Executive Vice President and Chief Financial Officer at CVS Health
Thank you, Karen, and good morning, everyone. Our first quarter results reflect strong performance from all our core business segments with continued momentum in revenue growth, cash flow generation and adjusted earnings per share growth, positioning us to increase our 2022 adjusted EPS guidance to a range of $8.20 to $8.40 per share. As we continue making progress towards our financial targets, we remain focused on growth, operational execution and supporting the communities we serve.
A few highlights of total company performance, first quarter revenues of $76.8 billion increased by 11.2% year-over-year, reflecting robust growth across all business segments. We delivered adjusted operating income of approximately $4.5 billion and adjusted EPS of $2.22, representing an increase of 6.6% and 8.8% versus prior year, respectively. Our first quarter adjusted EPS performance reflects both a higher adjusted operating income contribution and lower interest expense versus prior year due to our proactive deleveraging campaign in 2021. Importantly, our first quarter 2022 adjusted EPS was impacted by $75 million of net realized capital losses, which lowered adjusted EPS performance by $0.04. Of the losses noted, approximately $40 million or $0.02 per share related to write-downs of sovereign bonds in Ukraine and Belarus.
Turning to the Health Care Benefits segment, first quarter revenue of $23.1 billion increased by 12.8% year-over-year, driven by membership growth across all product lines. We delivered sequential membership growth of over 670,000, reflecting growth across all product lines. We continue to be pleased with the performance of our Medicare franchise, which has been a key growth engine over the years. Medicare Advantage grew about 200,000 members sequentially, up 6.7%. Our momentum in dual eligible plans enrollment also continued into the first quarter, growing 28% sequentially.
In our commercial business, a strong national account selling season contributed to membership growth along with growth in commercial risk membership driven by group commercial and our re-entry into the individual exchange marketplace. Adjusted operating income of $1.8 billion was down slightly as compared to the prior year as the previously mentioned net realized capital losses impacted growth along with the continued progression towards normalized medical cost trends. Our medical benefit ratio of 83.5% increased approximately 30 basis points year-over-year, reflective of the same continued progression towards normalized total medical costs. In total, medical cost trends in our commercial business remain in line with pre-pandemic trended baselines with government remaining slightly lower than pre-pandemic baselines. Consolidated days claims payable at the end of the quarter was 51.7, up 2.6 days sequentially as we brought on new government and other membership in the first quarter. Overall, we remain confident in the adequacy of our reserves.
In Pharmacy Services, we continue to achieve strong revenue and adjusted operating income growth. This is a natural outcome from our execution, delivering industry-leading drug trend on behalf of our clients, providing leading specialty management capabilities and outstanding customer service. During the first quarter, revenue of $39.5 billion increased by 8.6% year-over-year, driven by pharmacy claims growth, growth in specialty pharmacy and brand inflation, partially offset by the impact of continued client price improvements. Total pharmacy membership was roughly flat from year-end at 110 million members as underlying growth in commercial and other government lives helped to offset significant membership losses from the California Medicaid carve out that started this year. Total pharmacy claims processed increased by 5.8% above prior year, primarily attributable to new business in 2022. Currently, we are approximately 60% through renewals for the 2023 selling season with over 98% core client retention.
Adjusted operating income of $1.6 billion grew 8.6% year-over-year, driven by improved purchasing economics, reflecting increased contribution from the products and services of our group purchasing organization and specialty pharmacy, partially offset by continued client price improvements and increased expenses to on board new business at the beginning of the year. As Karen mentioned, our 340B product lines did not grow inside the quarter.
In our Retail Long Term Care segment we delivered strong revenue and adjusted operating income growth versus prior year. First quarter revenue of $25.4 billion grew 9.2% year-over-year, largely due to increased prescription and front-store volume, including the sale of COVID-19 OTC test kits. Adjusted operating income of $1.6 billion grew 15.1% versus prior year driven by a few key components; strength in pharmacy and front store sales, administration of COVID-19 vaccines, and demand for over the counter test kits and related treatment categories, particularly at the beginning of the quarter when Omicron incident was high. These positive factors were partially offset by the impacts of, ongoing but stable reimbursement pressure, business investments, including the minimum wage increase and store improvements, and investments in store labor as we were consciously slow to draw down staffing in response to declining Omicron case levels to ensure we had sufficient capacity to meet consumer health needs.
Our liquidity and capital position remained strong at the end of the first quarter, generating cash flow from operations of $3.6 billion and ending the quarter with $3 billion of cash at the parent and unrestricted subsidiaries. We remain committed to maintaining our investment grade ratings, while also having the flexibility to deploy capital strategically for capability focused M&A. The announced sales of our PayFlex and Aetna international business in Thailand are expected to provide us with additional deployable capital later this year. We repurchased approximately 19.1 million shares of common stock during the three months ended March 31, 2022, marking the first time the company has repurchased shares of its common stock since 2017. We also increased the quarterly shareholder dividend by 10% effective with the February 1, 2022 dividend distribution, which resulted in the return of $722 million to shareholders through dividends during the three months ended March 31, 2022.
In March, we also announced we had entered into an agreement with the State of Florida to resolve claims dating back more than a decade related to opioid medications. Under the agreement, we will settle all opioid claims by Florida for $484 million to be paid over a period of 18 years. As a result, upon satisfaction of the settlement terms by the state, CVS will be released from the pending litigation in Florida. Associated with this settlement, we have taken a charge of approximately $370 million after tax in our first quarter 2022 financials, which has been excluded from our adjusted operating metrics. As a result of our first quarter performance, we are raising our full-year adjusted earnings per share guidance to $8.20 to $8.40, which represents 3.5% to 6% growth versus our 2021 adjusted earnings per share baseline. The increase reflects the favorable impact of prior year's development net of realized capital losses experienced in our Health Care Benefits business, both of which we do not forecast.
As such, we are raising full-year Health Care Benefits guidance as follows. Membership increases to a range of 24 million to 24.3 million members, revenue increases to a range of $89.3 billion to $90.8 billion, adjusted operating income guidance increases by $180 million at the midpoint to $5.94 billion to $6.04 billion. Similarly, MBR guidance is updated to 83.5% to 84.5% to reflect our first quarter experience. We are maintaining all other guidance shared during our fourth quarter earnings call. Our updated guidance now reflects the assumption that a fourth COVID-19 booster will be administered to adults aged 50 and older and to certain immunocompromised individuals as per the guidelines set forth by the CDC. Administration of a fourth booster is expected to have a net neutral impact to our enterprise, representing an incremental cost to our Health Benefits segment, but helping to maintain our full-year outlook for our Retail segment by offsetting first quarter 2022 expense pressures previously mentioned.
As we evaluate the progression of earnings for the remainder of the year, we would remind investors of our prior statements that we expect 2022 earnings to be modestly higher in the first half of the year. Similar to 2021 earnings progression, we currently project that 47% to 49% of adjusted EPS will occur in the back half of 2022 which we split between the third and fourth quarters. You will find additional details regarding our updated guidance in the slide presentation we posted to our website this morning. We continue to anticipate strong cash from operations in 2022 between $12 billion and $13 billion in the range of 2.8 [Technical Issues] technology and digital enhancements to improve the consumer experience [Technical Issues] Full-year deployable free cash flow activity while any earnings impact from these divestitures are included [Technical Issues]
To conclude, first quarter results and improved 2022 outlook particularly at this early stage in the year as we continue to sharpen our focus and execute our strategy. As a leader and we strive to deliver a superior healthcare experience for our consumers through lowering the cost of care, improving access and building engagement and convenience to our consumers and their communities we.
We will now open the call to your questions. Operator?