CVS Health tops profit, sales estimates amid cost cuts, layoffs

Marianne Wilson
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CVS Health store
CVS Health’s total second-quarter revenue rose 10.3% to $88.92 billion.

CVS Health Corp. reported second-quarter earnings and revenue that topped expectations, with sales growth across all segments.

The retail pharmacy and health care giant  reported its earnings the day after news broke that it planned to layoff approximately 5,000 employees in a move that it said “will set the company up for long-term success.”  (CVS had about 300,000 employees at the end of 2022.)

As previously reported, CVS has implemented a restructuring plan aimed at cutting costs and improving efficiency after two big acquisitions —  Oak Street Health for $10.6 billion and Signify Health for $7.8 billion — related to its ongoing push into health care. The company said it expects the plan to be “substantially completed” in 2023.

CVS net income fell to $1.90 billion, or $1.48 a share, for the quarter ended June 30, from $3.03 billion, or $2.29 a share, in the year-ago period. Excluding nonrecurring items, such as a $496 million restructuring charge, adjusted earnings of $2.21 ahead of analysts’ estimates of $2.12. 

Total revenue rose 10.3% to $88.92 billion, easily topping estimates of $86.41 billion. Revenue for both the health services and pharmacy and consumer wellness segments increased 7.6%, with pharmacy revenue driven by increased prescription volume.

Revenue in the the health care benefits (insurance) segment rose 17.6%.

During the quarter, CVS completed its acquisition of Oak Street Health, a value-based primary care company with approximately 600 primary care providers and more than 170 medical centers across 21 states. 

“Our diversified business model delivered strong results this quarter,” said Karen S. Lynch, president and CEO, CVS Health. “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.”

For the full year, CVS affirmed its adjusted earnings guidance range of $8.50 to $8.70, which it had cut  $0.20 last quarter due to costs associated with its acquisition of Oak Street Health and Signify Health.