What Are CVS’s Key Sources Of Revenue?

by Trefis Team
CVS Health
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CVS Health (NYSE:CVS) has continued with its growth momentum the past few years, primarily driven by higher prescription volumes within the retail pharmacy business. The top line got a major boost by a strong Pharmacy Services segment, benefiting from the upside in the specialty services. Recently, during the Q4 earnings for FY18, the company reported better-than-expected growth in sales growing by 12.5% y-o-y.

CVS’s Revenue for its Pharmacy Services segment grew by 2.2%  in Q4 driven by growth in the pharmacy network and specialty claim volume as well as brand inflation, partially offset by continued price compression. This segment includes the pharmacy benefits manager business and specialty pharmacy services. In addition, Origins generated sales growth from every geographic region, led by Asia. The division is continuing to perform well in e-commerce and is outpacing growth in the mass Skin Care segment.

CVS’s Retail/LTC segment remains one of the important source of revenues that increased by 5.4%,  driven by an increase in same store prescription volume of 8.6%, on a 30-day equivalent basis, due to continued adoption of the Patient Care Programs, partnerships with PBM’s and health plans, and inclusion in a number of additional Medicare Part D networks this year, as well as brand inflation.

Driven by this earning performance, which has been fueled by growth in most of their segments and brands, the company expects its GAAP diluted EPS from continuing operations to grow in the range of $4.88 to $5.08 for the full year 2019. CVS is focused on long-term growth initiatives and to invest in process improvements and technology enhancements that will position them well to expand their reach in providing access to high-quality and more affordable care. The recent Aetna transaction will also provide CVS the means to further lower health care costs for consumers and payers, in turn benefiting the company in the longer run.

We have created an interactive dashboard on CVS’s Key Sources of Revenues that shows CVS’s key revenue sources and the expected performance in 2019. You can adjust the revenues to see the impact on earnings. In addition, here is more Health Care data.



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