WOONSOCKET, R.I., June 4, 2019 /PRNewswire/ -- The executive
team of CVS Health (NYSE: CVS) will outline a series of
transformation initiatives at its 2019 Investor Day today, showing
how the company plans to accelerate enterprise growth, simplify a
consumer health system that is confusing and inconvenient, and
position the company for long-term growth and increased shareholder
value. The company also will provide greater insight into near- and
long-term earnings potential.
"Our goal is to fundamentally transform the consumer health
experience for the millions of Americans we interact with every
day, while creating value for our patients, members, partners, and
shareholders," said Larry J. Merlo,
President and Chief Executive Officer, CVS Health. "We have
combined with Aetna to build a powerful and unique business model
that will guide our journey to becoming the most consumer-centric
health company."
Enterprise Priorities to Accelerate Growth
CVS Health is dedicated to putting consumers at the center of
its strategy and helping them achieve their best health by
strengthening health care locally and making it simpler to use and
understand.
The CVS Health management team is focused on:
- Growing and differentiating CVS Health's
businesses with a focus on driving engagement through
personalization, winning in high-growth products and services and
delivering new and innovative benefit designs and reimbursement
models.
- Expanding HealthHUBs to build on the success of its pilot
program in Houston, TX.
HealthHUBs are a powerful example of how CVS Health can provide
consumers with convenient, personalized and integrated access to
local health care. The company will open additional HealthHUBs in
Houston, Atlanta, Philadelphia/Southern New Jersey and Tampa this year, and plans to have 1,500 total
HealthHUBs operating by the end of 2021.
- Taking advantage of the unmatched breadth of CVS Health's
capabilities to introduce new products and services. CVS
Health will optimize government programs, introduce new risk-based
carve-outs, develop programs aimed at complex conditions like
chronic kidney disease, and create new analytics products.
- Building a robust technology infrastructure designed to
support transformational initiatives and protect CVS
Health's breadth of data. CVS Health will deploy that data across
the organization to create a holistic view of the patient, which
will offer insights on how to communicate with the patient most
effectively, including providing the next best action they can take
to improve their health.
- Realizing cost savings by modernizing enterprise
functions and efficiently integrating operations following the
Aetna transaction.
Strong Financial Foundation Will Drive Long-Term Value
Creation
CVS Health CFO Eva Boratto will
discuss how a focus on synergies and modernization will drive a
more efficient company, and how investments in technology and new
products will create long-term value.
"We are continuing to drive significant synergies and cost
savings across the entire enterprise as we execute our integration
plans," Boratto said. "Going forward, we also have truly exciting
opportunities to introduce programs and products that will change
the way people think of and address their health."
2019 Guidance
The company is reaffirming its 2019 full year projections:
- Consolidated Revenues: $251.2 to $254.4
billion
- GAAP Operating Income: $11.8 to $12.0
billion
- Adjusted Operating Income: $15.0 to $15.2
billion
- GAAP diluted EPS: $4.90 to
$5.05
- Adjusted EPS: $6.75 to
$6.90
- GAAP Net Cash Provided by Operating Activities:
$9.8 to $10.3
billion
- Cash Available to Repay Debt: $4.2 to $4.6
billion
Long-Term Earnings Potential
CVS Health expects to balance near-term execution with long-term
value creation through strategic initiatives and consumer-centric
products which are projected to drive Adjusted EPS of at least
$7.00 in 2020, mid-single digit
percent Adjusted EPS growth in 2021, and low-double digit percent
growth in 2022 and beyond. Additional details will be provided in
today's presentations.
Investor Day Webcast
CVS Health will host its 2019 Investor Day presentation today
beginning at 8 a.m. Eastern Time. The
presentation will be available via a live video and audio webcast
for all interested parties through the Investor Relations section
of the CVS Health website at http://investors.cvshealth.com. The
webcast will be archived and available on the website for a
one-year period following today's Investor Day.
About CVS Health
CVS Health is the nation's premier health innovation company
helping people on their path to better health. Whether in one of
its pharmacies or through its health services and plans, CVS Health
is pioneering a bold new approach to total health by making quality
care more affordable, accessible, simple and seamless. CVS Health
is community-based and locally focused, engaging consumers with the
care they need when and where they need it. The Company has more
than 9,900 retail locations, approximately 1,100 walk-in medical
clinics, a leading pharmacy benefits manager with approximately 94
million plan members, a dedicated senior pharmacy care business
serving more than one million patients per year and expanding
specialty pharmacy services. CVS Health also serves an estimated 38
million people through traditional, voluntary and consumer-directed
health insurance products and related services, including a rapidly
expanding Medicare Advantage offering and a leading standalone
Medicare Part D prescription drug plan. The Company believes its
innovative health care 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.
Cautionary Statement Regarding 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 press release that are
forward-looking include the information in the italicized
introductory information and under the headings "2019 Guidance" and
"Long-Term Earnings Potential" and the related endnotes and
reconciliations and the information in Mr. Merlo's and Ms.
Boratto's quoted statements. 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.
You are cautioned not to place undue reliance on CVS Health's
forward looking statements. These 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
or otherwise, as of any future date.
Non-GAAP Financial Measures
This press release
contains certain non-GAAP financial measures, including adjusted
operating income, adjusted earnings per share (Adjusted EPS) and
cash available to repay debt. In accordance with SEC regulations,
you can find the definitions of the Non-GAAP items mentioned, as
well as the reconciliations to the most directly comparable GAAP
measures, below in this press release.
Investor Contact:
Joe
Krocheski
Vice President
Investor Relations
(860) 273-0896
Media Contact:
T.J. Crawford
Vice President
External Affairs
(212) 457-0583
Non-GAAP Financial Measures
The Company uses non-GAAP measures, including adjusted operating
income, Adjusted EPS and cash available to repay debt, to analyze
underlying business performance and trends. The Company believes
that providing these non-GAAP 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 presented in this press release 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 adjusted operating income,
Adjusted EPS and cash available to repay debt may not be comparable
to similarly titled measurements reported by other companies.
The Company defines adjusted operating income as operating
income (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 and store rationalization
charges. A reconciliation of projected 2019 operating income to
adjusted operating income is provided below.
The Company defines adjusted net 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, store
rationalization charges, the corresponding tax benefit or expense
related to the items excluded from adjusted net income attributable
to CVS Health and the corresponding impact to income allocable to
participating securities, net of tax, related to the items excluded
from net income attributable to CVS Health in determining adjusted
net income attributable to CVS Health. GAAP diluted EPS and
Adjusted EPS, respectively, are calculated by dividing net income
attributable to CVS Health and adjusted net income attributable to
CVS Health by the Company's weighted average diluted shares
outstanding. A reconciliation of projected 2019 net income to
projected adjusted net income attributable to CVS Health and a
calculation of projected 2019 GAAP diluted EPS and Adjusted EPS is
provided below.
Projected Adjusted EPS after 2019 excludes from GAAP diluted EPS
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,
the corresponding tax benefit or expense related to the items
excluded from adjusted net income attributable to CVS Health and
the corresponding impact to income allocable to participating
securities, net of tax, related to the items excluded from net
income attributable to CVS Health in determining adjusted net
income attributable to CVS Health. The Company is not able to
project the amount of any such other items during periods after
2019 at this time and therefore cannot reconcile projected Adjusted
EPS after 2019 to projected GAAP diluted EPS. The Company is unable
at this time to accurately quantify the significance of any item of
unavailable information.
The Company defines cash available to repay debt as net cash
provided by operating activities (GAAP measure) minus cash
allocated to fund: (i) net capital expenditures, (ii) shareholder
dividends and (iii) additional retained capital needs of its
insurance subsidiaries. A reconciliation of projected 2019 net cash
provided by operating activities to cash available to repay debt is
provided below.
Adjusted Operating Income
Guidance
(Unaudited)
The following reconciliation of projected operating income to
projected adjusted operating income 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
"Non-GAAP Financial Measures" above for more information on how we
calculate adjusted operating income.
|
|
|
|
|
Year Ending
|
|
December 31, 2019
|
In millions
|
Low
|
|
High
|
Operating income
(GAAP measure)
|
$
|
11,765
|
|
|
$
|
11,975
|
|
Non-GAAP
adjustments:
|
|
|
|
Amortization of
intangible assets
|
2,520
|
|
|
2,520
|
|
Acquisition-related
integration costs (1)
|
550
|
|
|
550
|
|
Store rationalization
charge (2)
|
135
|
|
|
135
|
|
Adjusted operating
income
|
$
|
14,970
|
|
|
$
|
15,180
|
|
_____________________________________________
|
|
|
|
(1)
|
Acquisition-related
integration costs relate to the acquisition of Aetna.
|
(2)
|
Primarily relates to
operating lease right-of-use asset impairment charges in connection
with the planned closure of 46 underperforming retail pharmacy
stores in the second quarter of 2019.
|
Adjusted Earnings Per Share
Guidance
(Unaudited)
The following reconciliation of projected net income to
projected adjusted net income attributable to CVS Health and
calculation of projected GAAP diluted EPS and projected Adjusted
EPS contain 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 "Non-GAAP Financial Measures" above for more
information on how we calculate Adjusted EPS.
|
Year Ending
December 31, 2019
|
|
Low
|
|
High
|
In millions, except per share amounts
|
Total
Company
|
|
Per Common
Share
|
|
Total
Company
|
|
Per Common
Share
|
Net income (GAAP
measure)
|
$
|
6,420
|
|
|
|
|
$
|
6,620
|
|
|
|
Net income
attributable to noncontrolling interests (GAAP measure)
|
(10)
|
|
|
|
|
(10)
|
|
|
|
Income allocable to
participating securities (GAAP measure)
|
(5)
|
|
|
|
|
(5)
|
|
|
|
Net income
attributable to CVS Health (GAAP measure)
|
6,405
|
|
|
$
|
4.90
|
|
|
6,605
|
|
|
$
|
5.05
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
2,520
|
|
|
1.93
|
|
|
2,520
|
|
|
1.93
|
|
Acquisition-related
integration costs (1)
|
550
|
|
|
0.42
|
|
|
550
|
|
|
0.42
|
|
Store rationalization
charge (2)
|
135
|
|
|
0.10
|
|
|
135
|
|
|
0.10
|
|
Income tax benefit
(3)
|
(785)
|
|
|
(0.60)
|
|
|
(785)
|
|
|
(0.60)
|
|
Income allocable to
participating securities, net of tax (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted net income
attributable to CVS Health
|
$
|
8,825
|
|
|
$
|
6.75
|
|
|
$
|
9,025
|
|
|
$
|
6.90
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
|
|
1,308
|
|
|
|
|
1,308
|
|
_____________________________________________
|
|
|
|
|
|
|
|
|
|
(1)
|
Acquisition-related
integration costs relate to the acquisition of Aetna.
|
(2)
|
Primarily relates to
operating lease right-of-use asset impairment charges in connection
with the planned closure of 46 underperforming retail pharmacy
stores in the second quarter of 2019.
|
(3)
|
Represents the
corresponding tax benefit or expense related to the items excluded
from adjusted net income attributable to CVS Health and Adjusted
EPS above. The nature of each non-GAAP adjustment is evaluated to
determine whether a discrete adjustment should be made to the
adjusted income tax provision.
|
(4)
|
Represents the
corresponding impact to income allocable to participating
securities, net of tax, related to the items above excluded from
net income attributable to CVS Health in determining adjusted net
income attributable to CVS Health and calculating Adjusted EPS
above.
|
Cash Available to Repay
Debt
(Unaudited)
The following reconciliation of projected net cash provided by
operating activities to projected cash available to repay debt
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 "Non-GAAP Financial Measures" above for more
information on how we calculate cash available to repay debt.
|
Year
Ending
December 31,
2019
|
In millions
|
Low
|
|
High
|
Net cash provided by
operating activities (GAAP measure)
|
$
|
9,800
|
|
|
$
|
10,300
|
|
Net capital
expenditures (additions to property and equipment less
sale-leaseback proceeds)
|
(2,600)
|
|
|
(2,300)
|
|
Shareholder
dividends
|
(2,600)
|
|
|
(2,600)
|
|
Additional retained
capital needs of insurance subsidiaries (1)
|
(400)
|
|
|
(800)
|
|
Cash available for
debt repayment
|
$
|
4,200
|
|
|
$
|
4,600
|
|
_____________________________________________
|
|
|
|
(1)
|
Represents a portion
of the retained capital required to support the projected insured
membership growth in the Health Care Benefits segment.
|
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SOURCE CVS Health