CVS beats earnings, revenue expectations amid cost-cutting

Doug Cunningham
·2 min read
UPI
CVS reported Wednesday that second quarter 2023 revenue was up but profits were down compared to the same quarter in 2022. The news comes a day after CVS announced 5,000 layoffs. Photo courtesy CVS

Aug. 2 (UPI) -- CVS Health Corporation reported better-than-expected earnings and revenue Wednesday amid cost-cutting efforts.

The company reported net income of $1.91 billion for the second quarter of 2023, down 37% from the same period in 2022 while revenue was up 10% to $88.9 billion.

Year-to-date CVS revenues for 2023 were up 10.6% to $174.2 billion. The company reported returning $795 million to shareholders via dividends during the three months ended June 30.

According to CVS, health services revenue of $46.22 billion was up 7.6% compared to the second quarter of 2022. Meanwhile, CVS's health insurance operations delivered $26.75 billion in revenue, up 17.6% over 2022's second quarter.

The CVS retail pharmacy division had revenue of $28.78 billion, also an increase of 7.6% from 2022.

"Our diversified business model delivered strong results this quarter," CVS CEO Karen S. Lynch said in a statement. "We continue to execute on our strategy to expand access to health services across our care delivery channels and strengthen our engagement with consumers to improve their health and well-being."

According to CVS, the drop in operating income for the quarter was "primarily due to the decrease in adjusted operating income ... a restructuring charge and acquisition-related transaction and integration costs recorded in the current year, as well as the absence of a $225 million pre-tax gain on the sale of PayFlex Holdings, Inc."

Adjusted operating income fell 10.4% for the 2023 second quarter driven "by declines in the Health Care Benefits and Pharmacy & Consumer Wellness segments, partially offset by increases in the Health Services segment," CVS said.

The pre-tax restructuring charge for the quarter was $496 million.

The restructuring is being carried out to streamline operations following major acquisitions of Signify Health and Oak Street Health.

The earnings report came on the heels of a Tuesday announcement CVS would slash 5,000 jobs in mostly corporate and "non-customer facing positions."

CVS said it completed the acquisition of Oak Street Health in May. That all-cash $10.6 billion deal announced in February added 600 primary caregivers and 169 medical centers in 21 states.

The Signifiy acquisition cost $8 billion and was announced in Sept. 2022.

In June CVS launched Caremark Cost Saver to help lower out-of-pocket drug costs.