WOONSOCKET, R.I., May 3,
2016 /PRNewswire/ --
First Quarter Year-over-year Highlights:
- Net revenues increased 18.9% to $43.2
billion
- Operating profit increased 2.0% to $2.2 billion, including the effect of
acquisition-related integration costs of $61
million; operating profit increased approximately 5.0%
excluding the acquisition-related integration costs
- Adjusted EPS increased 4.0% to $1.18; GAAP diluted EPS of $1.04
- Generated free cash flow of $1.8
billion and cash flow from operations of $2.4 billion
2016 Guidance:
- Confirmed full year Adjusted EPS of $5.73 to $5.88
- As expected, GAAP diluted EPS is revised, to $5.24 to $5.39 from $5.28
to $5.43, recognizing the impact in the first quarter of the
acquisition-related integration costs and a charge related to a
disputed 1999 legal settlement
- Provided second quarter Adjusted EPS guidance of
$1.28 to $1.31; GAAP diluted EPS of
$1.17 to $1.20; both excluding
acquisition-related integration costs
- Confirmed full year free cash flow of $5.3 to $5.6 billion; cash flow from operations
of $7.6 to $7.9 billion
CVS Health Corporation (NYSE: CVS) today announced operating
results for the three months ended March 31, 2016.
Revenues
Net revenues for the three months ended March 31, 2016
increased 18.9%, or $6.9 billion, to
$43.2 billion, compared to the three
months ended March 31, 2015. Revenues in the Pharmacy Services
Segment increased 20.5%, or $4.9
billion, to $28.8 billion in
the three months ended March 31, 2016. The increase was
primarily driven by pharmacy network claim volume and growth in
specialty pharmacy. Pharmacy network claims processed during the
three months ended March 31, 2016
increased 22.6% to 283 million, compared to 231 million in the
prior year. The increase in pharmacy network claim volume was
primarily due to the growth in net new business. Mail choice claims
processed during the three months ended March 31, 2016,
increased 6.6%, to 21.7 million, compared to 20.3 million in the
prior year. The increase in mail choice claims was primarily driven
by the continued adoption of our Maintenance Choice®
offerings.
Revenues in the Retail/LTC Segment increased 18.6%, or
$3.2 billion, to $20.1 billion, in the three months ended
March 31, 2016. The increase was primarily driven by the
addition of the long-term care ("LTC") operations acquired as part
of the acquisition of Omnicare, Inc. ("Omnicare") in August 2015, the addition of the pharmacies and
clinics of Target Corporation ("Target") acquired in December 2015 and pharmacy same store sales
growth. Same store sales increased 4.2% versus the first quarter of
last year. Same store sales were positively affected by
approximately 125 basis points due to an additional day in 2016
related to leap year. Pharmacy same
store sales rose 5.5% and pharmacy same store prescription volumes
rose 5.9% on a 30-day equivalent basis. Pharmacy same store sales
were negatively affected by approximately 360 basis points from
recent generic drug introductions, and positively affected by
approximately 130 basis points from the additional day in 2016
related to leap year. Front store
same store sales increased 0.7%. Front store same store sales were
negatively affected by softer customer traffic, partially offset by
an increase in basket size and the shift of Easter from April in
2015 to March in 2016, which positively affected front store same
store sales by approximately 80 basis points. Front store same
store sales were also positively affected by approximately 105
basis points from the additional day in 2016 related to
leap year.
For the three months ended March 31, 2016, the generic
dispensing rate increased approximately 170 basis points to 85.2%
in the Pharmacy Services Segment and increased approximately 125
basis points to 85.7% in the Retail/LTC Segment.
Operating Profit
For the three months ended March 31,
2016, consolidated operating profit increased $44 million, or 2.0%. Excluding
acquisition-related integration costs of $61
million and a $3 million legal
charge related to a disputed 1999 legal settlement, consolidated
operating profit increased $108
million, or 5.0%, from $2,132
million for the three months ended March 31, 2015 to $2,240
million for the three months ended March 31, 2016. For the three months ended
March 31, 2016, operating profit
increased by $48 million, or 6.6%, in
the Pharmacy Services Segment and by $50
million, or 2.9%, in the Retail/LTC Segment. Excluding
acquisition-related integration costs of $61
million, the Retail/LTC Segment operating profit grew
$111 million, or 6.4% from
$1,727 million for the three months
ended March 31, 2015 to $1,838 million for the three months ended
March 31, 2016. Both segments
benefited from the Omnicare acquisition and increased generic drugs
dispensed. The Pharmacy Services Segment was also positively
affected by growth in specialty pharmacy and favorable purchasing
economics, partially offset by price compression. The Retail/LTC
Segment was also positively affected by increased sales and an
improved front store margin rate. These positive factors for the
Retail/LTC Segment, along with the benefits from the Omnicare
acquisition and generic drugs dispensed, were partially offset by
continued reimbursement pressure.
Net Income and Earnings Per Share
Net income for the three months ended March 31, 2016 was
$1.1 billion, a decrease of
$74 million or 6.1%. The decrease is
primarily driven by an increase in interest expense of $149 million and $61
million of acquisition-related integration costs, partially
offset by an increase in operating profit. The increase in interest
expense is primarily due to the issuance of $15 billion of long-term debt in July 2015 that was used to acquire Omnicare and
the pharmacies and clinics of Target, as well as the debt assumed
through the acquisition of Omnicare in August 2015.
Adjusted earnings per share ("Adjusted EPS") for the three
months ended March 31, 2016 and 2015, was $1.18 and $1.14,
respectively. Adjusted EPS excludes $199
million and $129 million of
intangible asset amortization for the three months ended
March 31, 2016 and 2015,
respectively. Adjusted EPS for the three months ended March 31, 2016 also excludes $61 million of acquisition-related integration
costs and a $3 million legal charge
related to a legacy lawsuit challenging the 1999 settlement by
MedPartners of various securities class actions and a related
derivative claim. GAAP earnings per diluted share ("GAAP diluted
EPS") for the three months ended March 31, 2016 was
$1.04, compared to $1.07 in the prior year.
President and Chief Executive Officer Larry Merlo stated, "We posted solid results
this quarter and are off to a strong start in 2016. Operating
profit in the retail business was in line with our expectations
while operating profit in the PBM exceeded our expectations, driven
by strong prescription volumes. We also generated $1.8 billion of free cash during the quarter and
continued to return value to our shareholders through high-return
investments in our business as well as dividends and share
repurchases."
Mr. Merlo continued, "Our contract wins have grown for the 2016
PBM selling season and our 2017 season is off to a solid start with
some early wins. Our distinctive, channel-agnostic solutions are
resonating strongly in the market as they continue to control
patient and client costs while improving health outcomes. We
continue to believe we have the right strategy for success in the
evolving health care marketplace."
Guidance
The Company confirmed its previous Adjusted EPS guidance for the
full year 2016. The Company expects to deliver Adjusted EPS of
$5.73 to $5.88. The Company revised
the GAAP diluted EPS to $5.24 to
$5.39 from $5.28 to $5.43 to
reflect the impact in the first quarter of acquisition-related
integration costs and a charge related to a disputed 1999 legal
settlement. When the Company reports subsequent quarters, full-year
2016 GAAP diluted EPS is expected to be revised downward to reflect
the impact from future acquisition-related integration costs, which
are not currently included in guidance. The Company expects to
deliver Adjusted EPS of $1.28 to
$1.31 and GAAP diluted EPS of $1.17
to $1.20 in the second quarter of 2016. The Company
continues to expect to deliver 2016 free cash flow of $5.9 billion to $6.2 billion and 2016 cash flow
from operations of $7.6 billion to $7.9
billion.
Real Estate Program
During the three months ended March 31, 2016, the Company
opened 24 new retail stores and closed five retail stores. In
addition, the Company relocated 14 retail stores. As of
March 31, 2016, the Company operated 9,674 retail stores,
including pharmacies in Target stores, in 49 states, the
District of Columbia, Puerto Rico and Brazil.
Teleconference and Webcast
The Company will be holding a conference call today for the
investment community at 8:30 am (ET)
to discuss its quarterly results. An audio webcast of the call will
be broadcast simultaneously for all interested parties through the
Investor Relations section of the CVS Health website at
http://investors.cvshealth.com. This webcast will be archived and
available on the website for a one-year period following the
conference call.
About the Company
CVS Health is a pharmacy innovation company helping people on
their path to better health. Through its more than 9,600 retail
pharmacies, more than 1,100 walk-in medical clinics, a leading
pharmacy benefits manager with nearly 80 million plan members, a
dedicated senior pharmacy care business serving more than one
million patients per year, and expanding specialty pharmacy
services, the Company enables people, businesses and communities to
manage health in more affordable and effective ways. This unique
integrated model increases access to quality care, delivers better
health outcomes and lowers overall health care costs. Find more
information about how CVS Health is shaping the future of health at
https://www.cvshealth.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. By their nature, all
forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those contemplated by the
forward-looking statements for a number of reasons as described in
our Securities and Exchange Commission filings, including those set
forth in the Risk Factors section and under the section entitled
"Cautionary Statement Concerning Forward-Looking Statements" in our
most recently filed Annual Report on Form 10-K and Quarterly
Report on Form 10-Q.
— Tables Follow —
CVS HEALTH
CORPORATION
Condensed
Consolidated Statements of Income
(Unaudited)
|
|
|
Three Months Ended
March
31,
|
In millions, except per share amounts
|
2016
|
|
2015
|
|
|
|
|
Net
revenues
|
$
|
43,215
|
|
$
|
36,332
|
Cost of
revenues
|
36,471
|
|
30,168
|
Gross
profit
|
6,744
|
|
6,164
|
Operating
expenses
|
4,568
|
|
4,032
|
Operating
profit
|
2,176
|
|
2,132
|
Interest expense,
net
|
283
|
|
134
|
Income before income
tax provision
|
1,893
|
|
1,998
|
Income tax
provision
|
746
|
|
777
|
Net income
|
1,147
|
|
1,221
|
Net income
attributable to noncontrolling interest
|
(1)
|
|
—
|
Net income
attributable to CVS Health
|
$
|
1,146
|
|
$
|
1,221
|
|
|
|
|
Net income per share
attributable to CVS Health:
|
|
|
|
Basic
|
$
|
1.04
|
|
$
|
1.08
|
Diluted
|
$
|
1.04
|
|
$
|
1.07
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
1,092
|
|
1,128
|
Diluted
|
1,099
|
|
1,136
|
Dividends declared
per share
|
$
|
0.425
|
|
$
|
0.350
|
CVS HEALTH
CORPORATION
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
March
31,
|
|
December
31,
|
In millions, except per share amounts
|
2016
|
|
2015
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,779
|
|
$
|
2,459
|
Short-term
investments
|
85
|
|
88
|
Accounts receivable,
net
|
13,025
|
|
11,888
|
Inventories
|
13,912
|
|
14,001
|
Other current
assets
|
612
|
|
722
|
Total current
assets
|
29,413
|
|
29,158
|
Property and
equipment, net
|
9,862
|
|
9,855
|
Goodwill
|
38,115
|
|
38,106
|
Intangible assets,
net
|
13,750
|
|
13,878
|
Other
assets
|
1,494
|
|
1,440
|
Total
assets
|
$
|
92,634
|
|
$
|
92,437
|
|
|
|
|
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
7,361
|
|
$
|
7,490
|
Claims and discounts
payable
|
8,530
|
|
7,653
|
Accrued
expenses
|
7,444
|
|
6,829
|
Current portion of
long-term debt
|
1,202
|
|
1,197
|
Total current
liabilities
|
24,537
|
|
23,169
|
Long-term
debt
|
26,267
|
|
26,267
|
Deferred income
taxes
|
4,232
|
|
4,217
|
Other long-term
liabilities
|
1,567
|
|
1,542
|
Commitments and
contingencies
|
—
|
|
—
|
Redeemable
noncontrolling interest
|
—
|
|
39
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
CVS Health
shareholders' equity:
|
|
|
|
Preferred
stock, par value $0.01: 0.1 shares authorized; none issued or
outstanding
|
—
|
|
—
|
Common stock,
par value $0.01: 3,200 shares authorized; 1,701 shares issued and
1,081
|
|
|
|
shares
outstanding at March 31, 2016 and 1,699 shares issued and 1,101
shares
|
|
|
|
outstanding at
December 31, 2015
|
17
|
|
17
|
Treasury
stock, at cost: 619 shares at March 31, 2016 and 597 shares at
December 31,
2015
|
(31,058)
|
|
(28,886)
|
Shares held in
trust: 1 share at March 31, 2016 and December 31,
2015
|
(31)
|
|
(31)
|
Capital
surplus
|
31,254
|
|
30,948
|
Retained
earnings
|
36,182
|
|
35,506
|
Accumulated
other comprehensive income (loss)
|
(339)
|
|
(358)
|
Total CVS
Health shareholders' equity
|
36,025
|
|
37,196
|
Noncontrolling
interest
|
6
|
|
7
|
Total
shareholders' equity
|
36,031
|
|
37,203
|
Total liabilities and
shareholders' equity
|
$
|
92,634
|
|
$
|
92,437
|
CVS HEALTH
CORPORATION
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Three
Months Ended
March
31,
|
In millions
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Cash receipts from
customers
|
$
|
41,482
|
|
$
|
34,570
|
Cash paid for
inventory and prescriptions dispensed by retail network
pharmacies
|
(35,575)
|
|
(28,276)
|
Cash paid to other
suppliers and employees
|
(2,961)
|
|
(4,162)
|
Interest
received
|
5
|
|
3
|
Interest
paid
|
(378)
|
|
(87)
|
Income taxes
paid
|
(161)
|
|
(64)
|
Net cash provided by
operating activities
|
2,412
|
|
1,984
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(598)
|
|
(419)
|
Proceeds from
sale-leaseback transactions
|
—
|
|
25
|
Proceeds from sale of
property and equipment and other assets
|
2
|
|
8
|
Acquisitions (net of
cash acquired) and other investments
|
(51)
|
|
(61)
|
Purchase of
available-for-sale investments
|
(36)
|
|
(113)
|
Sale or maturity of
available-for-sale investments
|
50
|
|
16
|
Net cash used in
investing activities
|
(633)
|
|
(544)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Decrease in
short-term debt
|
—
|
|
(185)
|
Purchase of
noncontrolling interest in subsidiary
|
(39)
|
|
—
|
Dividends
paid
|
(470)
|
|
(399)
|
Proceeds from
exercise of stock options
|
92
|
|
126
|
Excess tax benefits
from stock-based compensation
|
27
|
|
59
|
Repurchase of common
stock
|
(2,066)
|
|
(2,007)
|
Other
|
(4)
|
|
—
|
Net cash used in
financing activities
|
(2,460)
|
|
(2,406)
|
Effect of exchange
rates on cash and cash equivalents
|
1
|
|
3
|
Net decrease in cash
and cash equivalents
|
(680)
|
|
(963)
|
Cash and cash
equivalents at the beginning of the period
|
2,459
|
|
2,481
|
Cash and cash
equivalents at the end of the period
|
$
|
1,779
|
|
$
|
1,518
|
|
|
|
|
Reconciliation of net
income to net cash provided by operating activities:
|
|
|
|
Net income
|
$
|
1,147
|
|
$
|
1,221
|
Adjustments required
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
617
|
|
490
|
Stock-based
compensation
|
57
|
|
44
|
Deferred income taxes
and other non-cash items
|
17
|
|
(31)
|
Change in operating
assets and liabilities, net of effects of acquisitions:
|
|
|
|
Accounts receivable,
net
|
(1,131)
|
|
(481)
|
Inventories
|
89
|
|
(313)
|
Other current
assets
|
106
|
|
269
|
Other
assets
|
(52)
|
|
(52)
|
Accounts payable and
claims and discounts payable
|
798
|
|
756
|
Accrued
expenses
|
741
|
|
153
|
Other long-term
liabilities
|
23
|
|
(72)
|
Net cash provided by
operating activities
|
$
|
2,412
|
|
$
|
1,984
|
Adjusted Earnings
Per Share
(Unaudited)
|
|
The Company is
providing non-GAAP information that excludes certain items because
of the nature of these items and the impact they have on the
analysis of underlying business performance and trends. Management
believes that providing this information enhances investors'
understanding of the Company's performance. This information should
be considered in addition to, but not in lieu of, information
prepared in accordance with GAAP.
|
|
The following is a
reconciliation of income before income tax provision to Adjusted
EPS:
|
|
|
Three Months Ended
March
31,
|
In millions, except per share amounts
|
2016
|
|
2015
|
Income before income
tax provision
|
$
|
1,893
|
|
$
|
1,998
|
Non-GAAP
adjustments:
|
|
|
|
Amortization of
intangible assets
|
199
|
|
129
|
Acquisition-related
integration costs(1)
|
61
|
|
—
|
Charge related to a
disputed 1999 legal settlement
|
3
|
|
—
|
Adjusted income
before income tax provision
|
2,156
|
|
2,127
|
Adjusted income tax
provision
|
847
|
|
828
|
Adjusted net
income
|
1,309
|
|
1,299
|
Net income
attributable to noncontrolling interest
|
(1)
|
|
—
|
Income allocable to
participating securities
|
(7)
|
|
(5)
|
Adjusted net income
attributable to CVS Health
|
$
|
1,301
|
|
$
|
1,294
|
|
|
|
|
Weighted average
diluted shares outstanding
|
1,099
|
|
1,136
|
Adjusted
EPS
|
$
|
1.18
|
|
$
|
1.14
|
|
(1) Costs
associated with the acquisitions of Omnicare and the pharmacies and
clinics of Target.
|
Free Cash
Flow
(Unaudited)
|
|
For internal
comparisons, management finds it useful to assess year-over-year
cash flow performance using free cash flow.
|
|
The Company defines
free cash flow as net cash provided by operating activities less
net additions to properties and equipment (i.e., additions to
property and equipment plus proceeds from sale-leaseback
transactions).
|
|
The following is a
reconciliation of net cash provided by operating activities to free
cash flow:
|
|
|
|
Three
Months Ended
March
31,
|
In millions
|
|
2016
|
|
2015
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
2,412
|
|
$
|
1,984
|
Subtract: Additions
to property and equipment
|
|
(598)
|
|
(419)
|
Add: Proceeds from
sale-leaseback transactions
|
|
—
|
|
25
|
Free cash
flow
|
|
$
|
1,814
|
|
$
|
1,590
|
Supplemental
Information
(Unaudited)
|
|
The Company evaluates
its Pharmacy Services Segment and Retail/LTC Segment performance
based on net revenue, gross profit and operating profit before the
effect of nonrecurring charges and gains and certain intersegment
activities. The Company evaluates the performance of its Corporate
Segment based on operating expenses before the effect of
nonrecurring charges and gains and certain intersegment activities.
The following is a reconciliation of the Company's segments to the
accompanying condensed consolidated financial
statements:
|
|
In millions
|
Pharmacy
Services
Segment(1)
|
|
Retail/LTC
Segment
|
|
Corporate
Segment
|
|
Intersegment
Eliminations(2)
|
|
Consolidated
Totals
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
March 31,
2016:
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
28,765
|
|
$
|
20,112
|
|
$
|
—
|
|
$
|
(5,662)
|
|
$
|
43,215
|
Gross
profit(3)
|
1,102
|
|
5,830
|
|
—
|
|
(188)
|
|
6,744
|
Operating profit
(loss)(3)
|
782
|
|
1,777
|
|
(212)
|
|
(171)
|
|
2,176
|
March 31,
2015:
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
23,879
|
|
16,951
|
|
—
|
|
(4,498)
|
|
36,332
|
Gross
profit
|
1,026
|
|
5,295
|
|
—
|
|
(157)
|
|
6,164
|
Operating profit
(loss)
|
734
|
|
1,727
|
|
(189)
|
|
(140)
|
|
2,132
|
|
(1)
|
Net revenues of the
Pharmacy Services Segment include approximately $3.0 billion and
$2.5 billion of retail co-payments for the three months ended March
31, 2016 and 2015, respectively.
|
(2)
|
Intersegment
eliminations relate to intersegment revenue generating activities
that occur between the Pharmacy Services Segment and the Retail/LTC
Segment. These occur when Pharmacy Services Segment members fill
prescriptions at either the Company's retail pharmacies or
long-term care facilities. Revenues are recorded in both segments
and are eliminated in consolidation. Gross profit and operating
profit related to the Company's Maintenance Choice®
programs are recorded in both segments and are also eliminated in
consolidation.
|
(3)
|
The Retail/LTC
Segment gross profit and operating profit for the three months
ended March 31, 2016 include $4 million and $57 million,
respectively, of acquisition-related integration costs related to
the acquisitions of Omnicare and the pharmacies and clinics of
Target.
|
Supplemental
Information
(Unaudited)
|
|
Pharmacy Services
Segment
|
|
The following table
summarizes the Pharmacy Services Segment's performance for the
respective periods:
|
|
|
Three Months Ended
March
31,
|
In millions
|
2016
|
|
2015
|
|
|
|
|
Net
revenues
|
$
|
28,765
|
|
|
$
|
23,879
|
|
Gross
profit
|
1,102
|
|
|
1,026
|
|
Gross profit % of net
revenues
|
3.8
|
%
|
|
4.3
|
%
|
Operating
expenses
|
320
|
|
|
292
|
|
Operating expense %
of net revenues
|
1.1
|
%
|
|
1.2
|
%
|
Operating
profit
|
782
|
|
|
734
|
|
Operating profit % of
net revenues
|
2.7
|
%
|
|
3.1
|
%
|
Net
revenues:
|
|
|
|
Mail
choice(1)
|
$
|
10,150
|
|
|
$
|
8,750
|
|
Pharmacy
network(2)
|
18,536
|
|
|
15,059
|
|
Other
|
79
|
|
|
70
|
|
Pharmacy claims
processed:
|
|
|
|
Total
|
304.8
|
|
|
251.1
|
|
Mail
choice(1)
|
21.7
|
|
|
20.3
|
|
Pharmacy
network(2)
|
283.1
|
|
|
230.8
|
|
Generic dispensing
rate:
|
|
|
|
Total
|
85.2
|
%
|
|
83.5
|
%
|
Mail
choice(1)
|
77.3
|
%
|
|
76.1
|
%
|
Pharmacy
network(2)
|
85.8
|
%
|
|
84.1
|
%
|
Mail choice
penetration rate
|
17.6
|
%
|
|
19.8
|
%
|
|
|
(1)
|
Mail choice is
defined as claims filled at a Pharmacy Services mail facility,
which include specialty mail claims inclusive of Specialty
Connect® claims filled at retail, as well as
prescriptions filled at retail under the Maintenance
Choice® program.
|
(2)
|
Pharmacy network net
revenues, claims processed and generic dispensing rates do not
include Maintenance Choice, which are included within the mail
choice category. Pharmacy network is defined as claims filled at
retail and specialty pharmacies, including our retail drugstores
and long-term care pharmacies, but excluding Maintenance Choice
activity.
|
Supplemental
Information
(Unaudited)
|
|
Retail/LTC
Segment
|
|
The following table
summarizes the Retail/LTC Segment's performance for the respective
periods:
|
|
|
Three Months Ended
March 31,
|
In millions
|
2016
|
|
2015
|
|
|
|
|
Net
revenues
|
$
|
20,112
|
|
|
$
|
16,951
|
|
Gross
profit(1)
|
5,830
|
|
|
5,295
|
|
Gross profit % of net
revenues
|
29.0
|
%
|
|
31.2
|
%
|
Operating
expenses(1)
|
4,053
|
|
|
3,568
|
|
Operating expense %
of net revenues
|
20.1
|
%
|
|
21.0
|
%
|
Operating
profit
|
1,777
|
|
|
1,727
|
|
Operating profit % of
net revenues
|
8.8
|
%
|
|
10.2
|
%
|
Prescriptions filled
(90 Day = 3 Rx)(2)
|
305.1
|
|
|
241.3
|
|
Net revenue increase
(decrease):
|
|
|
|
Total
|
18.6
|
%
|
|
2.9
|
%
|
Pharmacy
|
23.7
|
%
|
|
5.3
|
%
|
Front
store
|
2.6
|
%
|
|
(3.6)
|
%
|
Total prescription
volume (90 Day = 3 Rx)(2)
|
16.0
|
%
|
|
6.3
|
%
|
Same store increase
(decrease)(3):
|
|
|
|
Total
sales
|
4.2
|
%
|
|
1.2
|
%
|
Pharmacy
sales
|
5.5
|
%
|
|
4.2
|
%
|
Front store
sales
|
0.7
|
%
|
|
(6.1)
|
%
|
Prescription volume
(90 Day = 3 Rx)(2)
|
5.9
|
%
|
|
5.1
|
%
|
Generic dispensing
rate
|
85.7
|
%
|
|
84.4
|
%
|
Pharmacy % of total
revenues
|
74.7
|
%
|
|
71.7
|
%
|
|
|
(1)
|
Gross profit includes
$4 million and operating expenses include $57 million of
acquisition-related integration costs related to the acquisitions
of Omnicare and the pharmacies and clinics of Target for the three
months ended March 31, 2016.
|
(2)
|
Includes the
adjustment to convert 90-day, non-specialty prescriptions to the
equivalent of three 30-day prescriptions. This adjustment reflects
the fact that these prescriptions include approximately three times
the amount of product days supplied compared to a normal
prescription.
|
(3)
|
Same store sales and
prescriptions exclude revenues from MinuteClinic®, and
revenue and prescriptions from stores in Brazil, long-term care
operations and from commercialization services.
|
Adjusted Earnings
Per Share Guidance
(Unaudited)
|
|
The following
reconciliation of estimated income before income tax provision to
estimated adjusted earnings per share contains forward-looking
information. All forward-looking information involves risks and
uncertainties. Actual results may differ materially from those
contemplated by the forward-looking information for a number of
reasons as described in our Securities and Exchange Commission
filings, including those set forth in the Risk Factors section and
under the section entitled "Cautionary Statement Concerning
Forward-Looking Statements" in our most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q.
|
|
In millions, except per share amounts
|
Year
Ending
December 31, 2016
|
|
|
|
|
Income before income
tax provision(1)
|
$
|
9,330
|
|
$
|
9,606
|
Non-GAAP
adjustments:
|
|
|
|
Amortization of
intangible assets
|
800
|
|
798
|
Acquisition-related
integration costs(1)
|
61
|
|
61
|
Charge related to a
disputed 1999 legal settlement
|
3
|
|
3
|
Adjusted income
before income tax provision
|
10,194
|
|
10,468
|
Adjusted income tax
provision
|
3,974
|
|
4,082
|
Adjusted net
income
|
6,220
|
|
6,386
|
Net income
attributable to noncontrolling interest
|
(7)
|
|
(7)
|
Income allocable to
participating securities
|
(30)
|
|
(30)
|
Adjusted net income
attributable to CVS Health
|
$
|
6,183
|
|
$
|
6,349
|
|
|
|
|
Weighted average
diluted shares outstanding
|
1,080
|
|
1,080
|
Adjusted earnings per
share
|
$
|
5.73
|
|
$
|
5.88
|
|
In millions, except per share amounts
|
Three Months
Ending
June
30, 2016
|
|
|
|
|
Income before income
tax provision(1)
|
$
|
2,069
|
|
$
|
2,138
|
Non-GAAP
adjustments:
|
|
|
|
Amortization of
intangible assets
|
195
|
|
195
|
Adjusted income
before income tax provision
|
2,264
|
|
2,333
|
Adjusted income tax
provision
|
884
|
|
917
|
Adjusted net
income
|
1,380
|
|
1,416
|
Net income
attributable to noncontrolling interest
|
—
|
|
—
|
Income allocable to
participating securities
|
(8)
|
|
(8)
|
Adjusted net income
attributable to CVS Health
|
$
|
1,372
|
|
$
|
1,408
|
|
|
|
|
Weighted average
diluted shares outstanding
|
1,075
|
|
1,075
|
Adjusted earnings per
share(4)
|
$
|
1.28
|
|
$
|
1.31
|
|
|
(1)
|
Excludes anticipated
acquisition-related integration costs for the acquisitions of
Omnicare and the pharmacies and clinics of Target for the period
from April 1, 2016 through December 31, 2016.
|
Free Cash Flow
Guidance
(Unaudited)
|
|
For internal
comparisons, management finds it useful to assess year-over-year
cash flow performance using free cash flow. The Company defines
free cash flow as net cash provided by operating activities less
net additions to properties and equipment (i.e., additions to
property and equipment plus proceeds from sale-leaseback
transactions). The following reconciliation of net cash provided by
operating activities to free cash flow contains forward-looking
information. All forward-looking information involves risks and
uncertainties. Actual results may differ materially from those
contemplated by the forward-looking information for a number of
reasons as described in our Securities and Exchange Commission
filings, including those set forth in the Risk Factors section and
under the section entitled "Cautionary Statement Concerning
Forward-Looking Statements" in our most recently filed Annual
Report on Form 10-K and Quarterly Report on Form 10-Q.
|
|
In millions
|
Year
Ending
December 31, 2016
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
7,575
|
|
$
|
7,875
|
Subtract: Additions
to property and equipment
|
(2,550)
|
|
(2,450)
|
Add: Proceeds from
sale-leaseback transactions
|
275
|
|
175
|
Free cash
flow
|
$
|
5,300
|
|
$
|
5,600
|
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SOURCE CVS Health Corporation