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CVS Caremark Reports Record First Quarter Results

              CVS Caremark Reports Record First Quarter Results

2012 GUIDANCE RAISED TO REFLECT STRONG PERFORMANCE TO DATE AND THE ANTICIPATED
SECOND QUARTER BENEFIT OF THE CONTINUING IMPASSE BETWEEN INDUSTRY PEERS

PR Newswire

WOONSOCKET, R.I., May 2, 2012

WOONSOCKET, R.I., May 2, 2012 /PRNewswire/ -- CVS Caremark Corporation (NYSE:
CVS) today announced revenues, operating profit and net income for the three
months ended March 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20090226/NE75914LOGO)

First Quarter and Year-Over-Year Highlights:

  oNet revenues increased 19.9% to a record $30.8 billion, with Pharmacy
    Services up 32.3% and Retail Pharmacy up 9.9%
  oRetail Pharmacy segment same stores sales increased 8.4%
  oAdjusted EPS of $0.65, up 14.7%; GAAP diluted EPS from continuing
    operations of $0.59
  oGenerated free cash flow of $2.4 billion; cash flow from operations of
    $2.8 billion

2012 Guidance:

  oRaised full-year Adjusted EPS guidance to $3.23 to $3.33 and GAAP diluted
    EPS from continuing operations guidance to $3.01 to $3.11
  oSet second quarter Adjusted EPS guidance of $0.78 to $0.80 and GAAP
    diluted EPS from continuing operations guidance of $0.72 to $0.74
  oReconfirmed full-year free cash flow guidance of $4.6 to $4.9 billion and
    cash flow from operations of $6.2 to $6.4 billion

Revenues

Net revenues for the three months ended March 31, 2012, increased 19.9% or
$5.1 billion, to $30.8 billion, up from $25.7 billion in the three months
ended March 31, 2011.

Revenues in the Pharmacy Services segment increased 32.3% to $18.3 billion in
the three months ended March 31, 2012. This increase was primarily associated
with new activity resulting from our acquisition of the Medicare prescription
drug plan of Universal American Corp. ("UAM Medicare PDP Business") in the
second quarter of 2011, new client starts associated with our highly
successful 2011 selling season, and drug cost inflation. Pharmacy network
claims processed during the three months ended March 31, 2012, increased 25.9%
to 198.5 million, compared to 157.7 million in the prior year period. The
increase in pharmacy network claims was primarily due to the Company's 2011
acquisition of the UAM Medicare PDP Business, as well as new client starts.
Mail choice claims processed during the three months ended March 31, 2012
increased approximately 16.6% to 20.4 million compared to 17.5 million in the
prior year period. The increase in the mail choice claim volume was primarily
driven by new client starts and the continued adoption of our Maintenance
Choice^® program.

Revenues in the Retail Pharmacy segment increased 9.9% to $16.0 billion in the
three months ended March 31, 2012. Same store sales increased 8.4% over the
prior year period, with pharmacy same store sales increasing 9.8% over the
prior year period. This increase in pharmacy same store sales included a
significant benefit associated with Walgreens no longer being part of the
Express Scripts pharmacy provider network as of January 1, 2012. Calendar day
shifts in the first quarter of 2012, which had one additional weekday compared
with the same period in 2011, positively impacted pharmacy same store sales by
approximately 50 basis points; while the extra day in 2012 due to leap year
had a positive impact on pharmacy same store sales of approximately 75 basis
points. Additionally, pharmacy same store prescription volumes rose 7.2% when
90-day scripts are counted as one script. When converting 90-day scripts into
3 scripts, our same store prescription volumes increased 9.2% in the quarter.
Pharmacy same store sales were negatively impacted by approximately 305 basis
points due to recent generic introductions. Pharmacy same store sales were
also negatively impacted by a weak flu season, which was partially offset by
the early onset of the allergy season. Front store same store sales increased
5.3% in the three months ended March 31, 2012, and were positively impacted by
approximately 120 basis points from the one extra day due to leap year.

For the three months ended March 31, 2012, the generic dispensing rate
increased approximately 270 basis points to 76.5% in our Pharmacy Services
segment and 290 basis points to 78.1% in our Retail Pharmacy segment, compared
to the prior year period.

Income from Continuing Operations Attributable to CVS Caremark

Income from continuing operations attributable to CVS Caremark for the three
months ended March 31, 2012, increased $67 million to $777 million, compared
with $710 million during the three months ended March 31, 2011. The increase
in income from continuing operations attributable to CVS Caremark was
primarily driven by an 18.4% increase in operating profit in our Retail
Pharmacy segment. Our retail business benefited significantly from the
continuing contractual impasse between Walgreens and Express Scripts, the
extra day due to leap year, and the continued growth of our popular
Maintenance Choice program. Additionally, effective January 1, 2012, the
Company changed its methods of accounting for prescription drug inventories in
the Retail Pharmacy segment, which resulted in an after tax benefit of
approximately $19 million, or approximately one cent per share, during the
first quarter. Adjusted earnings per share from continuing operations
attributable to CVS Caremark ("Adjusted EPS") for the three months ended March
31, 2012 and 2011 was $0.65 and $0.57, respectively. Adjusted EPS excludes
$118 million and $106 million of intangible asset amortization related to
acquisition activity in the three months ended March 31, 2012 and 2011,
respectively. GAAP earnings per diluted share from continuing operations
attributable to CVS Caremark for the three months ended March 31, 2012 and
2011 was $0.59 and $0.52, respectively.

Larry Merlo, president and CEO, stated: "We posted an outstanding first
quarter with strong results across the board.Results in both our retail and
PBM segments came in at the high end of our guidance, while EPS exceeded
expectations. We also generated $2.4 billion in free cash during the quarter,
which places us comfortably on track to achieve our goal for the year."

Mr. Merlo continued, "Our retail team has done an outstanding job capitalizing
on the unprecedented opportunity for share gains afforded to us by the impasse
between two of our industry peers. At the same time, while it is still early
in the 2013 PBM selling season, we're optimistic about the opportunities and
continue to feel very good about our position in the marketplace. With our
stable business and unmatched breadth of capabilities, we are very well
positioned for success in the 2013 and 2014 selling seasons."

Real Estate Program

During the three months ended March 31, 2012, the Company opened 32 new retail
drugstores and closed seven retail drugstores and one onsite pharmacy. In
addition, the Company relocated 40 retail drugstores. As of March 31, 2012,
the Company operated 7,428 locations, including 7,352 retail drugstores, 29
onsite pharmacies, 31 retail specialty pharmacy stores, 12 specialty mail
order pharmacies and four mail order pharmacies in 44 states, the District of
Columbia and Puerto Rico.

Guidance

The Company raised its earnings guidance for the full year 2012 to reflect the
solid first quarter performance and the anticipated benefit to second quarter
results of approximately $0.03 to $0.04 per share from the continuing impasse
between Walgreens and Express Scripts. The guidance adjustment reflects the
potential estimated benefit if the stalemate continues only through the end of
the second quarter and does not contemplate any potential benefit beyond the
second quarter. Based on these assumptions, the Company currently expects to
deliver Adjusted EPS of $3.23 to $3.33 and GAAP diluted earnings per share
from continuing operations of $3.01 to $3.11 per share in 2012.The Company
now expects the Retail Pharmacy segment's operating profit to increase between
10.5% and 12.5%, up from a range of 8.5% to 10.5%, while the Pharmacy Services
segment's operating profit growth is still expected to increase between 11%
and 15%.The Company reiterated its 2012 free cash flow guidance and expects
to generate between $4.6 billion and $4.9 billion. Further, the Company
confirmed that it expects to generate cash flow from operations in 2012 in the
range of $6.2 billion to $6.4 billion.These 2012 guidance estimates assume
the completion of $3.0 billion in previously authorized share repurchases.

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 Caremark website at
http://info.cvscaremark.com/investors. This webcast will be archived and
available on the website for a one-year period following the conference call.

About the Company

CVS Caremark is dedicated to helping people on their path to better health as
the largest integrated pharmacy company in the United States. Through the
Company's more than 7,300 CVS/pharmacy^® stores; its leading pharmacy benefit
manager serving more than 60 million plan members; and its retail health
clinic system, the largest in the nation with approximately 600 MinuteClinic^®
locations, it is a market leader in mail order, retail and specialty pharmacy,
retail clinics, and Medicare Part D Prescription Drug Plans. As a pharmacy
innovation company with an unmatched breadth of capabilities, CVS Caremark
continually strives to improve health and lower costs by developing new
approaches such as its unique Pharmacy Advisor^® program that helps people
with chronic diseases such as diabetes obtain and stay on their
medications.Find more information about how CVS Caremark is reinventing
pharmacy for better health at http://info.cvscaremark.com/.

Forward-Looking Statements

This press release contains certain forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially. For these statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. The Company strongly recommends that you become
familiar with the specific risks and uncertainties outlined under the Risk
Factors section in our Annual Report on Form 10-K for the year ended December
31, 2011 and under the section entitled "Cautionary Statement Concerning
Forward-Looking Statements" in our most recently filed Quarterly Report on
Form 10-Q.



CVS CAREMARK CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)
                                             Three Months Ended
                                             March 31,
In millions, except per share amounts        2012^(1)        2011
Net revenues                                 $  30,798      $   25,695
Cost of revenues                             25,685          20,953
Gross profit                                 5,113           4,742
Operating expenses                           3,709           3,437
Operating profit                             1,404           1,305
Interest expense, net                        132             134
Income before income tax provision           1,272           1,171
Income tax provision                         496             462
Income from continuing operations            776             709
Income (loss) from discontinued operations,  (1)             3
net of tax
Net income                                   775             712
Net loss attributable to noncontrolling      1               1
interest
Net income attributable to CVS Caremark      $     776   $      713
Income from continuing operations
attributable to CVS Caremark:
Income from continuing operations            $     776   $      709
Net loss attributable to noncontrolling      1               1
interest
Income from continuing operations            $     777   $      710
attributable to CVS Caremark
Basic earnings per common share: ^                           
                                             $     0.60
 Income from continuing operations                          $      0.52
attributable to CVS Caremark
 Income (loss) from discontinued          ─               ─
operations attributable to CVS Caremark
 Net income attributable to CVS Caremark  $    0.60    $      0.52
 Weighted average basic common shares     1,299           1,362
outstanding
Diluted earnings per common share: ^
                                             $     0.59  $     0.52
Income from continuing operations
attributable to CVS Caremark
 Income (loss) from discontinued          ─               ─
operations attributable to CVS Caremark
 Net income attributable to CVS Caremark  $     0.59  $     0.52
 Weighted average diluted common shares   1,309           1,371
outstanding
Dividends declared per common share          $  0.1625      $   0.1250



(1) Effective January 1, 2012, the Company changed its methods of
accounting for prescription drug inventories in the Retail Pharmacy segment.
Additional details of this accounting change are discussed in Note 2 to the
condensed consolidated financial statements included in the Company's Form
10-Q for the quarter ended March 31, 2012.





CVS CAREMARK CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
                                                      March 31,   December 31,
In millions, except per share amounts                 2012^(1)    2011
Assets:
 Cash and cash equivalents                         $  2,211  $   1,413
 Short-term investments                            5           5
 Accounts receivable, net                          6,109       6,047
 Inventories                                       10,677      10,046
 Deferred income taxes                             538         503
 Other current assets                              351         580
 Total current assets                           19,891      18,594
 Property and equipment, net                       8,517       8,467
 Goodwill                                          26,431      26,458
 Intangible assets, net                            9,799       9,869
 Other assets                                      1,368       1,155
 Total assets                                   $ 66,006   $  64,543
Liabilities:
 Accounts payable                                  $  5,240  $   4,370
 Claims and discounts payable                      3,661       3,487
 Accrued expenses                                  4,506       3,293
 Short-term debt                                   —           750
 Current portion of long-term debt                 5           56
 Total current liabilities                      13,412      11,956
 Long-term debt                                    9,206       9,208
 Deferred income taxes                             3,875       3,853
 Other long-term liabilities                       1,431       1,445
 Commitments and contingencies
 Redeemable noncontrolling interest                29          30
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; 1,650 shares
 issued and 1,290 shares outstanding at March               
31, 2012 and 1,640 shares
 issued and 1,298 shares outstanding at December 16          16
31, 2011
Treasury stock, at cost: 358 shares at March 31, 2012            
and 340 shares at
 December 31, 2011                               (12,752)    (11,953)
Shares held in trust: 2 shares at March 31, 2012                 

 and December 31, 2011                             (56)        (56)
Capital surplus                                       28,450      28,126
Retained earnings                                     22,566      22,090
Accumulated other comprehensive loss                  (171)       (172)
 Total shareholders' equity                        38,053      38,051
Total liabilities and shareholders' equity            $ 66,006   $  64,543



(1) Effective January 1, 2012, the Company changed its methods of
accounting for prescription drug inventories in the Retail Pharmacy segment.
Additional details of this accounting change are discussed in Note 2 to the
condensed consolidated financial statements included in the Company's Form
10-Q for the quarter ended March 31, 2012.



CVS CAREMARK CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                                              Three Months Ended
                                              March 31,
In millions                                   2012^(1)        2011
Cash flows from operating activities:
 Cash receipts from customers              $  29,207     $    22,971
 Cash paid for inventory and prescriptions (22,515)        (17,445)
dispensed by retail network pharmacies
 Cash paid to other suppliers and          (3,751)         (3,342)
employees
 Interest received                         1               1
 Interest paid                             (128)           (150)
 Income taxes paid                         (28)            (169)
Net cash provided by operating activities     2,786           1,866
Cash flows from investing activities:
 Purchases of property and equipment       (376)           (309)
 Proceeds from sale-leaseback transactions —               11
 Proceeds from sale of property and        —               12
equipment
 Acquisitions (net of cash acquired) and   (74)            (11)
other investments
 Purchase of available-for-sale            —               (2)
investments
 Proceeds from sale of subsidiary          7               —
Net cash used in investing activities         (443)           (299)
Cash flows from financing activities:
 Decrease in short-term debt               (750)           —
 Repayments of long-term debt              (52)            (301)
 Dividends paid                            (211)           (171)
 Proceeds from exercise of stock options   278             107
 Repurchase of common stock                (810)           (467)
Net cash used in financing activities         (1,545)         (832)
Net increase in cash and cash equivalents     798             735
Cash and cash equivalents at the beginning of 1,413           1,427
the period
Cash and cash equivalents at the end of the   $    2,211   $     2,162
period
Reconciliation of net income to net cash
provided by operating activities:
 Net income                                $     775  $      712
 Adjustments required to reconcile net
income to net cash provided by operating
activities:
 Depreciation and amortization       423             374
 Stock-based compensation            36              36
 Deferred income taxes and other     21              70
non-cash items
  Change in operating assets and
liabilities, net of effects of acquisitions:
  Accounts receivable, net         (70)            (423)
  Inventories                   (776)           514
  Other current assets          286             (30)
  Other assets                  (189)           (52)
  Accounts payable and claims   1,044           535
and discounts payable
  Accrued expenses              1,250           156
  Other long-term liabilities   (14)            (26)
Net cash provided by operating activities     $    2,786   $     1,866



(1) Effective January 1, 2012, the Company changed its methods of
accounting for prescription drug inventories in the Retail Pharmacy segment.
Additional details of this accounting change are discussed in Note 2 to the
condensed consolidated financial statements included in the Company's Form
10-Q for the quarter ended March 31, 2012.



Adjusted Earnings Per Share
(Unaudited)



For internal comparisons, management finds it useful to assess year-to-year
performance by adjusting diluted earnings per share for amortization, which
primarily relates to acquisition activities.

The Company defines adjusted earnings per share as income before income tax
provision plus amortization, less adjusted income tax provision, plus net loss
attributable to noncontrolling interest divided by the weighted average
diluted common shares outstanding.

The following is a reconciliation of income before income tax provision to
adjusted earnings per share:





                                                Three Months Ended
                                                March 31,
In millions, except per share amounts           2012           2011^(2)
Income before income tax provision              $    1,272  $   1,171
Amortization                                    118            106
Adjusted income before income tax provision     1,390          1,277
Adjusted income tax provision^(1)               542            503
Adjusted income from continuing operations      848            774
Net loss attributable to noncontrolling         1              1
interest
Adjusted income from continuing operations      $     849  $    775
attributable to CVS Caremark
Weighted average diluted common shares          1,309          1,371
outstanding
Adjusted earnings per share from continuing     $    0.65  $   0.57
operations attributable to CVS Caremark

(1)The adjusted income tax provision is computed using the effective income
tax rate from the consolidated statement of income.
(2)The adjusted results for the three months ended March 31, 2011 have been
revised to reflect the results of TheraCom as discontinued operations.

Free Cash Flow
(Unaudited)

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                                       2012          2011
Net cash provided by operating activities         $   2,786  $   1,866
 Subtract: Additions to property and equipment   (376)         (309)
 Add: Proceeds from sale-leaseback transactions  ─             11
Free cash flow                                    $  2,410     $   1,568





Supplemental Information
(Unaudited)

The Company evaluates its Pharmacy Services and Retail Pharmacy 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 consolidated financial statements:



         Pharmacy        Retail                                  Consolidated
          Services        Pharmacy  Corporate  Intersegment
In                        Segment   Segment     Eliminations^(2)  Totals
millions  Segment^(1)(3)
Three
Months
Ended
 March                                                       
31, 2012:
          $         $      $       $            $   
 Net   18,300                   --         (3,526)          30,798
revenues                  16,024
 Gross 616             4,572     --          (75)              5,113
profit

Operating 349             1,298     (168)       (75)              1,404
profit
(loss)
 March
31, 2011:                                                     

 Net   13,829          14,587    --          (2,721)           25,695
revenues
 Gross 630             4,147     --          (35)              4,742
profit

Operating 391             1,096     (147)       (35)              1,305
profit
(loss)



(1) Net revenues of the Pharmacy Services segment include approximately
$2.3 billion and $2.2 billion of retail co-payments for the three months ended
March 31, 2012 and 2011, respectively.
(2) Intersegment eliminations relate to two types of transactions: (i)
Intersegment revenues that occur when Pharmacy Services segment customers use
Retail Pharmacy segment stores to purchase covered products. When this occurs,
both the Pharmacy Services and Retail Pharmacy segments record the revenue on
a standalone basis, and (ii) Intersegment revenues, gross profit and operating
profit that occur when Pharmacy Services segment customers, through the
Company's intersegment activities (such as the Maintenance Choice program),
elect to pick-up their maintenance prescriptions at Retail Pharmacy segment
stores instead of receiving them through the mail. When this occurs, both the
Pharmacy Services and Retail Pharmacy segments record the revenue, gross
profit and operating profit on a standalone basis. Beginning in the fourth
quarter of 2011, the Maintenance Choice eliminations reflect all discounts
available for the purchase of mail order prescription drugs. The following
amounts are eliminated in consolidation in connection with the item (ii)
intersegment activity: net revenues of $798 million and $558 million for the
three months ended March 31, 2012 and 2011, respectively, gross profit and
operating profit of $75 million and $35 million for the three months ended
March 31, 2012 and 2011, respectively.
(3) The results of the Pharmacy Services segment for the three months
ended March 31, 2011 have been revised to reflect the results of TheraCom as
discontinued operations.



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                              2012      2011^(4)
Net revenues                             $ 18,300  $ 13,829
Gross profit                             616       630
 Gross profit % of net revenues       3.4%      4.6%
Operating expenses                       267       239
 Operating expense % of net revenues 1.5%      1.7%
Operating profit                         349       391
 Operating profit % of net revenues  1.9%      2.8%
Net revenues^(1):
 Mail choice^(2)                      $ 5,666   $  4,393
 Pharmacy network^(3)                  12,584    9,377
 Other                                50        59
Pharmacy claims processed^(1):
 Total                                218.9     175.2
 Mail choice^(2)                      20.4      17.5
 Pharmacy network^(3)                 198.5     157.7
Generic dispensing rate^(1):
 Total                                76.5%     73.8%
 Mail choice^(2)                      69.0%     63.8%
 Pharmacy network^(3)                 77.3%     74.8%
Mail choice penetration rate             22.8%     24.1%



(1) Pharmacy network net revenues, claims processed and generic dispensing
rates do not include Maintenance Choice, which are included within the mail
choice category.
(2) Mail choice is defined as claims filled at a Pharmacy Services' mail
facility, which include specialty mail claims, as well as 90-day claims filled
at retail under the Maintenance Choice program.
(3) Pharmacy network is defined as claims filled at retail pharmacies,
including our retail drugstores, but excluding Maintenance Choice activity.
(4) The results of the Pharmacy Services segment for the three months
ended March 31, 2011 have been revised to reflect the results of TheraCom as
discontinued operations.



EBITDA and EBITDA per Adjusted Claim
(Unaudited)

The Company defines EBITDA as earnings before interest, taxes, depreciation
and amortization. We define EBITDA per adjusted claim as EBITDA divided by
adjusted pharmacy claims. Adjusted pharmacy claims normalize the claims volume
statistic for the difference in average days' supply for mail and retail
claims. Adjusted pharmacy claims are calculated by multiplying 90-day claims
(the majority of total mail claims) by 3 and adding the 30-day claims. EBITDA
can be reconciled to operating profit, which we believe to be the most
directly comparable GAAP financial measure.

The following is a reconciliation of operating profit to EBITDA for the
Pharmacy Services segment:



                                               Three Months Ended
                                               March 31,
In millions, except per adjusted claim amounts 2012        2011^(1)
Operating profit                               $   349  $   391
Depreciation and amortization                  122         98
EBITDA                                         471         489
 Adjusted claims                              257.0       207.6
EBITDA per adjusted claim                      $  1.83   $    2.36



(1) The results of the Pharmacy Services segment for the three months
ended March 31, 2011 have been revised to reflect the results of TheraCom as
discontinued operations.



Supplemental Information
(Unaudited)

Retail Pharmacy Segment

The following table summarizes the Retail Pharmacy segment's performance for
the respective periods:



                                         Three Months Ended
                                         March 31,
In millions                              2012          2011
Net revenues                             $   16,024  $  14,587
Gross profit                             4,572         4,147
 Gross profit % of net revenues       28.5%         28.4%
Operating expenses                       3,275         3,051
 Operating expense % of net revenues 20.4%         20.9%
Operating profit                         1,298         1,096
 Operating profit % of net revenues  8.1%          7.5%
Net revenue increase:
 Total                                9.9%          4.4%
 Pharmacy                             11.1%         5.1%
 Front store                          7.1%          2.8%
Same store sales increase:
 Total                                8.4%          2.6%
 Pharmacy                             9.8%          3.7%
 Front store                          5.3%          0.4%
Generic dispensing rate                  78.1%         75.2%
Pharmacy % of total revenues             69.9%         69.1%
Third party % of pharmacy revenue        97.7%         97.5%
Retail prescriptions filled              179.5         165.6



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
that is subject to risks and uncertainties that could cause actual results to
differ materially. The Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The Company strongly recommends that you become familiar
with the specific risks and uncertainties outlined under the Risk Factors
section in our Annual Report on Form 10-K for the year ended December 31, 2011
and under the section entitled "Cautionary Statement Concerning
Forward-Looking Statements" in our most recently filed Quarterly Report on
Form 10-Q. For internal comparisons, management finds it useful to assess
year-to-year performance by adjusting diluted earnings per share for
amortization, which primarily relates to acquisition activities.



                                                   Year Ending
In millions, except per share amounts              December 31, 2012
Income before income tax provision                 $    6,324   $  6,516
Amortization                                       475             475
Adjusted income before income tax provision        6,799           6,991
Adjusted income tax provision                      2,652           2,727
Adjusted income from continuing operations         4,147           4,264
Net loss attributable to noncontrolling interest   3               3
Adjusted income from continuing operations         $   4,150    $  4,267
attributable to CVS Caremark
Weighted average diluted common shares outstanding 1,283           1,280
Adjusted earnings per share from continuing        $     3.23  $   3.33
operations attributable to CVS Caremark



Free Cash Flow Guidance
(Unaudited)

The following reconciliation of net cash provided by operating activities to
free cash flow contains forward-looking information that is subject to risks
and uncertainties that could cause actual results to differ materially. The
Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
The Company strongly recommends that you become familiar with the specific
risks and uncertainties outlined under the Risk Factors section in our Annual
Report on Form 10-K for the year ended December 31, 2011 and under the section
entitled "Cautionary Statement Concerning Forward-Looking Statements" in our
most recently filed Quarterly Report on Form 10-Q. For internal comparisons,
management finds it useful to assess year-to-year cash flow performance by
adjusting cash provided by operating activities, by capital expenditures and
proceeds from sale-leaseback transactions.

                                               Year Ending
In millions                                    December 31, 2012
Net cash provided by operating activities      $    6,195  $     6,420
 Subtract: Additions to property and       (2,145)        (2,075)
equipment
 Add: Proceeds from sale-leaseback         500            600
transactions
Free cash flow                                 $    4,550  $     4,945



SOURCE CVS Caremark Corporation