Once again CVS has reported great results, this time beating estimates by 2 cents a share and raking in some more billions of dollars. Front-store sales were down 7.8%, mostly due to lack of tobacco sales.
So once again the question comes up, when will they spend a little of those profits to clean up their stores? I was in a Rite-Aid last night (needed to buy something and it was on the way…) and it looked WAY better than any CVS I have been into in recent history. Rite-Aid used to be the “dirty” drug store but the roles are now completely reversed–the store was clean, full and straight. Most CVS stores are so short staffed they are too busy checking outdates and avoiding fines that they don’t have enough time to fill and/or clean the store. Their pharmacies seem well-staffed and clean though, how about a little front-store love with those billions of dollars of profit?
CVS OUTPERFORMS MARKET EXPECTATIONS WITH Q2 RESULTS
WOONSOCKET, R.I. — With second-quarter net revenues up 7.4% to $37.2 billion, CVS Health shows no signs of slowing down. CVS Health posted earnings of $1.22 per share, beating Zacks Investment Research analyst consensus of $1.20 per share.
“On an underlying basis, we surpassed the high end of our guidance range by two cents, as operating profit in the retail business exceeded our expectations while operating profit in the PBM was in line with our guidance,” CVS Health president and CEO Larry Merlo said. “We have also generated more than $2.1 billion in free cash flow in the first half of 2015, putting us well on our way to return more than $6 billion to shareholders through dividends and share repurchases this year.”
“Additionally, I’m pleased to report that we’re having a highly successful 2016 PBM selling season and have won significant net new business. Our unmatched suite of assets is enabling us to bring innovative, channel-agnostic products and services to the marketplace,” Merlo said. “In this era of consumer-directed health care, our assets have uniquely positioned us to provide patients with greater choice as to how they receive their pharmacy care while driving positive impacts on adherence through face-to-face interactions. This should result in lower overall health care costs providing savings for clients as well as better health outcomes and convenience for patients.”
Revenues in the Retail Pharmacy Segment increased 2.2% to $17.2 billion in the three months ended June 30. Same-store sales increased 0.5% versus the second quarter of last year, with pharmacy same-store sales up 4.1% and front store same-store sales down 7.8%. On a comparable basis, front store same-store sales would have been approximately 780 basis points higher if tobacco and the estimated associated basket sales were excluded from the three months ended June 30, 2014.
Pharmacy same-store prescription volumes rose 4.8% on a 30-day equivalent basis and were negatively impacted by approximately 370 basis points from recent generic drug introductions and by approximately 80 basis points from the implementation of Specialty Connect. The implementation of Specialty Connect had a greater effect on revenues than prescription volumes due to the higher dollar value of specialty products.
Revenues in the Pharmacy Services segment increased 11.9% to $24.4 billion, the healthcare retailer reported. The increase was primarily driven by growth in specialty pharmacy and pharmacy network claims. Pharmacy network claims processed during the three months ended June 30, 2015, increased 8.7% to approximately 229 million compared to 210 million in the prior year.
The increase in the pharmacy network claim volume was primarily due to net new business as well as growth in Managed Medicaid. Mail choice claims processed during the three months ended June 30, 2015, increased 3.9% to 21.3 million, compared to 20.5 million in the prior year. The increase in mail choice claims was driven by specialty claim volume and increased claims associated with the continued adoption of CVS Health’s Maintenance Choice offerings.
For the three months ended June 30, 2015, the generic dispensing rate increased approximately 150 basis points from the prior year in both segments, rising to 83.9% in the Pharmacy Services segment and 85% in the Retail Pharmacy segment.
During the three months ended June 30, CVS Health opened 25 new retail drug stores and closed 5 retail drug stores and one branch for infusion and enteral services. In addition, the company relocated 16 retail drug stores.
At the close of the second quarter, CVS Health operated 8,028 locations in 47 states, the District of Columbia, Puerto Rico and Brazil. These locations included 7,870 retail drug stores, 18 onsite pharmacies, 24 retail specialty pharmacy stores, 11 specialty mail order pharmacies, four mail service dispensing pharmacies, and 85 branches for infusion and enteral services, including approximately 72 ambulatory infusion suites and six centers of excellence.