CVS: Q1 Results Demonstrate Transformation Success

First quarter financial results indicate that its fresh approach to retail and health care, including the company’s Aetna acquisition, is making gains, said Larry Menlo, CVS Health Corp. president and CEO.

The company reported net income of $1.43 billion, or 1.09 per diluted share, versus $998 million, or 98 cents per diluted share, in the period a fiscal year earlier. Adjusted for one-time charges, company net income was $2.11 billion, or $1.62 per diluted share, versus $1.5 billion, or $1.48 per diluted share, in the fiscal year prior.

CVS topped a MarketBeat first quarter consensus analyst estimate of $1.50 per adjusted diluted share.

Revenues advanced 34.8% to $61.65 billion, while operating income increased 34.8% to $2.69 billion and adjusted operating income increased 56.8% to $3.6 billion.

In the Retail/LTC division, revenues increased 3.3% to $21.12 billion, with operating income slipping to $1.24 billion from $1.62 billion in the period a year previous. Adjusted operating income slid to $1.49 billion from $1.84 billion, in the fiscal year before. Higher labor and legal costs, pharmacy reimbursement pressure, and declining performance in the long-term care business hit operating income.

Front store comparable store sales, which include general merchandise revenues, increased 0.4%, according to CVS.

In announcing the first quarter financial results, Menlo said, “We generated strong first quarter results, providing positive momentum to start the year. Following the close of our Aetna acquisition in late November, our first full quarter of combined operations was a success in many ways. In the quarter we continued to advance our integration efforts while beginning to launch new innovations such as our HealthHUB concept stores. With our differentiated collection of health care assets we are uniquely positioned to lead the transformation of the U.S. health care system. We remain relentlessly focused on creating value for clients and customers while driving both near and longer-term returns for our shareholders.”