CVS Reports $3 Billion Loss To Cover Its Share Of Global Opioid Settlement

CVS Health reported a quarterly loss of more than $3 billion to cover its share of a global opioid settlement in the works with various states, counties and local governments.

CVS Wednesday said its loss for the third quarter was $3.4 billion, or $2.60 per share, for the three months ended Sept. 30 compared to a profit of $1.6 billion, or $1.21 a share in the year ago quarter. CVS, along with rival U.S. retail pharmacy chains Walgreens Boots Alliance and Walmart have agreed “in principle” to pay a combined $12 billion in a massive global settlement to resolve claims they contributed to the opioid epidemic.

“During the three months ended September 30, 2022, the Company incurred an operating loss of $3.9 billion compared to $3.1 billion of operating income in the prior year,” CVS said Wednesday in its third quarter earnings report. “The difference was primarily driven by $5.2 billion in opioid litigation charges and a $2.5 billion loss on assets held for sale to write-down the Company’s (long-term care) business in the current year, partially offset by the absence of a $431 million goodwill impairment charge on the remaining goodwill of the (Long-term-care) reporting unit recorded in the prior year.”

The opioid settlement costs put a damper on an otherwise solid financial performance for CVS, which owns thousands of drugstores, the health insurance giant Aetna and a large pharmacy benefit management company. Revenues in the quarter rose 10% to more than $81 billion compared to $73.8 billion in the year-ago period.

“We delivered another outstanding quarter, and have raised full-year guidance as a result,” CVS chief executive Karen S. Lynch said. “We continue to execute on our strategy with a focus on expanding capabilities in health care delivery, and the announced acquisition of Signify Health will further strengthen our engagement with consumers.”

CVS, which is integrating more of the primary care healthcare services into the Aetna health plan benefits it sells, continues to benefit from that strategy with medical membership rising by 590,000 to 24.3 million as of Sept. 30. The growth reflected increases in private Medicare Advantage and commercial enrollment growth, the company said Wednesday.