View all news 05.01.24 First Quarter Highlights 2024 Full-Year Guidance CEO Commentary WOONSOCKET, R.I., May 1, 2024 /PRNewswire/ -- CVS Health Corporation (NYSE: CVS) today announced operating results for the three months ended March 31, 2024. Financial Results Summary Three Months Ended March 31, Inmillions,exceptpershareamounts 2024 2023 Change Total revenues $ 88,437 $ 85,278 $ 3,159 Operating income 2,271 3,446 (1,175) Adjusted operating income (1) 2,957 4,370 (1,413) Diluted earnings per share $ 0.88 $ 1.65 $ (0.77) Adjusted EPS (2) $ 1.31 $ 2.20 $ (0.89) First quarter revenues of $88.4 billion increased by 3.7% compared to the prior year, reflecting strong growth in the Health Care Benefits and Pharmacy & Consumer Wellness segments, partially offset by a decline in our Health Services segment. First quarter GAAP diluted EPS of $0.88 decreased from $1.65 in the prior year and Adjusted EPS of $1.31 decreased from $2.20 in the prior year, primarily due to a decline in the Health Care Benefits segment's operating results, reflecting utilization pressure in the Company's Medicare business. Recognizing the potential for continued elevated medical cost trends in the remainder of 2024, the Company revised its full-year 2024 GAAP diluted EPS, Adjusted EPS and cash flow from operations guidance to reflect the assumption that the majority of this pressure will persist throughout 2024. 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 11and endnotes beginning on page 22for explanations of non-GAAP financial measures presented in this press release. See pages 13through 14and page 21for reconciliations of each non-GAAP financial measure used in this release to the most directly comparable GAAP financial measure. Consolidated first quarter results Three Months Ended March 31, Inmillions,exceptpershareamounts 2024 2023 Change Total revenues $ 88,437 $ 85,278 $ 3,159 Operating income 2,271 3,446 (1,175) Adjusted operating income (1) 2,957 4,370 (1,413) Net income 1,124 2,142 (1,018) Diluted earnings per share $ 0.88 $ 1.65 $ (0.77) Adjusted EPS (2) $ 1.31 $ 2.20 $ (0.89) For the three months ended March 31, 2024 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 ended March31, 2024 and 2023 were as follows: Three Months Ended March 31, Inmillions, except percentages 2024 2023 Change Total revenues $ 32,236 $ 25,877 $ 6,359 Adjusted operating income (1) 732 1,824 (1,092) Medical benefit ratio ("MBR") (3) 90.4% 84.6% 5.8% Medical membership (4) 26.8 25.5 1.3 See the supplemental information on page 16for 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 ended March31, 2024 and 2023 were as follows: Three Months Ended March 31, Inmillions 2024 2023 Change Total revenues $ 40,285 $ 44,591 $ (4,306) Adjusted operating income (1) 1,363 1,680 (317) Pharmacy claims processed (5) (6) 462.9 587.3 (124.4) See the supplemental information on page 17for 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 ended March31, 2024 and 2023 were as follows: Three Months Ended March 31, Inmillions 2024 2023 Change Total revenues $ 28,725 $ 27,922 $ 803 Adjusted operating income (1) 1,177 1,134 43 Prescriptions filled (5) (6) 417.6 404.8 12.8 See the supplemental information on page 18for 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 $5.64 from at least $7.06 and its full-year 2024 Adjusted EPS guidance to at least $7.00 from at least $8.30. The Company also revised its full-year 2024 cash flow from operations guidance to at least $10.5 billion from at least $12.0 billion. The Company's guidance revision reflects the assumption that the majority of utilization pressure observed in the Health Care Benefits segment during the first quarter will persist throughout 2024. Additional details of the guidance revision can be found in the Q1 2024 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, net realized capital losses, acquisition-related integration costs, opioid litigation charges 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 first quarter 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, the information under the headings "2024 Full-Year Guidance", "CEO Commentary" and "Financial Results Summary" 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 Report on Form 10-Q for the quarterly period ended March 31, 2024 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 - CVSHEALTH CORPORATION Three Months Ended March 31, Inmillions,exceptpershareamounts 2024 2023 Revenues: Products $ 53,724 $ 58,147 Premiums 30,391 24,352 Services 3,868 2,445 Net investment income 454 334 Total revenues 88,437 85,278 Operating costs: Cost of products sold 48,073 51,455 Health care costs 27,803 20,448 Loss on assets held for sale — 349 Operating expenses 10,290 9,580 Total operating costs 86,166 81,832 Operating income 2,271 3,446 Interest expense 716 589 Other income (25) (22) Income before income tax provision 1,580 2,879 Income tax provision 456 737 Net income 1,124 2,142 Net income attributable to noncontrolling interests (11) (6) Net income attributable to CVS Health $ 1,113 $ 2,136 Net income per share attributable to CVS Health: Basic $ 0.88 $ 1.66 Diluted $ 0.88 $ 1.65 Weighted average shares outstanding: Basic 1,260 1,283 Diluted 1,267 1,291 Dividends declared per share $ 0.665 $ 0.605 CVSHEALTH CORPORATION Inmillions March 31, December 31, Assets: Cash and cash equivalents $ 9,801 $ 8,196 Investments 3,288 3,259 Accounts receivable, net 32,217 35,227 Inventories 16,346 18,025 Other current assets 5,821 3,151 Total current assets 67,473 67,858 Long-term investments 24,074 23,019 Property and equipment, net 13,037 13,183 Operating lease right-of-use assets 17,045 17,252 Goodwill 91,272 91,272 Intangible assets, net 28,770 29,234 Separate accounts assets 3,271 3,250 Other assets 4,801 4,660 Total assets $ 249,743 $ 249,728 Liabilities: Accounts payable $ 13,717 $ 14,897 Pharmacy claims and discounts payable 22,289 22,874 Health care costs payable 14,368 12,049 Policyholders' funds 1,081 1,326 Accrued expenses 22,350 22,189 Other insurance liabilities 1,158 1,141 Current portion of operating lease liabilities 1,906 1,741 Short-term debt 2,719 200 Current portion of long-term debt 3,731 2,772 Total current liabilities 83,319 79,189 Long-term operating lease liabilities 15,742 16,034 Long-term debt 57,694 58,638 Deferred income taxes 4,184 4,311 Separate accounts liabilities 3,271 3,250 Other long-term insurance liabilities 5,178 5,459 Other long-term liabilities 6,205 6,211 Total liabilities 175,593 173,092 Shareholders' equity: Preferred stock — — Common stock and capital surplus 49,209 48,992 Treasury stock (36,773) (33,838) Retained earnings 61,873 61,604 Accumulated other comprehensive loss (341) (297) Total CVS Health shareholders' equity 73,968 76,461 Noncontrolling interests 182 175 Total shareholders' equity 74,150 76,636 Total liabilities and shareholders' equity $ 249,743 $ 249,728 CVSHEALTH CORPORATION Three Months Ended March 31, Inmillions 2024 2023 Cash flows from operating activities: Cash receipts from customers $ 84,997 $ 87,798 Cash paid for inventory, prescriptions dispensed and health services rendered (44,824) (50,223) Insurance benefits paid (24,894) (19,757) Cash paid to other suppliers and employees (9,677) (9,958) Interest and investment income received 407 426 Interest paid (1,043) (773) Income taxes paid (63) (75) Net cash provided by operating activities 4,903 7,438 Cash flows from investing activities: Proceeds from sales and maturities of investments 2,153 1,891 Purchases of investments (3,545) (2,358) Purchases of property and equipment (705) (984) Acquisitions (net of cash and restricted cash acquired) (25) (7,094) Other 28 31 Net cash used in investing activities (2,094) (8,514) Cash flows from financing activities: Commercial paper borrowings (repayments), net 2,519 — Proceeds from issuance of long-term debt — 5,951 Repayments of long-term debt (18) (362) Repurchase of common stock (3,027) (2,018) Dividends paid (840) (779) Proceeds from exercise of stock options 203 96 Payments for taxes related to net share settlement of equity awards (31) (34) Other (33) (128) Net cash provided by (used in) financing activities (1,227) 2,726 Net increase in cash, cash equivalents and restricted cash 1,582 1,650 Cash, cash equivalents and restricted cash at the beginning of the period 8,525 13,305 Cash, cash equivalents and restricted cash at the end of the period $ 10,107 $ 14,955 CVSHEALTH CORPORATION Three Months Ended March 31, Inmillions 2024 2023 Reconciliation of net income to net cash provided by operating activities: Net income $ 1,124 $ 2,142 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,138 1,001 Stock-based compensation 137 103 Deferred income taxes and other noncash items (217) 155 Change in operating assets and liabilities, net of effects from acquisitions: Accounts receivable, net 3,008 (751) Inventories 1,660 828 Other assets (2,836) (1,255) Accounts payable and pharmacy claims and discounts payable (1,410) (1,203) Health care costs payable and other insurance liabilities 2,253 4,382 Other liabilities 46 2,036 Net cash provided by operating activities $ 4,903 $ 7,438 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, 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. 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 22for 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 13 through 14 and page 21. Reconciliationsof Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures Adjusted Operating Income The following arereconciliationsof consolidated operating income (GAAP measure) to consolidated adjusted operating income, as well asreconciliationsof segment GAAP operating income (loss) to segment adjusted operating income (loss): Three Months Ended March 31, 2024 Inmillions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ 428 $ 1,213 $ 1,113 $ (483) $ 2,271 Amortization of intangible assets 294 150 64 — 508 Net realized capital losses 10 — — 8 18 Acquisition-related integration costs — — — 60 60 Opioid litigation charge — — — 100 100 Adjusted operating income (loss) (1) $ 732 $ 1,363 $ 1,177 $ (315) $ 2,957 Three Months Ended March 31, 2023 Inmillions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ 1,408 $ 1,638 $ 717 $ (317) $ 3,446 Amortization of intangible assets 295 41 65 1 402 Net realized capital losses 99 — 3 3 105 Acquisition-related transaction and integration costs — — — 43 43 Office real estate optimization charges 22 1 — 2 25 Loss on assets held for sale — — 349 — 349 Adjusted operating income (loss) (1) $ 1,824 $ 1,680 $ 1,134 $ (268) $ 4,370 Adjusted Earnings Per Share The following arereconciliationsof net income attributable toCVSHealth to adjusted income attributable toCVSHealth and calculations of GAAP diluted EPS and Adjusted EPS: Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 Inmillions,exceptpershareamounts Total Per Total Per Net income attributable to CVS Health (GAAP measure) $ 1,113 $ 0.88 $ 2,136 $ 1.65 Amortization of intangible assets 508 0.40 402 0.31 Net realized capital losses 18 0.01 105 0.08 Acquisition-related transaction and integration costs 60 0.05 43 0.03 Opioid litigation charge 100 0.08 — — Office real estate optimization charges — — 25 0.02 Loss on assets held for sale — — 349 0.27 Tax impact of non-GAAP adjustments (142) (0.11) (221) (0.16) Adjusted income attributable to CVS Health (2) $ 1,657 $ 1.31 $ 2,839 $ 2.20 Weighted average diluted shares outstanding 1,267 1,291 Supplemental Information 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, 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 as further described in endnote (1). The CODM uses adjusted operating income as its principal measure of segment performance as it enhances the CODM's ability to compare past financial performance with current performance and analyze underlying business performance and trends. The following is a reconciliation of financial measures of the Company's segments to the consolidated totals: Inmillions Health Care Benefits Health Services (a) Pharmacy & Consumer Wellness Corporate/ Other Intersegment Eliminations (b) Consolidated Totals Three Months Ended March 31, 2024 Total revenues $ 32,236 $ 40,285 $ 28,725 $ 115 $ (12,924) $ 88,437 Adjusted operating income (loss) (1) 732 1,363 1,177 (315) — 2,957 March 31, 2023 Total revenues $ 25,877 $ 44,591 $ 27,922 $ 188 $ (13,300) $ 85,278 Adjusted operating income (loss) (1) 1,824 1,680 1,134 (268) — 4,370 (a) Total revenues of the Health Services segment include approximately $3.4 billion and $4.1 billion of retail co-payments for the three months ended March 31, 2024 and 2023, 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. Supplemental Information Health Care Benefits segment The following table summarizes the Health Care Benefits segment's performance for the respective periods: Three Months Ended March 31, Change Inmillions, except percentages and basis points ("bps") 2024 2023 $ % Revenues: Premiums $ 30,379 $ 24,339 $ 6,040 24.8% Services 1,504 1,374 130 9.5% Net investment income 353 164 189 115.2% Total revenues 32,236 25,877 6,359 24.6% Health care costs 27,458 20,595 6,863 33.3% MBR (Health care costs as a % of premium revenues) (3) 90.4% 84.6% 580 bps Operating expenses $ 4,350 $ 3,874 $ 476 12.3% Operating expenses as a % of total revenues 13.5% 15.0% Operating income $ 428 $ 1,408 $ (980) (69.6)% Operating income as a % of total revenues 1.3% 5.4% Adjusted operating income (1) $ 732 $ 1,824 $ (1,092) (59.9)% Adjusted operating income as a % of total revenues 2.3% 7.0% Premium revenues (by business): Government $ 21,716 $ 17,528 $ 4,188 23.9% Commercial 8,663 6,811 1,852 27.2% The following table summarizes the Health Care Benefits segment's medical membership for the respective periods: March 31, 2024 December 31, 2023 March 31, 2023 Inthousands Insured ASC Total Insured ASC Total Insured ASC Total Medical membership: (4) Commercial 4,735 14,111 18,846 4,252 14,087 18,339 3,949 14,039 17,988 Medicare Advantage 4,205 — 4,205 3,460 — 3,460 3,387 — 3,387 Medicare Supplement 1,300 — 1,300 1,343 — 1,343 1,344 — 1,344 Medicaid 1,972 447 2,419 2,073 444 2,517 2,293 501 2,794 Total medical membership 12,212 14,558 26,770 11,128 14,531 25,659 10,973 14,540 25,513 Supplemental membership information: Medicare Prescription Drug Plan (stand-alone) 4,947 6,081 6,112 The following table summarizes the Health Care Benefits segment's days claims payable for the respective periods: March 31, 2024 December 31, 2023 March 31, 2023 Days Claims Payable (7) 44.5 45.9 48.1 Supplemental Information Health Services segment The following table summarizes the Health Services segment's performance for the respective periods: Three Months Ended March 31, Change Inmillions, except percentages 2024 2023 $ % Revenues: Products $ 37,717 $ 43,671 $ (5,954) (13.6)% Services 2,568 920 1,648 179.1% Total revenues 40,285 44,591 (4,306) (9.7)% Cost of products sold 37,532 42,416 (4,884) (11.5)% Health care costs 701 — 701 100.0% Gross profit (8) 2,052 2,175 (123) (5.7)% Gross margin (Gross profit as a % of total revenues) (8) 5.1% 4.9% Operating expenses $ 839 $ 537 $ 302 56.2% Operating expenses as a % of total revenues 2.1% 1.2% Operating income $ 1,213 $ 1,638 $ (425) (25.9)% Operating income as a % of total revenues 3.0% 3.7% Adjusted operating income (1) $ 1,363 $ 1,680 $ (317) (18.9)% Adjusted operating income as a % of total revenues 3.4% 3.8% Revenues (by distribution channel): Pharmacy network (9) $ 20,464 $ 27,592 $ (7,128) (25.8)% Mail & specialty (10) 17,262 16,145 1,117 6.9% Other 2,559 854 1,705 199.6% Pharmacy claims processed (5) (6) 462.9 587.3 (124.4) (21.2)% Generic dispensing rate (6) (11) 88.3% 88.4% Supplemental Information Pharmacy & Consumer Wellness segment The following table summarizes the Pharmacy & Consumer Wellness segment's performance for the respective periods: Three Months Ended March 31, Change Inmillions, except percentages 2024 2023 $ % Revenues: Products $ 28,120 $ 27,258 $ 862 3.2% Services 605 667 (62) (9.3)% Net investment income (loss) — (3) 3 100.0% Total revenues 28,725 27,922 803 2.9% Cost of products sold 22,760 21,876 884 4.0% Gross profit (8) 5,965 6,046 (81) (1.3)% Gross margin (Gross profit as a % of total revenues) (8) 20.8% 21.7% Loss on assets held for sale $ — $ 349 $ (349) (100.0)% Operating expenses 4,852 4,980 (128) (2.6)% Operating expenses as a % of total revenues 16.9% 17.8% Operating income $ 1,113 $ 717 $ 396 55.2% Operating income as a % of total revenues 3.9% 2.6% Adjusted operating income (1) $ 1,177 $ 1,134 $ 43 3.8% Adjusted operating income as a % of total revenues 4.1% 4.1% Revenues (by major goods/service lines): Pharmacy $ 22,784 $ 21,780 $ 1,004 4.6% Front Store 5,370 5,597 (227) (4.1)% Other 571 548 23 4.2% Net investment income (loss) — (3) 3 100.0% Prescriptions filled (5) (6) 417.6 404.8 12.8 3.2% Same store sales increase (decrease): (12) Total 5.3% 11.6% Pharmacy 7.3% 12.7% Front Store (2.2)% 7.7% Prescription volume (6) 5.8% 5.0% Generic dispensing rate (6) (11) 90.1% 89.4% Supplemental Information Corporate/Other segment The following table summarizes the Corporate/Other segment's performance for the respective periods: Three Months Ended March 31, Change In millions, except percentages 2024 2023 $ % Revenues: Premiums $ 12 $ 13 $ (1) (7.7)% Services 2 2 — —% Net investment income 101 173 (72) (41.6)% Total revenues 115 188 (73) (38.8)% Cost of products sold — 1 (1) (100.0)% Health care costs 47 52 (5) (9.6)% Operating expenses 551 452 99 21.9% Operating loss (483) (317) (166) (52.4)% Adjusted operating loss (1) (315) (268) (47) (17.5)% Supplemental Information The following table shows the components of the change in the consolidated health care costs payable during the three months ended March31, 2024 and 2023: Three Months Ended March 31, Inmillions 2024 2023 Health care costs payable, beginning of the period $ 12,049 $ 10,142 Less: Reinsurance recoverables 5 5 Less: Impact of discount rate on long-duration insurance reserves (a) (23) 8 Health care costs payable, beginning of the period, net 12,067 10,129 Add: Components of incurred health care costs Current year 28,212 21,068 Prior years (b) (479) (693) Total incurred health care costs (c) 27,733 20,375 Less: Claims paid Current year 16,263 11,957 Prior years 9,150 7,645 Total claims paid 25,413 19,602 Health care costs payable, end of the period, net 14,387 10,902 Add: Reinsurance recoverables 4 5 Add: Impact of discount rate on long-duration insurance reserves (a) (23) (12) Health care costs payable, end of the period $ 14,368 $ 10,895 (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 unaudited condensed consolidated balance sheets. (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 three months ended March 31, 2024 and 2023 in the table above exclude $23 million and $22 million, respectively, of health care costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheets and $47 million and $51 million, respectively, of health care costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheets. Adjusted Earnings Per Share Guidance 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 Inmillions,exceptpershareamounts Total Per Net income attributable to CVS Health (GAAP measure) $ 7,135 $ 5.64 Non-GAAP adjustments: Amortization of intangible assets 2,020 1.60 Net realized capital losses 18 0.01 Acquisition-related integration costs 230 0.18 Opioid litigation charge 100 0.08 Tax impact of non-GAAP adjustments (649) (0.51) Adjusted income attributable to CVS Health (2) $ 8,854 $ 7.00 Weighted average diluted shares outstanding 1,265 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, opioid litigation charges, office real estate optimization charges and losses on assets held for sale. The CODM uses adjusted operating income as its principal measure of segment performance as it enhances the CODM'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, opioid litigation charges, office real estate optimization charges, losses on assets held for sale, as well as the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health. 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, as well as 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. (10) Health Services mail and 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. (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 and digital sales initiated online or through mobile applications and fulfilled through the Company's distribution centers, 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. 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 usefulin understanding the portion of current revenues and prescriptions resulting from organic growth in existing locations versus the portion resulting from opening new stores. SOURCE CVS Health Corporation Categories: Press Releases View all news CVS HEALTH CORPORATION REPORTS FIRST QUARTER 2024 RESULTS AND REVISES FULL-YEAR 2024 GUIDANCE
"The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company. We are confident we have a pathway to address our near-term Medicare Advantage challenges. We remain committed to our strategy and believe that we have the right assets in place to deliver value to our customers, members, patients, and shareholders." -Karen S. Lynch, CVS Health President and CEO
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