Dive Brief:

• Even as COVID-19's benefit waned, new plan members across multiple product lines helped driven CVS to $2.3 billion in profit in the first quarter, slightly higher than the $2.2 billion brought in at the same time last year.
• In results published Wednesday, the company beat Wall Street expectations on earnings and revenue, with a topline of $76.8 billion, up 11% year over year.
• CVS raised its full-year earnings guidance following the results, which sent its stock ticking up slightly in morning trade Wednesday.

Dive Insight:

The pandemic proved a net positive to CVS' bottom line in the fourth quarter, when the omicron variant spurred a sharp increase in testing, driving consumers to its stores. Booster vaccines and lower-than-expected medical costs in its payer business also helped to drive CVS' profit up.

Those dynamics waned, however, in the first quarter of 2022, signaling more of a return to normal for CVS' business trends, management told investors on a Wednesday morning call.

In the quarter, CVS performed more than 6 million tests for COVID-19 and administered more than 8 million vaccines. That's compared to more than 8 million tests and 20 million vaccines in the fourth.

CVS expects most of the earnings contribution from vaccinations and testing to be "more front-end loaded than back-ended loaded" in the year, Guertin said. The company expects to issue 18 million vaccines this year.

Payer business Aetna generated $23.1 billion in revenue, up 13% year over year.

Aetna's medical benefit ratio increased to 83.5%, up 30 basis points year over year, suggesting medical cost trends are normalizing.

Overall utilization remains in line with pre-pandemic trended baselines, while government is just slightly below those expectations, Guertin said.

CVS' medical membership grew by 674,000 members compared to 24.5 million members in the fourth quarter of 2021. It's Medicaid and commercial businesses both saw about 3% sequential membership growth, while membership in Medicare Advantage — plans that are a key growth area for many payers — was up 7%. 

One element of CVS' growth strategy is to drive Aetna members to its network of stores, pharmacies and newly created primary care centers, while finding new avenues to reach them, including virtually and in the home.

As part of that push, the company is diving further into home health services.

CVS is currently preparing to launch its post-acute transitions pilot for Aetna members in select geographies, before eventually expanding it to outside payers, according to CEO Karen Lynch.

CVS teased out at its investor day in December that it was looking for an acquisition to boost its primary care strategy. Many analysts expected an announcement in the first quarter, though management noted Wednesday they're still pursuing options.

"We are continuing to look for a broader range of primary care capabilities. It's an interesting market — we are trying to make sure we're prudent both strategically and financially — but it is part of our strategy," Lynch said. "More to come."

Guertin noted CVS has evaluated a "range of assets" in and around the care delivery space, with an eye toward home health, primary care and managed service organization capabilities.

Amid continued demand for virtual care, CVS plans to broaden its virtual care services in the next 30 days, Lynch said.