CVS Health : Q1 2021 Earnings Release (opens in new window)

Exhibit 99.1

Investor Katie Durant	Media T.J. Crawford
Contact: Senior Director	Contact: Vice President
Investor Relations	External Affairs
[phone]	[phone]
	FOR IMMEDIATE RELEASE

CVS HEALTH REPORTS STRONG FIRST QUARTER RESULTS

RAISES 2021 FULL YEAR EPS AND CONFIRMS CASH FLOW FROM OPERATIONS GUIDANCE

RANGES

First Quarter Highlights:

• Total revenues increased to $69.1 billion, up 3.5% compared to prior year
• GAAP diluted EPS of $1.68, up 9.8% compared to prior year
• Adjusted EPS of $2.04, up 6.8% compared to prior year
• Generated cash flow from operations of $2.9 billion

2021 Full Year Guidance:

• Raised GAAP diluted EPS guidance range to $6.24 to $6.36 from $6.06 to $6.22
• Raised Adjusted EPS guidance range to $7.56 to $7.68 from $7.39 to $7.55
• Confirmed cash flow from operations guidance range of $12.0 billion to $12.5 billion

WOONSOCKET, RHODE ISLAND, May 4, 2021 - CVS Health Corporation (NYSE: CVS) today announced operating results for the three months ended March 31, 2021.

"We delivered strong first quarter results and improved our outlook for the year," said CVS Health President and CEO Karen S. Lynch. "We continue to execute on our strategy while simultaneously managing through a pandemic, helping the country on the road to recovery. Our unmatched assets and strength of our brand are driving results as we work toward improving care delivery and driving growth."

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The Company presents both GAAP and non-GAAP financial measures in this press release to assist in the comparison of the Company's past financial performance with its current financial performance. See "Non-GAAP Financial Information" beginning on page 11 and endnotes beginning on page 21 for explanations of non-GAAP financial measures presented in this press release. See pages 12, 13 and 20 for reconciliations of each non-GAAP financial measure used in this release to the most directly comparable GAAP financial measure.

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Consolidated First Quarter Results

		Three Months Ended
				March 31,
In millions, except per share amounts		2021			2020		Change
Total revenues	$	69,097		$	66,755		$	2,342
Operating income		3,577			3,458			119
Adjusted operating income (1)		4,205			4,113			92
Net income		2,224			2,012			212
Diluted earnings per share	$	1.68		$	1.53		$	0.15
Adjusted EPS (2)	$	2.04	$	1.91	$	0.13
Enterprise prescriptions (3) (4)		738.4			746.6			(8.2)

• Total revenues increased 3.5% for the three months ended March 31, 2021 compared to the prior year driven by growth across all segments.
• Operating income and adjusted operating income increased 3.4% and 2.2%, respectively, for the three months ended March 31, 2021 compared to the prior year. The increase in both operating income and adjusted operating income was primarily due to growth in the Pharmacy Services and Health Care Benefits segments, partially offset by declines in the Retail/LTC segment.
• Interest expense decreased 10.4% for the three months ended March 31, 2021 compared to the prior year primarily due to lower debt in the three months ended March 31, 2021.
• The effective income tax rate was 25.1% for the three months ended March 31, 2021 compared to 27.6% for the three months ended March 31, 2020. The decrease in the effective income tax rate was primarily due to the repeal of the non-deductible health insurer fee ("HIF") for 2021.

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Health Care Benefits Segment

The Health Care Benefits segment offers a full range of insured and self-insured ("ASC") medical, pharmacy, dental and behavioral health products and services. The segment results for the three months ended March 31, 2021 and 2020 were as follows:

	Three Months Ended
		March 31,
In millions, except percentages	2021	2020		Change
Total revenues	$ 20,483		$ 19,198		$ 1,285
Adjusted operating income (1)	1,782	1,491	291
Medical benefit ratio ("MBR") (5)	83.2 %	82.4 %	0.8 %
Medical membership (6)	23.6	23.5	0.1

• Total revenues increased 6.7% for the three months ended March 31, 2021 compared to the prior year primarily driven by growth in the Government Services business, partially offset by the unfavorable impact of the repeal of the HIF for 2021.
• Adjusted operating income increased 19.5% for the three months ended March 31, 2021 compared to the prior year. The increase in adjusted operating income was primarily driven by improved performance in the Government Services business and the impact of cost savings initiatives.
• The MBR increased 80 basis points for the three months ended March 31, 2021 compared to the prior year primarily driven by the repeal of the HIF for 2021 and lower Medicare risk adjustment revenue. These increases were partially offset by improved performance in the Company's Medicaid products and favorable development of prior- years' health care cost estimates.
• Medical membership as of March 31, 2021 of 23.6 million increased 214,000 members compared with December 31, 2020, primarily reflecting increases in Medicare and Medicaid products, partially offset by a decline in Commercial products.
• The segment experienced favorable development of prior-years' health care cost estimates in its Commercial and Government Services businesses during the three months ended March 31, 2021, primarily attributable to fourth quarter 2020 performance.
• Prior years' health care costs payable estimates developed favorably by $652 million during the three months ended March 31, 2021. This development is reported on a basis consistent with the prior years' development reported in the health care costs payable table in the Company's annual audited financial statements and does not directly correspond to an increase in 2021 operating results.

See the supplemental information on page 15 for additional information regarding the performance of the Health Care Benefits segment.

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Pharmacy Services Segment

The Pharmacy Services segment provides a full range of pharmacy benefit management solutions to employers, health plans, government employee groups and government sponsored programs. The segment results for the three months ended March 31, 2021 and 2020 were as follows:

	Three Months Ended
			March 31,
In millions	2021	2020		Change
Total revenues	$ 36,321		$ 34,983		$ 1,338
Adjusted operating income (1)	1,507	1,181	326
Total pharmacy claims processed (4) (7)	535.9	541.4	(5.5)
Pharmacy network (8)	455.4	461.1	(5.7)
Mail choice (9)	80.5	80.3	0.2

• Total revenues increased 3.8% for the three months ended March 31, 2021 compared to the prior year primarily driven by net new business, growth in specialty pharmacy, product mix and brand inflation, partially offset by continued price compression and a weak cough, cold and flu season.
• Adjusted operating income increased 27.6% for the three months ended March 31, 2021 compared to the prior year primarily driven by improved purchasing economics and growth in specialty pharmacy, partially offset by continued price compression.
• Total pharmacy claims processed decreased 1.0% on a 30-day equivalent basis for the three months ended March 31, 2021 compared to the prior year primarily driven by a weak cough, cold and flu season, partially offset by net new business in the three months ended March 31, 2021.

See the supplemental information on page 17 for additional information regarding the performance of the Pharmacy Services segment.

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Retail/LTC Segment

The Retail/LTC segment fulfills prescriptions for medications, provides patient care programs, sells a wide assortment of health and wellness products and general merchandise, provides health care services through walk-in medical clinics, provides medical diagnostic testing, administers vaccinations and provides services to long-term care facilities. The segment results for the three months ended March 31, 2021 and 2020 were as follows:

	Three Months Ended
			March 31,
In millions	2021	2020		Change
Total revenues	$ 23,274		$ 22,749		$	525
Adjusted operating income (1)	1,394	1,902			(508)
Prescriptions filled (4) (7)	375.4	375.1			0.3

• Total revenues increased 2.3% for the three months ended March 31, 2021 compared to the prior year primarily driven by increased COVID-19 diagnostic testing and vaccinations and brand inflation. These increases were partially offset by lower front store revenues, primarily due to the acceleration of demand in March 2020 as consumers prepared for the COVID-19 pandemic and a weak cough, cold and flu season; continued reimbursement pressure and the impact of recent generic introductions.
• Adjusted operating income decreased 26.7% for the three months ended March 31, 2021 compared to the prior year primarily driven by continued reimbursement pressure and the lower front store volume described above. These decreases were partially offset by increased COVID-19 diagnostic testing in the three months ended March 31, 2021.
• Prescriptions filled remained relatively consistent on a 30-day equivalent basis for the three months ended March 31, 2021 compared to the prior year, with COVID-19 vaccinations and the continued adoption of patient care programs largely offset by the impact of a weak cough, cold and flu season, the acceleration of demand in March 2020 as consumers prepared for the COVID-19 pandemic and decreased long-term care prescription volume.

See the supplemental information on page 18 for additional information regarding the performance of the Retail/LTC segment.

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