Item 7.01 Regulation FD Disclosure.
Members of CVS Health Corporation’s (the “Company’s”) senior management team are scheduled to meet with investors during the remainder of June 2020. During the meetings, while continuing to acknowledge the inherent and unprecedented uncertainty surrounding the ongoing coronavirus disease 2019 (“COVID-19”) pandemic and its impact, the Company intends to disclose that its full year 2020 GAAP diluted earnings per share (“EPS”) guidance range of $5.47 to $5.60, its full year 2020 Adjusted EPS (1) guidance range of $7.04 to $7.17 and its full year 2020 cash flow from operations guidance range of $10.5 billion to $11.0 billion remain unchanged. Given the likelihood of significant variability in the impact of COVID-19 on its financial statement line items (and related ratios), as previously disclosed on May 6, 2020, in connection with its announcement of its first quarter 2020 results, the Company withdrew all other previously issued 2020 additional detailed guidance. The Company’s full year 2020 Adjusted EPS guidance does not include any other adjustment items beyond those reported in the Company’s first quarter 2020 earnings press release.
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(1)
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The Company defines adjusted income attributable to CVS Health as net income attributable to CVS Health (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance, such as acquisition-related integration costs, the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health, and any other items specifically identified herein. GAAP diluted EPS and Adjusted EPS, respectively, are calculated by dividing net income attributable to CVS Health and adjusted income attributable to CVS Health by the Company’s weighted average diluted shares outstanding. The following table reconciles projected GAAP diluted EPS to projected Adjusted EPS:
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Year Ending December 31, 2020
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Per Common Share
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Low
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High
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Net income attributable to CVS Health (GAAP measure)
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$
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5.47
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$
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5.60
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Non-GAAP adjustments:
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Amortization of intangible assets
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1.76
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1.76
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Acquisition-related integration costs
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0.34
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0.34
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Income tax benefit
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(0.53
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)
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(0.53
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)
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Adjusted income attributable to CVS Health
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$
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7.04
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$
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7.17
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Weighted average diluted shares outstanding (in millions)
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1,320
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1,320
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The Company uses non-GAAP financial measures to analyze underlying business performance and trends. The Company believes that providing these non-GAAP financial measures enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance. These non-GAAP financial measures are provided as supplemental information to the financial measures that are calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. The Company’s definitions of its non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies.
Cautionary Statement Concerning Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. Statements in this Current Report on Form 8-K that are forward-looking include CVS Health’s full year 2020 per share projections for net income attributable to CVS Health, adjusted income attributable to CVS Health, amortization of intangible assets, acquisition-related integration costs, and the income tax benefit related to items excluded from adjusted income attributable to CVS Health, as well as full year 2020 cash flow from operations and the weighted average diluted shares outstanding for the year ending December 31, 2020. By their nature, all forward-looking statements are not guarantees of future performance or results and are subject to risks and uncertainties that are difficult to predict and/or quantify. Actual results may differ materially from those contemplated by the forward-looking statements due to the risks and uncertainties related to the COVID-19 pandemic, the severity and duration of the pandemic, the pandemic’s impact on the U.S. and global economies and consumer behavior and health care utilization patterns, and the timing, scope and
impact of stimulus legislation and other federal, state and local governmental responses to the pandemic, as well as the risks and uncertainties described in our Securities and Exchange Commission (“SEC”) filings, including those set forth in the Risk Factors section and under the heading “Cautionary Statement Concerning Forward-Looking Statements” in the Company’s most recently filed Annual Report on Form 10-K, its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and its recently filed Current Reports on Form 8-K.
You are cautioned not to place undue reliance on CVS Health’s forward looking statements. CVS Health’s forward-looking statements are and will be based upon management’s then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. CVS Health does not assume any duty to update or revise forward-looking statements, whether as a result of new information, future events, uncertainties or otherwise.