CVS Health Corporation (CVS) has reported a 13.40 percent rise in profit for the quarter ended Dec. 31, 2015. The company has earned $1,498 million, or $1.34 a share in the quarter, compared with $1,321 million, or $1.14 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $1,704 million, or $1.53 a share compared with $1,393 million or $1.21 a share, a year ago. Revenue during the quarter grew 11.04 percent to $41,145 million from $37,055 million in the previous year period. Gross margin for the quarter contracted 16 basis points over the previous year period to 17.74 percent. Total expenses were 93.37 percent of quarterly revenues, down from 93.74 percent for the same period last year. This has led to an improvement of 37 basis points in operating margin to 6.63 percent.
Operating income for the quarter was $2,729 million, compared with $2,321 million in the previous year period.
President and chief executive officer Larry Merlo, stated, "We enjoyed a successful year in 2015, highlighted by excellent performance across our enterprise and two key acquisitions that support our strategy for growth. We grew our core business with the acquisition of Target’s pharmacies and clinics and expanded our reach with the acquisition of Omnicare, the leader in long-term care pharmacy. At the same time, we achieved solid year-over-year growth in revenues, operating profit, and earnings per share."
For the first-quarter 2016, CVS Health Corporation expects revenue to grow in the range of percent to percent. It projects diluted earnings per share to be in the range of $1.03 to $1.06 and on an adjusted basis, it projects diluted earnings per share to be in the range of $1.14 to $1.17 for the same quarter.
For financial year 2016, CVS Health Corporation projects diluted earnings per share to be in the range of $5.28 to $5.43 and it projects diluted earnings per share to be in the range of $5.73 to $5.88 on adjusted basis.
Operating cash flow improves marginally
CVS Health Corporation has generated cash of $8,412 million from operating activities during the year, up 3.38 percent or $275 million, when compared with the last year. The company has spent $13,420 million cash to meet investing activities during the year as against cash outgo of $4,045 million in the last year. It has incurred net capital expenditure of $2,332 million on net basis during the year, up 9.74 percent or $207 million from year ago.
Cash flow from financing activities was $5,006 million for the year as against cash outgo of $5,694 million in the last year period.
Cash and cash equivalents stood at $2,459 million as on Dec. 31, 2015, down 0.89 percent or $22 million from $2,481 million on Dec. 31, 2014.
Working capital increases marginally
CVS Health Corporation has recorded an increase in the working capital over the last year. It stood at $7,209 million as at Dec. 31, 2015, up 3.64 percent or $253 million from $6,956 million on Dec. 31, 2014. Current ratio was at 1.31 as on Dec. 31, 2015, down from 1.37 on Dec. 31, 2014.
Cash conversion cycle (CCC) has increased to 22 days for the quarter from 20 days for the last year period. Days sales outstanding went up to 13 days for the quarter compared with 12 days for the same period last year.
Days inventory outstanding was almost stable at 19 days for the quarter, when compared with the last year period. At the same time, days payable outstanding was almost stable at 10 days for the quarter, when compared with the previous year period.
Debt increases substantially
CVS Health Corporation has witnessed an increase in total debt over the last one year. It stood at $27,464 million as on Dec. 31, 2015, up 113.06 percent or $14,574 million from $12,890 million on Dec. 31, 2014. Total debt was 29.32 percent of total assets as on Dec. 31, 2015, compared with 17.36 percent on Dec. 31, 2014. Debt to equity ratio was at 0.74 as on Dec. 31, 2015, up from 0.34 as on Dec. 31, 2014.
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