CVS HEALTH CORPORATION 
WOONSOCKET, R.I., May 2, 2017 /PRNewswire/ --
First Quarter Year-over-year Highlights:
-- Net revenues increased 3.0% to $44.5 billion
-- GAAP diluted EPS from continuing operations of $0.92; Adjusted EPS of
$1.17
-- Generated cash flow from operations of $3.5 billion; free cash flow of
$3.1 billion
2017 Guidance:
-- Confirmed full year GAAP diluted EPS from continuing operations of $5.02
to $5.18
-- Confirmed full year Adjusted EPS of $5.77 to $5.93
-- Provided second quarter GAAP diluted EPS from continuing operations of
$1.15 to $1.19
-- Provided second quarter Adjusted EPS of $1.29 to $1.33
-- Confirmed full year cash flow from operations of $7.7 to $8.6 billion;
free cash flow of $6.0 to $6.4 billion
CVS Health Corporation (NYSE: CVS) today announced operating results for the three months ended March 31, 2017.
President and Chief Executive Officer Larry Merlo said, "2017 is off to a solid start as we posted results this quarter that surpassed our expectations. At the same time, we generated $3.1 billion of free cash and continued to return value to our shareholders through high-return investments in our business as well as dividends and share repurchases. However, while we are pleased with our financial performance versus our expectations, we won't be satisfied until the company returns to sustainable, healthy earnings growth."
Mr. Merlo continued, "We continue to expect 2017 to be a rebuilding year, but our goals remain clear, and we fully intend to return to healthy levels of growth. We remain confident in our model as well as our position in the evolving health care landscape, and our ability to generate significant levels of cash will continue to play an important role in driving shareholder value over the longer term."
Revenues
Net revenues for the three months ended March 31, 2017 increased 3.0%, or $1.3 billion, to $44.5 billion, up from $43.2 billion in the three months ended March 31, 2016.
Revenues in the Pharmacy Services Segment increased 8.5% to $31.2 billion in the three months ended March 31, 2017. This increase was primarily driven by growth in pharmacy network claim volume as well as brand inflation and growth in specialty pharmacy, partially offset by increased generic dispensing and price compression. Pharmacy network claims processed during the three months ended March 31, 2017, increased 10.5%, on a 30-day equivalent basis, to 376.8 million, compared to 340.9 million in the prior year. The increase in pharmacy network claim volume was primarily due to an increase in net new business. Mail choice claims processed during the three months ended March 31, 2017, increased 4.5%, on a 30-day equivalent basis, to 63.7 million, compared to 61.0 million in the prior year. The increase in the mail choice claim volume was primarily driven by continued adoption of our Maintenance Choice(®) offerings and an increase in specialty pharmacy claims.
Revenues in the Retail/LTC Segment decreased 3.8% to $19.3 billion in the three months ended March 31, 2017. The decrease was largely driven by a 4.7% decrease in same store sales, continued reimbursement pressure and an increase in the generic dispensing rate.
Pharmacy same store sales decreased 4.7% and were negatively impacted by approximately 480 basis points due to recent generic introductions. Same store prescription volumes declined 1.4%, on a 30-day equivalent basis, in the three months ended March 31, 2017. The previously-discussed marketplace changes that restrict CVS Pharmacy from participating in certain networks had an approximately 460 basis point negative impact on same store prescription volumes, while the absence of leap day versus the prior year had an approximately120 basis point negative impact on same store prescription volumes. Adjusting for both the network changes and leap day, same store prescription volumes would have been 580 basis points higher, and would have increased 4.4% in the quarter on a 30-day equivalent basis.
Front store same store sales declined 4.9% in the three months ended March 31, 2017. The absence of leap day versus the prior year had a 100 basis point negative impact on front store same store sales, while the shift of the Easter holiday to the second quarter in 2017 from the first quarter in 2016 had a 75 basis point negative impact. Front store sales were also negatively impacted by softer customer traffic and efforts to rationalize promotional strategies, partially offset by an increase in basket size.
For the three months ended March 31, 2017, the generic dispensing rate increased approximately 140 basis points to 87.0% in our Pharmacy Services Segment and increased approximately 180 basis points to 87.5% in our Retail/LTC Segment, compared to the prior year.
Operating Profit
For the three months ended March 31, 2017, consolidated operating profit decreased $392 million, or 18.0%. The decrease was due to the previously-announced restricted networks that exclude CVS Pharmacy as well as continued price compression in the Pharmacy Services Segment and continued reimbursement pressure in the Retail/LTC Segment. The decrease also reflects a charge of $199 million associated with the closure of 60 retail stores in connection with our enterprise streamlining initiative. This was partially offset by a $46 million decrease in acquisition-related integration costs in the three months ended March 31, 2017 versus the same quarter last year.
Net Income and Earnings Per Share
Net income for the three months ended March 31, 2017 decreased 16.9%, to $953 million. This was primarily driven by the decline in operating profit, partially offset by lower interest expense of $31 million related to refinancing activity in the prior year as well as the improvement in the effective income tax rate, from 39.4% to 37.3%. The decrease in the tax rate was largely driven by $19 million in discrete tax benefits related to the required adoption of new accounting guidance for share-based compensation.
GAAP earnings per diluted share from continuing operations ("GAAP diluted EPS") for the three months ended March 31, 2017 was $0.92, compared to $1.04 in the prior year. Adjusted earnings per share ("Adjusted EPS") for the three months ended March 31, 2017 and 2016, was $1.17 and $1.18, respectively. Further detail is shown in the Adjusted Earnings Per Share reconciliation later in this release.
Guidance
The Company confirmed its previous EPS and cash flow guidance for the full year and provided guidance for the second quarter of 2017. The Company continues to expect to deliver GAAP diluted EPS of $5.02 to $5.18 and Adjusted EPS of $5.77 to $5.93 for the full year 2017. The Company expects to deliver GAAP diluted EPS of $1.15 to $1.19 and Adjusted EPS of $1.29 to $1.33 in the second quarter of 2017. The Company also confirmed its 2017 cash flow from operations guidance of $7.7 to $8.6 billion and free cash flow guidance of $6.0 to $6.4 billion. These 2017 guidance estimates assume the completion of $5.0 billion in share repurchases.
Real Estate Program
During the three months ended March 31, 2017, the Company opened 27 new retail stores and closed 60 retail stores. In addition, the Company relocated 10 retail stores. As of March 31, 2017, the Company operated 9,676 retail stores, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico and Brazil.
As previously disclosed, the Company intends to close a total of approximately 70 retail stores during 2017 and expects to take a cumulative charge of approximately $220 million primarily associated with the remaining lease obligations of such stores. The Company closed 60 of the 70 retail stores in the three months ended March 31, 2017 and took a charge of $199 million. The Company expects to close approximately ten additional stores during the remainder of 2017.
Teleconference and Webcast
The Company will be holding a conference call today for the investment community at 8:30 am (EDT) 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 nearly 9,700 retail locations, more than 1,100 walk-in medical clinics, a leading pharmacy benefits manager with nearly 90 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a leading stand-alone Medicare Part D prescription drug plan, 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 2017 2016 (1)
------------------------------------- ---- -------
Net revenues $44,514 $43,215
Cost of revenues 37,934 36,471
------ ------
Gross profit 6,580 6,744
Operating expenses 4,787 4,559
----- -----
Operating profit 1,793 2,185
Interest expense, net 252 283
Other expense 7 9
--- ---
Income before income tax provision 1,534 1,893
Income tax provision 572 746
--- ---
Income from continuing operations 962 1,147
Loss from discontinued operations, net of tax (9) -
--- ---
Net income 953 1,147
Net income attributable to noncontrolling interest (1) (1)
--- ---
Net income attributable to CVS Health $952 $1,146
==== ======
Basic earnings per share:
Income from continuing operations attributable to CVS Health $0.93 $1.04
Loss from discontinued operations attributable to CVS Health $(0.01) $ -
Net income attributable to CVS Health $0.92 $1.04
Weighted average shares outstanding 1,030 1,092
Diluted earnings per share:
Income from continuing operations attributable to CVS Health $0.92 $1.04
Loss from discontinued operations attributable to CVS Health $(0.01) $ -
Net income attributable to CVS Health $0.92 $1.04
Weighted average shares outstanding 1,035 1,099
Dividends declared per share $0.50 $0.425
________________________
(1) During the three months ended March 31, 2017, the
Company adopted Accounting Standards Update ("ASU")
2017-07, Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit
Cost, which resulted in a retrospective
reclassification of $9 million of net benefit costs
from operating expenses to other expense in the three
months ended March 31, 2016.
CVS HEALTH CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
In millions, except per share amounts 2017 2016
------------------------------------- ---- ----
Assets:
Cash and cash equivalents $2,217 $3,371
Short-term investments 85 87
Accounts receivable, net 12,114 12,164
Inventories 14,306 14,760
Other current assets 735 660
--- ---
Total current assets 29,457 31,042
Property and equipment, net 10,057 10,175
Goodwill 38,263 38,249
Intangible assets, net 13,390 13,511
Other assets 1,503 1,485
----- -----
Total assets $92,670 $94,462
======= =======
Liabilities:
Accounts payable $7,344 $7,946
Claims and discounts payable 9,453 9,451
Accrued expenses 8,680 6,937
Short-term debt 1,768 1,874
Current portion of long-term debt 43 42
--- ---
Total current liabilities 27,288 26,250
Long-term debt 25,622 25,615
Deferred income taxes 4,214 4,214
Other long-term liabilities 1,704 1,549
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; 1,707 shares issued and 1,027 shares outstanding
at March 31, 2017 and 1,705 shares issued and 1,061 shares outstanding at December 31, 2016 17 17
Treasury stock, at cost: 679 shares at March 31, 2017 and 643 shares at December 31, 2016 (36,306) (33,452)
Shares held in trust: 1 share at March 31, 2017 and December 31, 2016 (31) (31)
Capital surplus 31,034 31,618
Retained earnings 39,419 38,983
Accumulated other comprehensive income (loss) (296) (305)
---- ----
Total CVS Health shareholders' equity 33,837 36,830
Noncontrolling interest 5 4
--- ---
Total shareholders' equity 33,842 36,834
------ ------
Total liabilities and shareholders' equity $92,670 $94,462
======= =======
CVS HEALTH CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
---------
In millions 2017 2016 (1)
----------- ---- -------
Cash flows from operating
activities:
Cash receipts from customers $43,913 $41,482
Cash paid for inventory and
prescriptions dispensed by retail
network pharmacies (36,178) (35,575)
Cash paid to other suppliers and
employees (3,823) (2,934)
Interest received 6 5
Interest paid (328) (378)
Income taxes paid (57) (161)
--- ----
Net cash provided by operating
activities 3,533 2,439
----- -----
Cash flows from investing
activities:
Purchases of property and
equipment (457) (598)
Proceeds from sale of property and
equipment and other assets 5 2
Acquisitions (net of cash
acquired) and other investments (110) (51)
Purchase of available-for-sale
investments - (36)
Maturity of available-for-sale
investments 8 50
--- ---
Net cash used in investing
activities (554) (633)
---- ----
Cash flows from financing
activities:
Decrease in short-term debt (106) -
Purchase of noncontrolling
interest in subsidiary - (39)
Dividends paid (516) (470)
Proceeds from exercise of stock
options 121 104
Payments for taxes related to net
share settlement of equity awards (11) (12)
Repurchase of common stock (3,621) (2,066)
Other - (4)
--- ---
Net cash used in financing
activities (4,133) (2,487)
------ ------
Effect of exchange rate changes on
cash and cash equivalents - 1
--- ---
Net decrease in cash and cash
equivalents (1,154) (680)
Cash and cash equivalents at the
beginning of the period 3,371 2,459
----- -----
Cash and cash equivalents at the
end of the period $2,217 $1,779
====== ======
Reconciliation of net income to
net cash provided by operating
activities:
Net income $953 $1,147
Adjustments required to reconcile
net income to net cash provided
by operating activities:
Depreciation and amortization 619 617
Stock-based compensation 55 57
Deferred income taxes and other
noncash items 14 17
Change in operating assets and
liabilities, net of effects from
acquisitions:
Accounts receivable, net 48 (1,131)
Inventories 456 89
Other current assets (74) 106
Other assets (1) (52)
Accounts payable and claims and
discounts payable (539) 798
Accrued expenses 1,848 768
Other long-term liabilities 154 23
--- ---
Net cash provided by operating
activities $3,533 $2,439
====== ======
________________________
(1) During the three months ended March 31, 2017, the
Company adopted ASU 2016-09, Improvements to
Employee Share-Based Payment Accounting, which
resulted in a retrospective reclassification of $27
million of excess tax benefits from financing
activities to operating activities which increased
net cash provided by operating activities and
increased cash used in financing activities for the
three months ended March 31, 2016.
Non-GAAP Financial Measures
The following provides reconciliations of certain non-GAAP financial measures presented in this Form 8-K to the most directly comparable financial measures calculated and presented in accordance with GAAP. The Company uses the non-GAAP measures "Adjusted EPS" and "Free Cash Flow" to assess and analyze underlying business performance and trends. Management believes that providing these non-GAAP measures enhances investors' understanding of the Company's performance.
The Company defines Adjusted Earnings per Share, or Adjusted EPS, as income from continuing operations excluding the impact of certain adjustments such as the amortization of intangible assets, acquisition-related transaction and integration costs, adjustments to legal reserves in connection with certain legal settlements, charges in connection with store rationalization, losses on early extinguishments of debt, and losses on settlements of defined benefit pension plans, divided by the Company's weighted average diluted shares outstanding. The Company believes that this measure enhances investors' ability to compare the Company's past financial performance with its current performance.
The Company defines Free Cash Flow as net cash provided by operating activities less net additions to property and equipment (i.e., additions to property and equipment plus proceeds from sale-leaseback transactions). Management uses this non-GAAP financial measure for internal comparisons and finds it useful in assessing year-over-year cash flow performance.
These non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP. Adjusted EPS should be considered in addition to, rather than as a substitute for, income before income tax provision as a measure of our performance. Free Cash Flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities as a measure of our liquidity. The Company's definitions of Adjusted EPS and Free Cash Flow may not be comparable to similarly titled measurements reported by other companies.
Adjusted Earnings Per Share
(Unaudited)
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 2017 2016
------------------------------------- ---- ----
Income before income tax provision $1,534 $1,893
Non-GAAP adjustments:
Amortization of intangible assets 200 199
Acquisition-related integration costs (1) 15 61
Charge in connection with store rationalization (2) 199 -
Charge related to a disputed 1999 legal settlement - 3
--- ---
Adjusted income before income tax provision 1,948 2,156
Adjusted income tax provision 734 847
--- ---
Adjusted income from continuing operations 1,214 1,309
Net income attributable to noncontrolling interest (1) (1)
Adjusted income allocable to participating securities (5) (7)
--- ---
Adjusted income from continuing operations attributable to CVS Health $1,208 $1,301
====== ======
Weighted average diluted shares outstanding 1,035 1,099
Adjusted EPS $1.17 $1.18
===== =====
________________________
(1) In 2017, the integration costs relate to the
acquisition of Omnicare and in 2016, the integration
costs relate to the acquisitions of Omnicare and the
pharmacies and clinics of Target.
(2) Primarily represents a charge for noncancelable lease
obligations associated with stores closed in
connection with our enterprise streamlining
initiative.
Free Cash Flow
(Unaudited)
The following is a reconciliation of net cash provided by operating activities to Free Cash Flow:
Three Months Ended
March 31,
---------
In millions 2017 2016 (1)
----------- ---- -------
Net cash provided by
operating activities $3,533 $2,439
Subtract: Additions to
property and equipment (457) (598)
---- ----
Free cash flow $3,076 $1,841
====== ======
________________________
(1) During the three months ended March 31, 2017, the
Company adopted ASU 2016-09, Improvements to
Employee Share-Based Payment Accounting, which
resulted in a retrospective reclassification of $27
million of excess tax benefits from financing
activities to operating activities which increased
net cash provided by operating activities for the
three months ended March 31, 2016.
Supplemental Information
(Unaudited)
The Company evaluates its Pharmacy Services and Retail/LTC segment performance based on net revenues, 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 consolidated financial statements:
Pharmacy
Services Retail/LTC Corporate Intersegment Consolidated
In millions Segment(1) Segment Segment Eliminations(2) Totals
----------- --------- ------- ------- --------------- ------
Three Months Ended
March 31, 2017:
Net revenues $31,223 $19,341 $ - $(6,050) $44,514
Gross profit 1,096 5,676 - (192) 6,580
Operating profit (loss) (3) 784 1,411 (226) (176) 1,793
March 31, 2016:
Net revenues 28,765 20,112 - (5,662) 43,215
Gross profit (4) 1,102 5,830 - (188) 6,744
Operating profit (loss) (4)(5) 784 1,784 (212) (171) 2,185
________________________
(1) Net revenues of the Pharmacy Services Segment include
approximately $3.1 billion and $3.0 billion of Retail
Co?Payments for the three months ended March 31, 2017
and 2016, respectively.
(2) Intersegment eliminations relate to intersegment
revenue generating activities that occur between the
Pharmacy Services Segment and the Retail/LTC
Segment. These occur in the following ways: when
members of Pharmacy Services Segment clients
("members") fill prescriptions at the Company's
retail pharmacies to purchase covered products, when
members enrolled in programs such as Maintenance
Choice(R) elect to pick up maintenance prescriptions
at one of the Company's retail pharmacies instead of
receiving them through the mail, or when members have
prescriptions filled at the Company's long-term care
pharmacies. When these occur, both the Pharmacy
Services and Retail/LTC segments record the
revenues, gross profit and operating profit on a
standalone basis.
(3) The Retail/LTC Segment operating profit for the three
months ended March 31, 2017 includes a $199 million
charge associated with store closures and $15 million
of acquisition-related integration costs. The
integration costs are related to the acquisition of
Omnicare.
(4) The Retail/LTC Segment gross profit and operating
profit for the three months ended March 31, 2016
includes $4 million and $61 million, respectively, of
acquisition-related integration costs. The
integration costs are related to the acquisitions of
Omnicare and the pharmacies and clinics of Target.
(5) Amounts revised to reflect the adoption of ASU
2017-07, Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit
Cost, which increased consolidated operating profit
by $9 million.
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 2017 2016
----------- ---- ----
Net revenues $31,223 $28,765
Gross profit 1,096 1,102
Gross profit % of net revenues 3.5% 3.8%
Operating expenses (1) 312 318
Operating expenses % of net revenues 1.0% 1.1%
Operating profit (1) 784 784
Operating profit % of net revenues 2.5% 2.7%
Net revenues:
Mail choice (2) $10,848 $10,150
Pharmacy network (3) 20,301 18,536
Other 74 79
Pharmacy claims processed (90 Day = 3 prescriptions) (4)(5):
Total 440.5 401.9
Mail choice (2) 63.7 61.0
Pharmacy network (3) 376.8 340.9
Generic dispensing rate (4):
Total (5) 87.0% 85.6%
Mail choice (2) 79.2% 77.3%
Pharmacy network (3)(5) 87.7% 86.5%
Mail choice penetration rate (4) 14.5% 15.2%
________________________
(1) Amounts revised for the three months ended March 31,
2016 to reflect the adoption of ASU 2017-07,
Improving the Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement Benefit Cost,
which decreased operating expenses and increased
operating profit by $2 million.
(2) Mail choice is defined as claims filled at a Pharmacy
Services mail facility, which includes specialty mail
claims inclusive of Specialty Connect(R) claims
filled at retail, as well as prescriptions filled at
our retail pharmacies under the Maintenance Choice(R)
program.
(3) 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 retail pharmacies,
including our retail pharmacies and long-term care
pharmacies, but excluding Maintenance Choice
activity.
(4) Includes the adjustment to convert 90-day
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.
(5) The pharmacy claims processed and the generic
dispensing rate for the three months ended March 31,
2016 have been revised to reflect 90-day
prescriptions to the equivalent of three 30-day
prescriptions.
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 2017 2016
----------- ---- ----
Net revenues $19,341 $20,112
Gross profit (1) 5,676 5,830
Gross profit % of net revenues 29.3% 29.0%
Operating expenses (1)(2)(3) 4,265 4,046
Operating expenses % of net revenues 22.1% 20.1%
Operating profit (3) 1,411 1,784
Operating profit % of net revenues 7.3% 8.9%
Prescriptions filled (90 Day = 3 prescriptions) (4) 303.1 305.1
Net revenue increase (decrease):
Total (3.8)% 18.6%
Pharmacy (3.8)% 23.7%
Front Store (3.9)% 2.6%
Total prescription volume (90 Day = 3 prescriptions) (4) (0.6)% 16.0%
Same store sales increase (decrease) (5):
Total (4.7)% 4.2%
Pharmacy (4.7)% 5.5%
Front Store (4.9)% 0.7%
Prescription volume (90 Day = 3 prescriptions) (4) (1.4)% 5.9%
Generic dispensing rates 87.5% 85.7%
Pharmacy % of net revenues 74.6% 74.7%
________________________
(1) Gross profit and operating expenses for the three
months ended March 31, 2016 includes $4 million and
$57 million, respectively, of acquisition-related
integration costs. The integration costs are related
to the acquisitions of Omnicare and the pharmacies
and clinics of Target.
(2) Operating expenses for the three months ended March
31, 2017 includes a $199 million charge associated
with store closures and $15 million of acquisition-
related integration costs. The integration costs are
related to the acquisition of Omnicare.
(3) Amounts revised for the three months ended March 31,
2016 to reflect the adoption of ASU 2017-07,
Improving the Presentation of Net Periodic Pension
Cost and Net Periodic Postretirement Benefit Cost,
which decreased operating expenses and increased
operating profit by $7 million.
(4) 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.
(5) Same store sales and prescriptions exclude revenues
from MinuteClinic, and revenue and prescriptions from
stores in Brazil, LTC 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. See also previous
discussion at "Non-GAAP Financial Measures" for more information on how we calculate Adjusted EPS.
Year Ending
In millions, except per share amounts December 31, 2017
------------------------------------- -----------------
Income before income tax provision $8,563 $8,806
Non-GAAP adjustments:
Amortization of intangible assets 820 820
Acquisition-related integration costs 40 40
Charge in connection with store rationalization 220 220
Loss on settlement of defined benefit pension plan 200 200
--- ---
Adjusted income before income tax provision 9,843 10,086
Adjusted income tax provision 3,862 3,949
----- -----
Adjusted income from continuing operations 5,981 6,137
Net income attributable to noncontrolling interest (2) (2)
Adjusted income allocable to participating securities (25) (25)
--- ---
Adjusted income from continuing operations attributable to CVS Health $5,954 $6,110
====== ======
Weighted average diluted shares outstanding 1,031 1,031
Adjusted earnings per share $5.77 $5.93
===== =====
Three Months Ending
In millions, except per share amounts June 30, 2017
------------------------------------- -------------
Income before income tax provision $1,917 $1,994
Non-GAAP adjustments:
Amortization of intangible assets 200 200
Acquisition-related integration costs 15 15
Charge in connection with store rationalization 10 10
--- ---
Adjusted income before income tax provision 2,142 2,219
Adjusted income tax provision 812 843
--- ---
Adjusted income from continuing operations 1,330 1,376
Net income attributable to noncontrolling interest - -
Adjusted income allocable to participating securities (5) (5)
--- ---
Adjusted income from continuing operations attributable to CVS Health $1,325 $1,371
====== ======
Weighted average diluted shares outstanding 1,029 1,029
Adjusted earnings per share $1.29 $1.33
===== =====
Free Cash Flow Guidance
(Unaudited)
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. See also previous discussion at "Non-GAAP Financial Measures" for more information on how
we calculate Free Cash Flow.
Year Ending
In millions December 31, 2017
----------- -----------------
Net cash provided by operating activities $7,700 $8,600
Subtract: Additions to property and equipment (2,000) (2,400)
Add: Proceeds from sale-leaseback transactions 300 200
--- ---
Free cash flow $6,000 $6,400
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cvs-health-reports-first-quarter-results-confirms-2017-eps-guidance-300449201.html
SOURCE CVS Health Corporation
