CVS Health total revenues and adjusted revenues increased 35.2% and 35.8%, respectively, for the three months ended June 30, 2019 compared to the prior year.
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Revenue growth was primarily driven by the acquisition of Aetna which the Company acquired on November 28, 2018 as well as increased volume and brand name drug price inflation in both the Pharmacy Services and Retail/LTC segments.[break]
The revenue increase was partially offset by continued reimbursement pressure in the Retail/LTC segment, price compression in the Pharmacy Services segment, and an increased generic dispensing rate.
Operating expenses and adjusted operating expenses increased 65.2% and 59.1%, respectively, for the three months ended June 30, 2019 compared to the prior year.
The increase in operating expenses is due to the impact of the Aetna Acquisition, an increase in intangible amortization related to the Aetna Acquisition and an increase in acquisition-related integration costs.
The increase in adjusted operating expenses was primarily driven by the impact of the Aetna Acquisition.
Operating income and adjusted operating income increased 342.7% and 55.1%, respectively, for the three months ended June 30, 2019 compared to the prior year.
The increase in both operating income and adjusted operating income was primarily due to the Aetna Acquisition as well as increased claims volume and improved purchasing economics in the Pharmacy Services segment.
These increases were partially offset by reimbursement pressure and the investment of a portion of the savings from tax reform in wages and benefits in the Retail/LTC segment and continued price compression in the Pharmacy Services segment.
The increase in operating income was also due to the absence of the $3.9 billion pre-tax goodwill impairment charge related to the LTC reporting unit within the Retail/LTC segment recorded in the three months ended June 30, 2018, partially offset by higher intangible asset amortization related to the Aetna Acquisition.
Net income increased 175.3% for the three months ended June 30, 2019 compared to the prior year primarily due to higher operating income described above, partially offset by (i) higher interest expense primarily due to financing activity associated with the Aetna Acquisition and the assumption of Aetna's debt as of the Aetna Acquisition date and (ii) higher income tax expense associated with the increase in pre-tax income.
The effective income tax rate was 25.5% for the three months ended June 30, 2019 compared to (24.1)% for the three months ended June 30, 2018.
The difference in the effective income tax rate compared to the prior year was primarily due to the $3.9 billion goodwill impairment charge recognized in the three months ended June 30, 2018, which was not deductible for income tax purposes. ■