CVS Caremark Reports Record Fourth Quarter And Full Year 2012 Results

    CVS Caremark Reports Record Fourth Quarter And Full Year 2012 Results

PR Newswire

WOONSOCKET, R.I., Feb. 6, 2013

WOONSOCKET, R.I., Feb. 6, 2013 /PRNewswire/ -- CVS Caremark Corporation (NYSE:
CVS) today announced operating results for the three months and year ended
December 31, 2012.

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

Fourth Quarter Year-over-year Highlights:

  oNet revenues increased 10.9% to a record $31.4 billion, with Pharmacy
    Services up 17.4% and Retail Pharmacy up 5.1%
  oRetail Pharmacy segment same store sales increased 4.0%
  oOperating profit increased 17.7% to a record $2.3 billion
  oAdjusted EPS of $0.97 and GAAP diluted EPS from continuing operations of
    $0.90, both of which include a $0.17 per share loss on early
    extinguishment of debt
  oAdjusted EPS of $1.14, excluding the loss on early extinguishment of debt

Full Year Highlights:

  oNet revenues increased 15.0% to a record $123.1 billion, with Pharmacy
    Services up 24.7% and Retail Pharmacy up 6.8%
  oRetail Pharmacy segment same store sales increased 5.5%
  oOperating profit increased 14.2% to a record $7.2 billion
  oAdjusted EPS of $3.27 and GAAP diluted EPS from continuing operations of
    $3.03, both of which include a $0.17 per share loss on early
    extinguishment of debt
  oAdjusted EPS of $3.43, excluding the loss on early extinguishment of debt
  oGenerated free cash flow of $5.2 billion; cash flow from operations of
    $6.7 billion

2013 Guidance:

  oRaised full year Adjusted EPS to $3.86 to $4.00; GAAP diluted EPS from
    continuing operations of $3.61 to $3.75, to reflect the impact of debt
    refinancing
  oConfirmed first quarter Adjusted EPS from continuing operations of $0.77
    to $0.80; GAAP diluted EPS from continuing operations of $0.71 to $0.74
  oConfirmed full year free cash flow of $4.8 to $5.1 billion; cash flow from
    operations of $6.4 to $6.6 billion

Revenues

Net revenues for the three months ended December 31, 2012, increased 10.9%, or
$3.1 billion, to $31.4 billion, up from $28.3 billion in the three months
ended December 31, 2011. For the year ended December 31, 2012, total revenue
increased 15.0%, or $16.0 billion, to $123.1 billion, compared to $107.1
billion for the year ended December 31, 2011.

Revenues in the Pharmacy Services segment increased 17.4% to $18.6 billion in
the three months ended December 31, 2012. This increase was primarily
associated with new 2012 client starts, drug cost inflation and the growth of
our Medicare Part D program. Pharmacy network claims processed during the
three months ended December 31, 2012, increased 6.5% to 205.5 million,
compared to 193.0 million in the prior year period. The increase in pharmacy
network claims was primarily due to a large number of 2012 new client starts,
as well as higher claims activity associated with our Medicare Part D program.
Mail choice claims processed during the three months ended December 31, 2012,
increased approximately 14.6% to 20.4 million compared to 17.8 million in the
prior year period. The increase in the mail choice claim volume was primarily
due to a significant number of 2012 new client starts, as well as increased
claims associated with the continuing client adoption of our Maintenance
Choice offerings. For the year ended December 31, 2012, total revenue in the
Pharmacy Services segment increased 24.7% to $73.4 billion, compared to $58.9
billion in the year ended December 31, 2011.

Revenues in the Retail Pharmacy segment increased 5.1% to $16.3 billion in the
three months ended December 31, 2012. Same store sales increased 4.0% over the
prior year period, with pharmacy same store sales up 4.0% and front store same
store sales up 3.9%. Calendar day shifts in the fourth quarter of 2012, which
had one additional Monday and one fewer Saturday compared with the same period
in 2011, positively impacted pharmacy same store sales by approximately 80
basis points. Additionally, pharmacy same store prescription volumes rose 9.0%
when 90-day prescriptions are counted as one prescription. After converting
each 90-day prescription into three prescriptions, same store prescription
volumes increased 11.0% in the quarter. Pharmacy same store sales were
negatively impacted by approximately 11 percentage points due to recent
generic introductions. For the year ended December 31, 2012, total revenue in
the Retail Pharmacy segment increased 6.8% to $63.7 billion, compared to $59.6
billion in the year ended December 31, 2011. Same store sales increased 5.5%
for the year ended December 31, 2012, over the prior year, with pharmacy same
store sales up 6.5% and front store same store sales up 3.4%.

For the three months ended December 31, 2012, the generic dispensing rate
increased approximately 500 basis points to 80.0% in our Pharmacy Services
segment and approximately 400 basis points to 79.9% 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 December 31, 2012, increased 2.7%, or $29 million, to $1.13
billion, compared with $1.10 billion during the three months ended December
31, 2011. The increase in income from continuing operations was primarily
driven by improved operating profit in both our Pharmacy Services and Retail
Pharmacy segments. Adjusted earnings per share from continuing operations
attributable to CVS Caremark (Adjusted EPS) for the three months ended
December 31, 2012 and 2011, was $0.97 and $0.89, respectively. These include a
$348 million, or an approximate $0.17 per share, loss on early extinguishment
of debt recognized in the fourth quarter of 2012. Excluding the loss on early
extinguishment of debt, Adjusted EPS increased 27.9% in the fourth quarter to
$1.14. Adjusted EPS excludes $124 million and $114 million of intangible asset
amortization related to acquisition activity in the three months ended
December 31, 2012 and 2011, respectively. GAAP earnings per diluted share from
continuing operations attributable to CVS Caremark for the three months ended
December 31, 2012 and 2011, was $0.90 and $0.84, respectively, which also
includes the impact of the loss on early extinguishment of debt recognized in
the fourth quarter of 2012.

Income from continuing operations attributable to CVS Caremark for the year
ended December 31, 2012, increased 11.3%, or $392 million, to $3.9 billion,
compared to $3.5 billion in the prior year. Adjusted EPS, which excludes $486
million and $452 million of intangible asset amortization related to
acquisition activity for the years ended December 31, 2012 and 2011, was $3.27
and $2.80, respectively. These include the $348 million, or the approximate
$0.17 per share, loss on early extinguishment of debt recognized in the fourth
quarter of 2012. Excluding the loss on early extinguishment of debt, Adjusted
EPS increased 22.8% in 2012 to $3.43. GAAP earnings per diluted share from
continuing operations attributable to CVS Caremark for the year ended December
31, 2012, was $3.03, which also includes the impact of the loss on early
extinguishment of debt, compared to $2.59 in the prior year.

President and Chief Executive Officer Larry Merlo, said, "I'm very pleased
with our fourth quarter results. Both the PBM and retail segments turned in
strong performances at the high end of our expectations. And we also realized
below-the-line benefits in the quarter from a lower effective tax rate and
fewer shares than we originally anticipated, resulting in EPS exceeding the
high end of our guidance by approximately three cents per share."

Mr. Merlo continued, "Additionally, we continued to drive shareholder value
through our disciplined approach to capital allocation. We generated free
cash flow of $5.2 billion in 2012, exceeding our expectations, and returned
more than $5.1 billion to our shareholders through dividends and share
repurchases."

Real Estate Program

During the three months ended December 31, 2012, the company opened 37 new
retail drugstores and closed two retail drugstores. In addition, the company
relocated eight retail drugstores. As of December 31, 2012, the company
operated 7,525 locations in 45 states, the District of Columbia and Puerto
Rico. These locations included 7,458 retail drugstores, 19 onsite pharmacies,
31 retail specialty pharmacy stores, 12 specialty mail order pharmacies and
five mail order pharmacies.

Guidance

The company raised its earnings guidance for the full year 2013 to reflect the
anticipated two cents per share of EPS accretion related to the debt tender
and refinancing that was executed during the fourth quarter of last year. The
company currently expects to deliver Adjusted EPS of $3.86 to $4.00 and GAAP
diluted earnings per share from continuing operations of $3.61 to $3.75 per
share in 2013.The company confirmed its 2013 free cash flow guidance of $4.8
billion to $5.1 billion, and its 2013 cash flow from operations guidance of
$6.4 billion to $6.6 billion.These 2013 guidance estimates assume the
completion of $4.0 billion in share repurchases.

Teleconference and Webcast

The company will be holding a conference call today for the investment
community at 8:30 am (EST) 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 7,400 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 breath 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.

– Tables Follow –

CVS CAREMARK CORPORATION

Condensed Consolidated Statements of Income

(Unaudited)
                       Three Months Ended           Year Ended
                       December 31,                 December 31,
In millions, except    2012^(1)       2011          2012^(1)       2011
per share amounts
Net revenues           $  31,394     $  28,317    $ 123,133     $ 107,100
Cost of revenues       25,097         22,762        100,627        86,539
Gross profit           6,297          5,555         22,506         20,561
Operating expenses     3,995          3,598         15,278         14,231
Operating profit       2,302          1,957         7,228          6,330
Interest expense, net  159            147           557            584
Loss on early          348            —             348            —
extinguishment of debt
Income before income   1,795          1,810         6,323          5,746
tax provision
Income tax provision   666            711           2,441          2,258
Income from continuing 1,129          1,099         3,882          3,488
operations
Income (loss) from
discontinued           —              (36)          (7)            (31)
operations, net of tax
Net income             1,129          1,063         3,875          3,457
Net loss attributable
to noncontrolling      —              1             2              4
interest
Net income                                                         $  
attributable to CVS    $   1,129    $   1,064   $   3,877   3,461
Caremark
Income from continuing
operations
attributable to CVS
Caremark:
Income from continuing $   1,129    $           $   3,882    $   3,488
operations                            1,099
Net loss attributable
to noncontrolling      —              1             2              4
interest
Income from continuing
operations             $  1,129     $   1,100   $   3,884    $   3,492
attributable to CVS
Caremark
Basic earnings per                    
common share: ^                                                    
                                                   
 Income from          $   0.91                                 $   
continuing operations                 $          $    3.06   2.61
attributable to CVS                   0.84
Caremark
 Income (loss) from
discontinued                                        
operations             —              (0.03)                       (0.02)
attributable to CVS                                 (0.01)
Caremark
 Net income                        $                         $   
attributable to CVS    $   0.91    0.82          $   3.05    2.59
Caremark
 Weighted average
basic common shares    1,241          1,302         1,271          1,338
outstanding
Diluted earnings per                  
common share: ^                                                    
                       $                        
Income from continuing 0.90                                       $   
operations                            $         $    3.03   2.59
attributable to CVS                   0.84
Caremark
 Income (loss) from
discontinued                                        
operations             —              (0.03)                       (0.02)
attributable to CVS                                 (0.01)
Caremark
 Net income         $           $                         $   
attributable to CVS    0.90          0.81         $   3.03    2.57
Caremark
 Weighted average
diluted common shares  1,249          1,310         1,280          1,347
outstanding
Dividends declared per $  0.1625     $  0.1250   $ 0.6500      $  0.5000
common share
(1) Effective January 1, 2012, the Company changed its methods of accounting
for prescription drug inventories in the Retail Pharmacy Segment. Additional
details of the 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 September 30, 2012.





CVS CAREMARK CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)
                                       December 31,
In millions, except per share amounts  2012^(1)              2011
Assets:
 Cash and cash equivalents          $      1,375     $      1,413
 Short-term investments             5                     5
 Accounts receivable, net           6,473                 6,047
 Inventories                        10,759                10,046
 Deferred income taxes              663                   503
 Other current assets               577                   580
 Total current assets            19,852                18,594
 Property and equipment, net        8,632                 8,467
 Goodwill                           26,395                26,458
 Intangible assets, net             9,753                 9,869
 Other assets                       1,280                 1,155
 Total assets                    $     65,912      $     64,543
Liabilities:
 Accounts payable                   $      5,070     $      4,370
 Claims and discounts payable       3,974                 3,487
 Accrued expenses                   4,051                 3,293
 Short-term debt                    690                   750
 Current portion of long-term debt  5                     56
 Total current liabilities       13,790                11,956
 Long-term debt                     9,133                 9,208
 Deferred income taxes              3,784                 3,853
 Other long-term liabilities        1,501                 1,445
 Commitments and contingencies
 Redeemable noncontrolling interest —                     30
Shareholders' equity:
Preferred stock, par value $0.01: 0.1
shares authorized; none issued         —                     —
oroutstanding
Common stock, par value $0.01: 3,200                        
shares authorized; 1,667 shares issued
and 1,231 shares outstanding at                             
December 31, 2012 and 1,640 shares
issued and 1,298 shares outstanding at 17                    16
December 31, 2011
Treasury stock, at cost: 435 shares at                      
December 31, 2012 and 340 shares at
December 31, 2011                      (16,270)              (11,953)
Shares held in trust: 1 share at       
December 31, 2012                                            (56)
                                       (31)
 and 2 shares at December 31, 2011
Capital surplus                        29,120                28,126
Retained earnings                      25,049                22,090
Accumulated other comprehensive loss   (181)                 (172)
 Total shareholders' equity         37,704                38,051
Total liabilities and shareholders'    $     65,912      $     64,543
equity
(1) Effective January 1, 2012, the Company changed its methods of accounting
for prescription drug inventories in the Retail Pharmacy Segment. Additional
details of the 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 September 30, 2012.





CVS CAREMARK CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)
                                         Year Ended
                                         December 31,
In millions                              2012^(1)             2011
Cash flows from operating activities:
 Cash receipts from customers         $  113,205         $    97,688
 Cash paid for inventory and
prescriptions dispensed by retail        (90,032)             (75,148)
network pharmacies
 Cash paid to other suppliers and     (13,643)             (13,635)
employees
 Interest received                    4                    4
 Interest paid                        (581)                (647)
 Income taxes paid                    (2,282)              (2,406)
Net cash provided by operating           6,671                5,856
activities
Cash flows from investing activities:
 Purchases of property and equipment  (2,030)              (1,872)
 Proceeds from sale-leaseback         529                  592
transactions
 Proceeds from sale of property and   23                   4
equipment
 Acquisitions (net of cash acquired)  (378)                (1,441)
and other investments
 Purchase of available-for-sale       —                    (3)
investments
 Sale or maturity of                  —                    60
available-for-sale investments
 Proceeds from sale of subsidiary     7                    250
Net cash used in investing activities    (1,849)              (2,410)
Cash flows from financing activities:
 Increase (decrease) in short-term    (60)                 450
debt
 Proceeds from issuance of long-term  1,239                1,463
debt
 Repayments of long-term debt         (1,718)              (2,122)
 Purchase of noncontrolling interest  (26)                 —
in subsidiary
 Dividends paid                       (829)                (674)
 Derivative settlements               —                    (19)
 Proceeds from exercise of stock      836                  431
options
 Excess tax benefits from stock-based 28                   21
compensation
 Repurchase of common stock           (4,330)              (3,001)
 Other                                —                    (9)
Net cash used in financing activities    (4,860)              (3,460)
Net decrease in cash and cash            (38)                 (14)
equivalents
Cash and cash equivalents at the         1,413                1,427
beginning of the year
Cash and cash equivalents at the end of  $    1,375       $     
the year                                                      1,413
Reconciliation of net income to net cash
provided by operating activities:
 Net income                           $     3,875      $     3,457
 Adjustments required to reconcile
net income to net cash provided by
operating activities:
 Depreciation and amortization  1,753                1,568
 Stock-based compensation       132                  135
 Loss on early extinguishment   348                  —
of debt
 Gain on sale of subsidiary     —                    (53)
 Deferred income taxes and      (106)                144
other non-cash items
  Change in operating assets and
liabilities, net of effects of
acquisitions:
  Accounts receivable, net    (387)                (748)
Inventories                 (858)                607
Other current assets        3                    (420)
Other assets                (99)                 (49)
Accounts payable and claims 1,147                1,128
and discounts payable
Accrued expenses            753                  85
Other long-term liabilities 110                  2
Net cash provided by operating           $     6,671      $     5,856
activities
(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 September 30, 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          Year Ended
                            December 31,                December 31,
In millions, except per     2012           2011         2012        2011
share amounts
Income before income tax    $           $          $         $  5,746
provision^(1)               1,795          1,810        6,323
Amortization                124            114          486         452
Adjusted income before      1,919          1,924        6,809       6,198
income tax provision
Adjusted income tax         713            756          2,628       2,436
provision^(2) ^
Adjusted income from        1,206          1,168        4,181       3,762
continuing operations
Net loss attributable to    —              1            2           4
noncontrolling interest
Adjusted income from
continuing operations       $            $          $         $  3,766
attributable to CVS         1,206         1,169        4,183
Caremark
Weighted average diluted    1,249          1,310        1,280       1,347
common shares outstanding
Adjusted earnings per share
from continuing operations  $           $         $        $   
attributable to CVS         0.97          0.89         3.27       2.80
Caremark
(1) Includes a $348 million loss on early extinguishment of debt
(approximately $0.17 per diluted share) in the fourth quarter of 2012.
(2) The adjusted income tax provision is computed using the effective income
tax rates of 37.11% and 38.6% from the consolidated statements of income for
the three months and year ended December 31, 2012.



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:



                                                   Year Ended
                                                   December 31,
In millions                                        2012          2011
Net cash provided by operating activities          $   6,671  $   5,856
 Subtract: Additions to property and equipment   (2,030)       (1,872)
 Add: Proceeds from sale-leaseback transactions  529           592
Free cash flow                                     $   5,170   $   4,576



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
Inmillions                     Segment   Segment     Eliminations^(2)  Totals
                   Segment^(1)
ThreeMonthsEnded
 December 31,                                                      
2012:
                   $       $      $       $            $   
 Net revenues    18,642              -          (3,528)          31,394
                                16,280
 Gross profit   1,334        5,095     -           (132)             6,297
 Operating      1,035        1,581     (182)       (132)             2,302
profit (loss)
 December 31,                                                      
2011:
                   15,874       15,493    -           (3,050)           28,317
 Net revenues
 Gross profit   1,016        4,608     -           (69)              5,555
 Operating      724          1,453     (151)       (69)              1,957
profit (loss)
Year Ended
 December 31,                                                      
2012:
                   73,444       63,654    -           (13,965)          123,133
 Net revenues
 Gross profit   3,808        19,109    -           (411)             22,506
 Operating      2,679        5,654     (694)       (411)             7,228
profit (loss)
 December 31,                                                      
2011:
                   58,874       59,599    -           (11,373)          107,100
 Net revenues
 Gross profit   3,279        17,468    -           (186)             20,561
 Operating      2,220        4,912     (616)       (186)             6,330
profit (loss)
(1) Net revenues of the Pharmacy Services segment include approximately $2.0 billion
of retail co-payments for both the three months ended December 31, 2012 and 2011, as
well as $8.4 billion and $7.9 billion of retail co-payments for the year ended
December 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 $888 million and $742 million for the three
months ended December 31, 2012 and 2011, respectively, and $3.4 billion and $2.6
billion for the year ended December 31, 2012 and 2011, respectively; gross profit
and operating profit of $132 million and $69 million for the three months ended
December 31, 2012 and 2011, respectively, and $411 million and $186 million for the
year ended December 31, 2012 and 2011, respectively.



Supplemental Information
(Unaudited)

Pharmacy Services Segment

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



                         Three Months Ended            Year Ended
                         December 31,                  December 31,
In millions              2012            2011          2012        2011
Net revenues             $ 18,642        $ 15,874      $ 73,444    $  58,874
Gross profit             1,334           1,016         3,808       3,279
 Gross profit % of    7.2%            6.4%          5.2%        5.6%
net revenues
Operating expenses       299             292           1,129       1,059
 Operating expense % 1.6%            1.8%          1.5%        1.8%
of net revenues
Operating profit         1,035           724           2,679       2,220
 Operating profit %  5.6%            4.6%          3.7%        3.8%
of net revenues
Net revenues^(1):
 Mail choice^(2)      $ 5,759         $ 4,901      $ 22,843    $ 18,616
 Pharmacy network^(3)  12,838          10,924        50,411      40,040
 Other                45              49            190         218
Pharmacy claims
processed^(1):
 Total                225.9           210.8         880.5       774.6
 Mail choice^(2)      20.4            17.8          81.7        70.6
 Pharmacy network^(3) 205.5           193.0         798.8       704.0
Generic dispensing
rate^(1):
 Total                80.0%           75.0%         78.5%       74.1%
 Mail choice^(2)      74.5%           66.1%         72.0%       64.9%
 Pharmacy network^(3) 80.5%           75.8%         79.1%       75.0%
Mail choice penetration  22.1%           20.8%         22.7%       22.3%
rate
(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.



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     Year Ended
                              December 31,           December 31,
In millions, except per       2012       2011        2012           2011
adjusted claim amounts
Operating profit              $ 1,035   $   724  $   2,679   $ 2,220
Depreciation and amortization 137        116         517            433
EBITDA                        1,172      840         3,196          2,653
 Adjusted claims             264.0      243.9       1,033.0        905.6
EBITDA per adjusted claim     $  4.44  $        $    3.09  $   2.93
                                         3.45



Supplemental Information
(Unaudited)
Retail Pharmacy Segment

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

                         Three Months Ended             Year Ended
                         December 31,                   December 31,
In millions              2012             2011          2012         2011
Net revenues             $16,280          $15,493       $63,654      $59,599
Gross profit             5,095            4,608         19,109       17,468
 Gross profit % of    31.3%            29.7%         30.0%        29.3%
net revenues
Operating expenses       3,514            3,155         13,455       12,556
 Operating expense % 21.6%            20.4%         21.1%        21.1%
of net revenues
Operating profit         1,581            1,453         5,654        4,912
 Operating profit %  9.7%             9.4%          8.9%         8.2%
of net revenues
Retail prescriptions     185.5            168.9         717.9        657.8
filled (90 Day = 1Rx)
Retail prescriptions
filled (90 Day = 3 Rx) ^ 219.7            197.1         848.1        763.4
(1)
Net revenue increase:
 Total                5.1%             4.0%          6.8%         3.9%
 Pharmacy             4.9%             4.9%          7.6%         4.4%
 Front store          5.5%             2.1%          5.1%         3.0%
Total prescription       9.8%             3.2%          9.1%         3.4%
volume (90 Day = 1 Rx)
Total prescription
volume (90 Day = 3 Rx) ^ 11.5%            5.4%          11.1%        5.6%
(1)
Same store increase:
 Total sales          4.0%             2.5%          5.5%         2.3%
 Pharmacy sales       4.0%             3.6%          6.5%         3.1%
 Front store sales    3.9%             0.1%          3.4%         0.8%
 Prescription volume  9.0%             2.1%          8.1%         2.2%
(90 Day = 1 Rx)
 Prescription volume  11.0%            4.4%          10.3%        4.4%
(90 Day = 3 Rx) ^ (1)
Generic dispensing rate  79.9%            75.9%         79.2%        75.6%
Pharmacy % of total      67.6%            67.7%         68.8%        68.3%
revenues
Third party % of         97.6%            97.9%         97.5%        97.8%
pharmacy revenue
(1) 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.



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, 2013
Income before income tax provision                 $    7,188   $  7,444
Amortization                                       485             485
Adjusted income before income tax provision        7,673           7,929
Adjusted income tax provision                      2,985           3,084
Adjusted income from continuing operations         4,688           4,845
Net loss attributable to noncontrolling interest   -               -
Adjusted income from continuing operations         $   4,688    $  4,845
attributable to CVS Caremark
Weighted average diluted common shares outstanding 1,215           1,211
Adjusted earnings per share from continuing        $     3.86  $   4.00
operations attributable to CVS Caremark



                                                   Three Months Ending
In millions, except per share amounts              March 31, 2013
Income before income tax provision                 $    1,442   $  1,502
Amortization                                       120             120
Adjusted income before income tax provision        1,562           1,622
Adjusted income tax provision                      609             633
Adjusted income from continuing operations         953             989
Net loss attributable to noncontrolling interest   -               -
Adjusted income from continuing operations         $     953   $    989
attributable to CVS Caremark
Weighted average diluted common shares outstanding 1,240           1,237
Adjusted earnings per share from continuing        $     0.77  $   0.80
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, 2013
Net cash provided by operating activities      $    6,350  $     6,649
 Subtract: Additions to property and       (2,050)        (2,149)
equipment
 Add: Proceeds from sale-leaseback         500            600
transactions
Free cash flow                                 $    4,800  $     5,100





SOURCE CVS Caremark Corporation

Website: http://info.cvscaremark.com
Contact: Investors, Nancy Christal, Senior Vice President, Investor Relations,
+1-914-722-4704; Media, Eileen H. Boone, Senior Vice President, Corporate
Communications & Community Relations, +1-401-770-4561
 
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