared
with December 31, 2022, reflecting
increases in the Commercial and Medicare product lines, including
an increase of 1.3 million members related to the individual
exchange business within the Commercial product line. These
increases were partially offset by a decline in the Medicaid
product line, primarily attributable to the resumption of Medicaid
redeterminations following the expiration of the public health
emergency in May 2023.
- The segment experienced favorable development of prior-periods'
health care cost estimates in its Government Services and
Commercial businesses during the three months ended December 31, 2023, primarily attributable to 2023
performance.
- Prior years' health care costs payable estimates developed
favorably by $675 million during the
year ended December 31, 2023. 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 2023 operating results.
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
|
- Total revenues increased 12.3% and 10.2% for the three months
and year ended December 31, 2023,
respectively, compared to the prior year primarily driven by
pharmacy drug mix, growth in specialty pharmacy, brand inflation
and the acquisitions of Oak Street Health and Signify Health. These
increases were partially offset by continued pharmacy client price
improvements.
- Adjusted operating income increased 4.2% and 7.8% for the three
months and year ended December 31,
2023, respectively, compared to the prior year primarily
driven by improved purchasing economics, including increased
contributions from the products and services of the Company's group
purchasing organization, as well as growth in specialty pharmacy,
including increased contributions from specialty generics. These
increases were partially offset by continued pharmacy client price
improvements.
- Pharmacy claims processed increased slightly on a 30-day
equivalent basis for the three months and year ended December 31, 2023 compared to the prior year
primarily driven by net new business and increased utilization.
These increases were largely offset by the impact of a Medicaid
customer contract change that occurred during the second quarter of
2023 and a decrease in COVID-19 vaccinations.
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
|
- Total revenues increased 8.6% and 7.5% for the three months and
year ended December 31, 2023,
respectively, compared to the prior year primarily driven by
pharmacy drug mix, increased prescription volume, brand inflation
and increased contributions from vaccinations. These increases were
partially offset by the impact of recent generic introductions,
continued pharmacy reimbursement pressure, a decrease in store
count and decreased contributions from COVID-19 over-the-counter
("OTC") test kits and diagnostic testing.
- Adjusted operating income increased 9.7% for the three months
ended December 31, 2023 compared to
the prior year primarily driven by improved drug purchasing,
increased contributions from vaccinations, increased prescription
volume and lower operating expenses. These increases were partially
offset by continued pharmacy reimbursement pressure.
- Adjusted operating income decreased 8.7% for the year ended
December 31, 2023 compared to the
prior year primarily driven by continued pharmacy reimbursement
pressure and decreased COVID-19 vaccinations and diagnostic
testing. These decreases were partially offset by the increased
prescription volume described above, improved generic drug
purchasing and lower operating expenses in the year ended
December 31, 2023.
- Prescriptions filled increased 1.9% and 1.5% on a 30-day
equivalent basis for the three months and year ended December 31, 2023, respectively, compared to the
prior year primarily driven by increased utilization, partially
offset by a decrease in COVID-19 vaccinations and the decrease in
store count.
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
2022)
|
—
|
|
(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
activities:
|
|
|
|
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:
- 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 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.
- The Company's net realized capital gains and losses arise from
various types of transactions, primarily in the course of managing
a portfolio of assets that support the payment of insurance
liabilities. Net realized capital gains and losses are reflected in
the condensed consolidated statements of operations in net
investment income (loss) within each segment. These capital gains
and losses are the result of investment decisions, market
conditions and other economic developments that are unrelated to
the performance of the Company's business, and the amount and
timing of these capital gains and losses do 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. Accordingly, the Company believes excluding
net realized capital gains and losses 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.
- During the three months and year ended December 31, 2023, the acquisition-related
transaction and integration costs relate to the acquisitions of
Signify Health and Oak Street Health. The acquisition-related
transaction and integration costs are reflected in the Company's
condensed consolidated statements of operations in operating
expenses within the Corporate/Other segment.
- During the year ended December 31,
2023, the restructuring charges include severance and
employee-related costs, asset impairment charges and a stock-based
compensation charge. During the second quarter of 2023, the Company
developed an enterprise-wide restructuring plan intended to
streamline and simplify the organization, improve efficiency and
reduce costs. In connection with the development of this plan and
the recently completed acquisitions of Signify Health and Oak
Street Health, the Company also conducted a strategic review of its
various transformation initiatives and determined that it would
terminate certain initiatives. The restructuring charges are
reflected within the Corporate/Other segment.
- During the three months and years ended December 31, 2023 and 2022, the office real
estate optimization charges primarily relate to the abandonment of
leased real estate and the related right-of-use assets and property
and equipment in connection with the planned reduction of corporate
office real estate space in response to the Company's new flexible
work arrangement. The office real estate optimization charges are
reflected in the Company's condensed consolidated statements of
operations in operating expenses within the Health Care Benefits,
Corporate/Other and Health Services segments.
- During the year ended December 31,
2023 and the three months and year ended December 31, 2022, the loss on assets held for
sale relates to the LTC reporting unit within the Pharmacy &
Consumer Wellness segment. During 2022, the Company determined that
its LTC business was no longer a strategic asset and committed to a
plan to sell it, at which time the LTC business met the criteria
for held-for-sale accounting and its net assets were accounted for
as assets held for sale. The carrying value of the LTC business was
determined to be greater than its estimated fair value less costs
to sell and, accordingly, the Company recorded a loss on assets
held for sale during the third quarter of 2022. As of December 31, 2022, the net assets of the LTC
business continued to meet the criteria for held-for-sale
accounting and during the fourth quarter of 2022, an incremental
loss on assets held for sale was recorded to write down the
carrying value of the LTC business to its estimated fair value less
costs to sell. During the first quarter of 2023, an additional loss
on assets held for sale was recorded to write down the carrying
value of the LTC business to the Company's best estimate of the
ultimate selling price which reflected its estimated fair value
less costs to sell. As of September 30,
2023, the Company determined the LTC business no longer met
the criteria for held-for-sale accounting and, accordingly, the net
assets associated with the LTC business were reclassified to held
and used at their respective fair values. During the year ended
December 31, 2022, the loss on assets
held for sale also relates to the Company's international health
care business domiciled in Thailand ("Thailand business"), which was included in the
Commercial Business reporting unit in the Health Care Benefits
segment. The sale of the Thailand
business closed in the second quarter of 2022, and the ultimate
loss on the sale was not material.
- During the three months and year ended December 31, 2022, the opioid litigation charges
relate to agreements to resolve substantially all opioid claims
against the Company by certain states and governmental entities.
The opioid litigation charges are reflected within the
Corporate/Other segment.
- During the three months and year ended December 31, 2022, the gain on divestiture of
subsidiary represents the pre-tax gain on the sale of bswift, which
the Company sold in November 2022.
During the year ended December 31,
2022, the gain on divestiture of subsidiaries also includes
the pre-tax gain on the sale of PayFlex, which the Company sold in
June 2022. The gains on divestitures
are reflected as a reduction of operating expenses in the Company's
condensed consolidated statement of operations within the Health
Care Benefits 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. The Company's adjusted income
tax provision also excludes the impact of certain discrete tax
items concluded in the year ended December
31, 2022.
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
operating income, as well as reconciliations of segment GAAP
operating income (loss) to segment adjusted operating
income (loss):
|
|
|
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
costs
|
—
|
|
—
|
|
—
|
|
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
costs
|
—
|
|
—
|
|
—
|
|
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
December 31, 2022
|
In millions, except per share amounts
|
Total
Company
|
|
Per
Common
Share
|
|
Total
Company
|
|
Per
Common
Share
|
Net income attributable
to CVS Health (GAAP measure)
|
$ 2,046
|
|
$
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
December 31, 2023
|
|
Year Ended
December 31, 2022
|
In millions, except per share amounts
|
Total
Company
|
|
Per
Common
Share
|
|
Total
Company
|
|
Per
Common
Share
|
Net income attributable
to CVS Health (GAAP measure)
|
$ 8,344
|
|
$
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:
- Effective for the first quarter of 2023, the Company realigned
the composition of its segments to correspond with changes made to
its operating model and how the business is managed. As a result of
this realignment, the Company formed a new Health Services segment,
which in addition to providing a full range of PBM solutions, also
delivers health care services in the Company's medical clinics,
virtually, and in the home, as well as provider enablement
solutions. In addition, the Company created a new Pharmacy &
Consumer Wellness segment, which includes its retail and long-term
care pharmacy operations and related pharmacy services, as well as
its retail front store operations. This segment will also provide
pharmacy fulfillment services to support the Health Services
segment's specialty and mail order pharmacy offerings. The Company
also discontinued its former segment reporting practice for
activity under its Maintenance Choice® program as
described in Note (b) of the table on page 17. Following this
segment realignment, the Company's four reportable segments are:
Health Care Benefits, Health Services, Pharmacy & Consumer
Wellness and Corporate/Other.
- Effective January 1, 2023, the
Company adopted a new accounting standard related to the accounting
for long-duration insurance contracts using a modified
retrospective transition method. 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 regarding the adoption of this accounting
standard.
- Effective January 1, 2023, the
Company's non-GAAP financial measures exclude the impact of net
realized capital gains or losses, described in further detail on
page 12.
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
Care
Benefits
|
|
Health
Services (a)
|
|
Pharmacy
&
Consumer
Wellness
|
|
Corporate/
Other
|
|
Intersegment
Eliminations
(b)
|
|
Consolidated
Totals
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2023
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$ 26,726
|
|
$
49,146
|
|
$ 31,185
|
|
$
75
|
|
$
(13,319)
|
|
$ 93,813
|
Adjusted operating
income (loss) (1)
|
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
adjusted
|
$ 23,019
|
|
$
43,769
|
|
$ 28,715
|
|
$
152
|
|
$
(11,809)
|
|
$ 83,846
|
Adjusted operating
income (loss), as
previously reported
|
$
858
|
|
$ 1,988
|
|
$
1,840
|
|
$
(508)
|
|
$
(172)
|
|
$
4,006
|
Adjustments
|
55
|
|
(203)
|
|
7
|
|
42
|
|
172
|
|
73
|
Adjusted operating
income (loss), as adjusted (1)
|
$
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
income (loss) (1)
|
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
adjusted
|
$ 91,350
|
|
$ 169,576
|
|
$
108,596
|
|
$
530
|
|
$
(47,585)
|
|
$ 322,467
|
Adjusted operating
income (loss), as
previously reported
|
$
5,984
|
|
$ 7,356
|
|
$
6,705
|
|
$
(1,785)
|
|
$
(728)
|
|
$
17,532
|
Adjustments
|
354
|
|
(575)
|
|
(174)
|
|
172
|
|
728
|
|
505
|
Adjusted operating
income (loss), as adjusted (1)
|
$
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
basis points ("bps")
|
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 %
of premium revenues) (3)
|
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
total revenues
|
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
total revenues
|
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
% of total revenues
|
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
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
|
$
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
% of total revenues) (8)
|
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
total revenues
|
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
revenues
|
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
% of total revenues
|
3.8 %
|
|
4.1 %
|
|
3.9 %
|
|
4.0 %
|
|
|
|
|
|
|
|
|
Revenues (by
distribution
channel):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
% of total revenues) (8)
|
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
total revenues
|
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
total revenues
|
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
% of total revenues
|
6.5 %
|
|
6.4 %
|
|
5.1 %
|
|
6.0 %
|
|
|
|
|
|
|
|
|
Revenues (by major
goods/service lines):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
(decrease): (12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
years ended December 31, 2023 and 2022:
|
|
|
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
December 31, 2024
|
|
At
Least
|
In millions, except per share amounts
|
Total
Company
|
|
Per
Common
Share
|
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.
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SOURCE CVS Health Corporation