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Prescription Growth Powers CVS Health Corp.'s Strong Q1

CVS Health Corp. (NYSE:CVS) ended its fiscal 2015 on a good note, delivering solid revenue and earnings growth in the fourth quarter. Investors were hoping for more good news when the large pharmacy services company announced its 2016 first-quarter results before the market opened on Tuesday. How did the company perform? Here are the highlights.

CVS Health results: The raw numbers

Metric

Q1 2016 Actuals

Q1 2015 Actuals

Growth (YOY)

Sales

$43.2 billion

$36.3 billion

19%

Net income from continuing operations

$1.1 billion

$1.2 billion

(6.1%)

Earnings per diluted share

$1.04

$1.07

(2.8%)

What happened with CVS Health this quarter?
While the official earnings numbers reflected a decrease from the prior-year period, the news really wasn't that bad. The negative comparisons stemmed from costs related to the 2015 acquisitions of Omnicare and Target's in-store pharmacies and clinics. On a non-GAAP basis, CVS Health reported earnings per share in the first quarter of $1.18, a 3.5% year-over-year increase.

Highlights of the company's first quarter included:

  • Pharmacy services segment revenue jumped 20.5% to $28.8 billion, driven primarily by higher pharmacy prescription volume and specialty pharmacy growth.
  • Net new business was the main catalyst behind the increased prescription volume, with the number of pharmacy network claims processed in the first quarter climbing 22.6% year over year.
  • Retail/long-term care (LTC) revenue rose 18.6% to $20.1 billion, thanks in large...

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