The news: CVS Health released its Q1 2022 earnings report.

Here are the key results:

• Total revenues are up 11.2% year-over-year. It posted $69.1 billion in Q1’21 and $76.8 billion in Q1’22.
• These results slightly outpaced Wall Street analysts’ expectations of $75.39 billion.
• CVS reported a $2.3 billion profit in Q1.

What led to this? In short, the pandemic.

• COVID-19 vaccines and tests drove foot traffic to CVS stores, and the retail giant saw a boost in store sales.

CVS’ ancillary healthcare businesses (Aetna and Caremark) also saw a boost thanks to vaccine and testing efforts.

• Aetna’s revenues grew 12.8% YoY to $23.1 billion. And it saw a spike in membership, hitting 24.5 million members by the end of Q1’21—up from 23.6 million year-over-year.
• Caremark’s revenues rose 8.6% YoY to $39.4 billion.

What’s next? CVS could eye a major partnership or M&A deal with a primary care disruptor to maintain growth in its healthcare business (akin to Walgreens’ stake in VillageMD).

• During its investor day event in December 2021, CVS hinted at potentially exploring partnerships to accelerate its primary care endeavors.

We could see CVS make a deal with a digital mental health startup, considering its mental health services saw massive utilization lately.

• CVS went from supporting 10,000 virtual mental health visits in 2019 to 10 million in 2021, per CEO Karen Lynch.
• CVS announced its plans to close around 900 of its retail locations (9% of its US footprint)—another sign that it’s looking to build even stronger inroads in the virtual care space.