CVS Health Corporation announced results for the three months ended June 30, 2015. Net revenues increased 7.4% to $37.2 billion and operating profit increased 2.5% to $2.3 billion.
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Revenues in the Pharmacy Services Segment increased 11.9%, or $2.6 billion, to $24.4 billion in the three months ended June 30, 2015. The increase was primarily driven by growth in specialty pharmacy and pharmacy network claims. Pharmacy network claims processed during the three months ended June 30, 2015, increased 8.7% to approximately 229 million compared to 210 million in the prior year.
The increase in the pharmacy network claim volume was primarily due to net new business as well as growth in Managed Medicaid. Mail choice claims processed during the three months ended June 30, 2015, increased 3.9% to 21.3 million, compared to 20.5 million in the prior year.
The increase in mail choice claims was driven by specialty claim volume and increased claims associated with the continued adoption of our Maintenance Choice® offerings.
Revenues in the Retail Pharmacy Segment increased 2.2%, or $371 million, to $17.2 billion in the three months ended June 30, 2015. Same store sales increased 0.5% versus the second quarter of last year, with pharmacy same store sales up 4.1% and front store same store sales down 7.8%.
On a comparable basis, front store same store sales would have been approximately 780 basis points higher if tobacco and the estimated associated basket sales were excluded from the three months ended June 30, 2014. Front store same store sales were impacted by softer customer traffic, partially offset by an increase in basket size.
Pharmacy same store prescription volumes rose 4.8% on a 30-day equivalent basis. Pharmacy same store sales were negatively impacted by approximately 370 basis points from recent generic drug introductions and by approximately 80 basis points from the implementation of Specialty Connect.
The implementation of Specialty Connect had a greater effect on revenues than prescription volumes due to the higher dollar value of specialty products.
For the three months ended June 30, 2015, the generic dispensing rate increased approximately 150 basis points from the prior year in both segments, rising to 83.9% in the Pharmacy Services Segment and 85.0% in the Retail Pharmacy Segment.
Operating profit for the Pharmacy Services Segment increased 7.1% and for the Retail Pharmacy Segment declined 1.4% for the three months ended June 30, 2015. Both segments benefited from the impact of increased generic drugs dispensed and favorable purchasing economics. The Pharmacy Services Segment was also positively impacted by growth in specialty pharmacy and pharmacy network volume, partially offset by price compression.
The Retail Pharmacy Segment was negatively impacted by continued reimbursement pressure, partially offset by increased sales and an improved front store margin rate, largely driven by the removal of tobacco products and changes in product mix. The Corporate Segment includes $21 million of acquisition-related transaction costs for the three months ended June 30, 2015 related to the proposed acquisitions of Omnicare and the pharmacies and clinics of Target Corporation.
The acquisition of Omnicare is expected to close prior to the end of 2015, potentially as early as the third quarter. The close of the acquisition of the pharmacies and clinics of Target is uncertain and could occur in either 2015 or 2016.
Net income for the three months ended June 30, 2015, increased 2.1%, or $26 million, to $1.3 billion, compared with approximately$1.2 billion during the three months ended June 30, 2014. In addition to the $21 million of transaction costs discussed above, net income for the three months ended June 30, 2015 also included $36 million of pre-tax acquisition-related financing costs related to the proposed Omnicare and Target acquisitions (combined impact of approximately $0.03 per diluted share).
Excluding the acquisition-related transaction and financing costs, net income increased 4.9%. Adjusted earnings per share (Adjusted EPS) for the three months ended June 30, 2015 and 2014, was $1.19 and $1.13, respectively. Excluding the acquisition-related transaction and financing costs, Adjusted EPS increased 7.7% to $1.22.
Adjusted EPS in the three months ended June 30, excludes $131 million and $133 million in 2015 and 2014, respectively, of intangible asset amortization related to acquisition activity. GAAP earnings per share for the three months ended June 30, 2015 and 2014, was $1.12 and $1.06, respectively, an increase of 5.3%, which includes the acquisition-related transaction and financing costs. ■