Shawn M. Guertin
Executive Vice President and Chief Financial Officer at CVS Health
Thank you, Karen, and good morning, everyone. Our second quarter results continue to demonstrate the strength of our execution and the power of our diversified enterprise. We delivered strong revenue growth, adjusted earnings per share and cash flow from operations. A few highlights regarding total company performance. Second quarter revenues of nearly $90 billion increased by more than 10% year-over-year reflecting strong growth across each of our businesses. We delivered adjusted operating income of nearly $4.5 billion and adjusted EPS of $2.21, representing decreases of approximately 10% and 13% versus prior year, respectively.
These decreases were primarily due to declines in our Health Care Benefits and Pharmacy and Consumer Wellness segments, partially offset by strong execution in our pharmacy services operations. Our ability to generate cash remains outstanding with year-to-date cash flow from operations of $13.3 billion. These cash flows were impacted by the timing of CMS payments that are expected to normalize in the fourth quarter. Excluding this impact, our cash flows from operations remain strong at $8 billion.
Shifting to the details for our Health Care Benefits segment. We delivered strong revenue growth versus the prior year. Second quarter revenue of $26.7 billion increased by 17.6% year-over-year reflecting growth across all product lines. Membership grew to 25.6 million, an increase of 121,000 members sequentially reflecting increases in our individual exchange and commercial businesses, partially offset by the impact of Medicaid redeterminations. Adjusted operating income of $1.5 billion in the quarter declined approximately 20% versus the prior year. This decline was driven by a higher-than-expected medical benefit ratio, partially offset by higher net investment income and strong execution on operating cost management.
Our medical benefit ratio of 86.2% increased 350 basis points year-over-year reflecting higher-than-expected Medicare Advantage utilization in the second quarter. These trends were primarily driven by higher utilization in the outpatient setting as well as dental and behavioral health. We also recognized higher utilization levels in the first quarter and prior year resulting in lower year-over-year prior-period development in the quarter. It is important to note that utilization in our other lines of business, including individual exchange, commercial and Medicaid remain generally in line with our pricing expectations. Days claims payable at the end of the quarter was 46.9, down 1.2 days sequentially. This decline was almost entirely driven by the impact of increased Medicaid pass-through payments in the quarter. Excluding this impact, DCP was stable and overall, we remain confident in the adequacy of our reserves.
Our Health Services segment which includes our pharmacy services business and our healthcare delivery operations generated revenue of approximately $46.2 billion, an increase of 7.6% year-over-year. This increase was driven by pharmacy drug mix, growth in specialty pharmacy, brand inflation and the addition of Signify and Oak Street. These increases were partially offset by the impact of continued client price improvements. Adjusted operating income of nearly $1.9 billion grew 3.5% year-over-year, primarily driven by strong execution and improved purchasing economics, partially offset by ongoing client price improvements and lower MinuteClinic COVID-19 testing.
Total pharmacy claims processed in the quarter declined by approximately 1% versus the prior year and down 50 basis points when excluding COVID-19 vaccinations. This decline was primarily attributable to the New York Medicaid carve-out, largely offset by net new business. Total pharmacy membership was approximately 110 million members. Within our Health Services segment, we are very encouraged by the performance and growth of our healthcare delivery assets. Signify completed 673,000 in-home evaluations in the quarter, an increase of 16% versus the same period last year and generated revenue growth of 19%. Oak Street ended the quarter with 177 centers and 181,000 at-risk lives, increases over the same period last year of approximately 23% and 35%, respectively. Oak Street also significantly increased revenue in the quarter growing 43% compared to the same quarter last year.
Moving to our Pharmacy and Consumer Wellness segment. We generated revenue of $28.8 billion, up nearly 8% versus the prior year and nearly 11% on a same-store basis reflecting the impact of pharmacy drug mix, increased prescriptions and brand inflation. These increases were partially offset by the impact of recent generic introductions, decreased COVID-19 related volume and continued reimbursement pressure. Adjusted operating income of $1.4 billion declined approximately 17% versus the prior year, driven by reimbursement pressure, lower COVID-19 vaccines and testing and lower front store volumes. These decreases were partially offset by increased prescription volume and improved generic drug purchasing.
Same store pharmacy sales were up more than 14%, driven by drug mix, a 3.6% increase in same store prescription volumes and brand inflation. The increase in same store prescription volumes excluding the impact of COVID-19 vaccinations was 4.9%. As Karen mentioned, our front store business is not immune to trends in the broader economy, but we have shown resiliency in the face of these challenges and continue to demonstrate the value we offer consumers. Same-store sales for the front store were down 30 basis points, primarily due to declines in cough, cold and flu and OTC test kits. Excluding the impact of OTC test kits, same-store front store sales were up by more than 1%.
Turning to the balance sheet. Our liquidity and capital position remain excellent. Our ability to generate cash flow has always been a strength of our organization and the enterprise continues to identify new opportunities to optimize our balance sheet. Through the second quarter, we generated cash flow from operations of $13.3 billion bolstered by the CMS prepayment I discussed earlier and ended the quarter with approximately $3.3 billion of cash at the parent and unrestricted subsidiaries.
During the quarter, we issued approximately $5 billion of long-term debt and repaid our outstanding $5 billion term loan that was used to fund a portion of the Oak Street transaction. Through our quarterly dividend, we returned $795 million to shareholders. We remain committed to maintaining our current investment grade ratings while preserving flexibility to deploy capital strategically.
A few other items worth highlighting for investors. We recognized acquisition-related transaction and integration costs associated with the Signify and Oak Street transactions as well as additional office real estate optimization charges in the quarter for a total of $168 million. As Karen mentioned in her prepared remarks, we also took a restructuring charge of nearly $500 million associated with our cost optimization efforts and the impairment of non-core assets.
Turning now to our outlook for 2023. We are reaffirming our adjusted earnings per share guidance of $8.50 to $8.70. This guidance reflects our performance through the second quarter as well as a higher-than-expected Medicare Advantage medical cost trend for the remainder of 2023, offset by strength in our pharmacy services business within our Health Service segment. In the Health Care Benefits segment, we now expect our 2023 medical benefit ratio to fall at the high end of our previous range of 84.7% plus or minus 50 basis points reflecting the impact of higher Medicare Advantage utilization.
While there is uncertainty surrounding the duration of this utilization spike, our 2023 guidance now prudently assumes that these medical cost trends will remain elevated for the rest of 2023. This update also results in a change to our guidance for adjusted operating income, which we now expect to fall in a range of $5.99 billion to $6.12 billion. While we are encouraged by trends in our individual exchange business, this guidance continues to reflect a prudent and cautious stance for that business.
In our Health Services segment, our updated adjusted operating income guidance is a range of $7.11 billion to $7.23 billion reflecting the strong execution year-to-date in our pharmacy services business and our expectation of continued strength for the remainder of the year. Developments in our 340B business continue to align with the guidance we provided on our first quarter call. In our Pharmacy and Consumer Wellness segment, we now expect adjusted operating income in a range of $5.63 billion to $5.73 billion. This updated guidance reflects strong fundamental execution year-to-date while recognizing the potential for a weakening consumer environment.
Shifting to our cash flow. We continue to anticipate strong full year 2023 cash flow from operations in a range of $12.5 billion to $13.5 billion. As a result of prioritization of our portfolio to optimize our cost structure, we now expect capital expenditures in a range of $2.6 billion to $2.8 billion. We continue to maintain our projections for interest expense and share count. And finally, we now project our adjusted effective tax rate at 25.3%. You can find additional details on the components of our updated 2023 guidance on our Investor Relations webpage.
Before concluding my prepared remarks, I would like to address our medium-term growth projections and targets. As Karen touched on in her remarks, CVS Health benefits from the diversity of our operations and this positions us well to be resilient in the face of adversity. We take our commitment seriously as evidenced by the announcement this morning of our cost cutting initiatives, which will meaningfully improve our positioning for 2024.
However, given the emergence of multiple potential headwinds across our diverse set of assets, including uncertainty in Medicare Advantage, the potential for a weakening consumer environment and reduced retail contributions from COVID combined with our plans to accelerate Oak Street clinic growth, our 2024 adjusted EPS target of $9 is no longer a reasonable starting point for our guidance range.
Given the more challenging outlook for 2024 and our desire to set guidance that is achievable with opportunities to outperform, we now believe investors should anchor their initial expectations for our 2024 adjusted EPS to $8.50 to $8.70 essentially flat to our existing 2023 guidance range. As is our convention, this guidance does not assume any prior year reserve development. Given the level of uncertainty for 2024, we also believe investors should no longer rely on our 2025 adjusted EPS target of $10. We will provide more clarity on our longer-term earnings growth outlook at our Investor Day in December.
While emerging headwinds have created uncertainty for our 2024 and 2025 outlook, make no mistake, we are more convinced than ever in our long-term strategy. The power of our integrated model and care delivery assets will change how consumers and patients engage with the health system and how they receive care. We believe this will benefit customers, patients, payers and ultimately our shareholders.
To conclude, our second quarter results continue to demonstrate the power of our diversified enterprise and the resiliency of our businesses. We continue to maintain our focus on growth and operational execution as we work to become the leading health solutions company for consumers.
With that, we will now open the call to your questions. Operator?
