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CVS Health reported strong revenue and earnings performance in the third quarter, hitting a $2.3 billion profit, the company said this week.
Total revenue increased to $89.8 billion, compared to $264 billion for the quarter and year-over-year, up 10.6 percent. Cash flow from operations totaled $16.1 billion during that period.
CVS Health President and CEO Karen Lynch said during the earnings call that it has been a “challenging business environment,” but the company has met the changing needs of consumers by expanding access to care and reducing costs.
Several factors contributed to the company’s financial performance, according to August Cordavis, a wholly-owned subsidiary that works with pharmaceutical manufacturers to manufacture and/or co-manufacture biozyme products for the US market. Cordavis products are FDA approved, and CVS expects this will help ensure a sustainable long-term supply of affordable biosimilars.
Then in October, CVS announced Aetna 2024 Medicare products — the largest Medicare offering in Aetna’s history — touting the company’s many choices, flexible benefits, a strong provider network and more medical and prescription drug plans.
Also last month, the company announced that 87% of Aetna’s Medicare Advantage members in 2024 MA prescription drug plans were rated 4 stars (out of 5) by Medicare & Medicaid Services.
CVS also appointed two new members to CVS Health Corp.’s board of directors — Scott Kirby, CEO of United Airlines Holdings, and Michael Mahoney, chairman and CEO of Boston Scientific Corp. — and returned $779 million to shareholders at the end of September 30. .
What is the effect?
The company posted an operating income of $3.7 billion compared to an operating loss of $3.9 billion last year. The change was primarily related to a $5.2 billion non-payment of opioid litigation and a $2.5 billion write-down on assets held for sale in CVS Omnicare’s long-term care business.
Adjusted operating income increased 2.5%, primarily due to an increase in the Health Services segment and partially due to a decline in the Health Care Benefits segment. Adjusted operating income for the Pharmacy and Consumer Safety segment remained relatively flat compared to last year.
In the three months ended Sept. 30, interest expense increased $127 million, or 22.4%, due to higher debt financing the acquisitions of Signify Health and Oak Street Health.
The biggest trend
CVS Health completed its acquisition of Oak Street Health in May. The actual deal was announced in February, and the entire transaction was worth around $10.6 billion. Oak Street Health, a multi-payer, value-based primary care organization focused on older adults, describes its scalable care model and technology platform.
CVS covered the transaction with a $5 billion loan and cash on hand in a May 1 credit agreement. CVS Health said it remains committed to maintaining its current credit rating.
It’s been a busy few months for CVS, as the company unveiled Virtual Primary Care in January, a virtual care service focused primarily on primary care and mental health services. With the launch, CVS is expanding its virtual mental health services. Enrollees 18 and older are slated to receive virtual mental health support from clinics nationwide, including licensed therapists and psychiatrists.
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