CVS Health Corporation (CVS) reported an increase of 2.6% in revenues to around $45.7 billion for the first quarter of 2018 compared to the prior year period. Net income rose 4.7% to $998 million or $0.98 per share. Adjusted EPS came in at $1.48, beating market estimates. CVS shares rose over 2% in premarket trade following the earnings release.
The quarterly results benefited from higher prescription volumes within the retail pharmacy business and a lower income tax rate.
In the Pharmacy Services segment, revenues grew 3.2% to about $32.2 billion, primarily driven by growth in pharmacy network and specialty claim volume as well as brand inflation. Pharmacy network claims processed during the quarter increased 6%. In the Retail/LTC segment, revenues rose 5.6% to about $20.4 billion, driven primarily by an increase in the same-store prescription volume of 8.5%.
Same-store sales increased 5.8% while pharmacy same-store sales grew 7.3% during the quarter. Front store same-store sales improved 1.6% in the quarter. The increase in pharmacy same-store sales was mainly driven by the rise in the pharmacy same-store prescription volumes, partially offset by a negative impact of approximately 280 basis points due to recent generic introductions.
CVS expects GAAP diluted EPS between $5.11 and $5.32, and adjusted EPS between $6.87 and $7.08 for the full year of 2018. For the second quarter of 2018, the company expects GAAP diluted EPS of $1.21-$1.26 and adjusted EPS of $1.59-$1.64.
Shareholders of both companies approved the proposed acquisition of Aetna by CVS Health on March 13, 2018. The regulatory approval process is proceeding as per expectations. The transaction is expected to close during the second half of 2018. Aetna reported its earnings on Tuesday where its adjusted EPS of $3.19 beat analyst estimates.
During the first quarter, CVS launched the Rx Savings Finder initiative to tackle rising drug prices. This initiative has helped to improve transparency and reduce costs for customers.