CVS Health on a roll as earnings rise

Woonsocket, R.I. -- CVS Health is showing no signs of slowing down.



The company reported that its second-quarter net income rose 2.1% to $1.27 billion. Adjusted earnings came to $1.22 per share, beating Zacks Investment Research analyst consensus of $1.20 per share.



Net revenues rose 7.4% to $37.2 billion.



“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,” said CVS Health president and CEO Larry Merlo. “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.”



Revenues in the company’s 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.



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.



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.