EX-99.1 2 exhibit991pressreleasedate.htm EX-99.1 Exhibit 99.1 Press Release dated May 1, 2013


Exhibit 99.1
 
Investor
 
Nancy Christal
 
Media
 
Eileen H. Boone
Contact:
 
Senior Vice President
 
Contact:
 
Senior Vice President
 
 
Investor Relations
 
 
 
Corporate Communications & Community Relations
 
 
(914) 722-4704
 
 
 
 
 
 
 
 
 
(401) 770-4561
 
FOR IMMEDIATE RELEASE
 
CVS CAREMARK REPORTS STRONG FIRST QUARTER RESULTS

2013 GUIDANCE RANGE NARROWED TO REFLECT HIGHER-THAN-EXPECTED PERFORMANCE
 
First Quarter Year-over-year Highlights:
▪
Operating profit increased 21.0% to $1.7 billion
▪
Adjusted EPS increased 28.1% to $0.83; GAAP diluted EPS from continuing operations increased 29.9% to $0.77
▪
Retail pharmacy same store prescription volumes increased 2.0%; 4.7% on a 30-day equivalent basis
▪
Retail pharmacy same store sales declined 2.3% due to new generic introductions; front store same store sales increased 1.4%
▪
Generated free cash flow of $1.3 billion; cash flow from operations of $1.6 billion

2013 Guidance:
▪
Narrowed 2013 full year Adjusted EPS range to $3.89 to $4.00 and GAAP diluted EPS from continuing operations range narrowed to $3.64 to $3.75
▪
Provided second quarter Adjusted EPS guidance of $0.94 to $0.97 and GAAP diluted EPS from continuing operations guidance of $0.88 to $0.91
▪
Reconfirmed full year free cash flow of $4.8 to $5.1 billion and cash flow from operations of $6.4 to $6.6 billion
 
WOONSOCKET, RHODE ISLAND, May 1, 2013 - CVS Caremark Corporation (NYSE: CVS) today announced operating results for the three months ended March 31, 2013.
 
Revenues
 
Net revenues for the three months ended March 31, 2013, decreased 0.1%, or $35 million, compared to the three months ended March 31, 2012.

Revenues in the Pharmacy Services Segment increased 0.1% in the three months ended March 31, 2013. The growth was primarily driven by volume increases across all channels and drug cost inflation in our specialty pharmacy business, mostly offset by the impact of new generic introductions. When substituted for brand equivalents, generic drugs lower revenue while increasing profit. Pharmacy network claims processed during the three months ended March 31, 2013, increased 4.3% to 207.1 million, compared to 198.5 million in the prior year period. The increase in pharmacy network claims was primarily due to higher claims activity associated with 1) new clients, 2) a strong flu season and 3) our Medicare Part D program. Mail choice claims processed during the three months ended March 31, 2013, increased approximately 0.6% to 20.5 million, compared to 20.4 million in the prior year period. The increase in the mail choice claim volume was primarily due to increased claims associated with the continuing adoption of our Maintenance Choice offerings.
 
Revenues in the Retail Pharmacy Segment increased 0.2% in the three months ended March 31, 2013. Same store sales decreased 1.2% when compared to the prior year period, with pharmacy same store sales down 2.3% and front store same store sales up 1.4%. The change in same store sales was primarily driven by new generic drug introductions, a strong flu season, the shift of the Easter holiday from April in 2012 to March in 2013 and the absence of leap day in 2013. Pharmacy same store prescription volumes rose 2.0% when 90-day prescriptions are counted as one prescription. On a 30-day equivalent basis, same store prescription volumes increased 4.7% in the quarter. Pharmacy same store sales were negatively impacted by approximately 925 basis points due to recent generic introductions. The high incidence of flu positively impacted pharmacy same store sales by approximately 90 basis points. Front store same store sales were positively impacted by 65 basis points due to the earlier Easter holiday. The absence of leap day in the three months ended March 31, 2013, had a negative impact on pharmacy same store sales of approximately 70 basis points and front store same store sales of approximately 120 basis points.

1



The increases in revenue in the Pharmacy Services and Retail Pharmacy segments were offset by an increase in intersegment activity primarily driven by the continued adoption of our Maintenance Choice program.
 
For the three months ended March 31, 2013, the generic dispensing rate increased approximately 400 basis points in our Pharmacy Services Segment, to 80.5%, and approximately 300 basis points in our Retail Pharmacy Segment, to 81.2%, 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, 2013, increased 23.1%, or $179 million, to $956 million, compared with $777 million during the three months ended March 31, 2012. The increase in income from continuing operations was primarily driven by the positive impact from new generics, which significantly 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 March 31, 2013 and 2012, was $0.83 and $0.65, respectively, an increase of 28.1%. Adjusted EPS excludes $122 million and $118 million of intangible asset amortization related to acquisition activity in the three months ended March 31, 2013 and 2012, respectively. GAAP earnings per diluted share from continuing operations attributable to CVS Caremark for the three months ended March 31, 2013 and 2012, was $0.77 and $0.59, respectively.
 
President and Chief Executive Officer Larry Merlo, said, “I'm very pleased with our strong first quarter results. As expected, the influx of new generic drugs was a key driver across the enterprise, resulting in solid gross margin expansion as well as significant growth in operating profit and earnings. In fact, operating profit grew well beyond our expectations across the enterprise, and we delivered EPS that was three cents above the high end of our guidance. This out-performance was driven by stronger-than-expected prescription volumes due in large part to the strong flu season, strong specialty growth, and favorable purchasing and rebate economics.”
 
Mr. Merlo continued, “Furthermore, we generated a substantial amount of free cash this quarter. We remain committed to our disciplined capital allocation strategy, which is enabling us to return significant value to our shareholders through both dividends and share repurchases.”
 
Real Estate Program
 
During the three months ended March 31, 2013, the Company opened 37 new retail drugstores and closed nine retail drugstores. In addition, the Company relocated 15 retail drugstores. As of March 31, 2013, the Company operated 7,596 locations in 45 states, the District of Columbia, Puerto Rico and Brazil. These locations included 7,531 retail drugstores, 18 onsite pharmacies, 31 retail specialty pharmacy stores, 12 specialty mail order pharmacies and four mail order pharmacies.
 
Guidance
 
The Company narrowed its earnings guidance range for the full year 2013 to reflect the solid first quarter performance to date and the outlook for the remainder of the year. The Company currently expects to deliver Adjusted EPS of $3.89 to $4.00 and GAAP diluted earnings per share from continuing operations of $3.64 to $3.75 per share in 2013. The guidance includes the estimated impact on our Medicare Part D business from sequestration. It also includes costs in our Medicare Part D business associated with resolving issues that arose following plan consolidation at the beginning of the year. The Company reconfirmed 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 (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.
 

2


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 more than 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, 2012 and under the section entitled “Cautionary Statement Concerning Forward-Looking Statements” in our most recently filed Quarterly Report on Form 10-Q.
 
— Tables Follow —




3


CVS CAREMARK CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)
 
 
 
Three Months Ended
March 31,
In millions, except per share amounts
 
2013
 
2012
 
 
 
 
 
Net revenues
 
$
30,763

 
$
30,798

Cost of revenues
 
25,181

 
25,685

Gross profit
 
5,582

 
5,113

Operating expenses
 
3,883

 
3,709

Operating profit
 
1,699

 
1,404

Interest expense, net
 
126

 
132

Income before income tax provision
 
1,573

 
1,272

Income tax provision
 
617

 
496

Income from continuing operations
 
956

 
776

Loss from discontinued operations, net of tax
 
—

 
(1
)
Net income
 
956

 
775

Net loss attributable to noncontrolling interest
 
—

 
1

Net income attributable to CVS Caremark
 
$
956

 
$
776

 
 
 
 
 
Income from continuing operations attributable to CVS Caremark:
 
 

 
 

Income from continuing operations
 
$
956

 
$
776

Net loss attributable to noncontrolling interest
 
—

 
1

Income from continuing operations attributable to CVS Caremark
 
$
956

 
$
777

 
 
 
 
 
Basic earnings per common share:
 
 

 
 

Income from continuing operations attributable to CVS Caremark
 
$
0.78

 
$
0.60

Loss from discontinued operations attributable to CVS Caremark
 
—

 
—

Net income attributable to CVS Caremark
 
$
0.78

 
$
0.60

Weighted average basic common shares outstanding
 
1,232

 
1,299

 
 
 
 
 
Diluted earnings per common share:
 
 

 
 

Income from continuing operations attributable to CVS Caremark
 
$
0.77

 
$
0.59

Loss from discontinued operations attributable to CVS Caremark
 
—

 
—

Net income attributable to CVS Caremark
 
$
0.77

 
$
0.59

Weighted average diluted common shares outstanding
 
1,241

 
1,309

 
 
 
 
 
Dividends declared per common share
 
$
0.2250

 
$
0.1625

 



4


CVS CAREMARK CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
 
March 31,
 
December 31,
In millions, except per share amounts
 
2013
 
2012
Assets:
 
 

 
 

Cash and cash equivalents
 
$
1,551

 
$
1,375

Short-term investments
 
5

 
5

Accounts receivable, net
 
6,635

 
6,473

Inventories
 
10,592

 
10,759

Deferred income taxes
 
604

 
663

Other current assets
 
340

 
577

Total current assets
 
19,727

 
19,852

Property and equipment, net
 
8,556

 
8,632

Goodwill
 
26,575

 
26,395

Intangible assets, net
 
9,738

 
9,753

Other assets
 
1,472

 
1,280

Total assets
 
$
66,068

 
$
65,912

 
 
 
 
 
Liabilities:
 
 

 
 

Accounts payable
 
$
5,506

 
$
5,070

Claims and discounts payable
 
3,854

 
3,974

Accrued expenses
 
3,523

 
4,051

Short-term debt
 
300

 
690

Current portion of long-term debt
 
12

 
5

Total current liabilities
 
13,195

 
13,790

Long-term debt
 
9,352

 
9,133

Deferred income taxes
 
3,774

 
3,784

Other long-term liabilities
 
1,538

 
1,501

Commitments and contingencies
 
 

 
 

 
 
 
 
 
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; 1,671 shares issued and
 
 
 
 
1,228 shares outstanding at March 31, 2013 and 1,667 shares issued and 1,231 shares
 
 
 
 
outstanding at December 31, 2012
 
17

 
17

Treasury stock, at cost: 441 shares at March 31, 2013 and 435 shares at December 31,
 
 
 
 
2012
 
(16,625
)
 
(16,270
)
Shares held in trust: 1 share at March 31, 2013 and December 31, 2012
 
(31
)
 
(31
)
Capital surplus
 
29,302

 
29,120

Retained earnings
 
25,728

 
25,049

Accumulated other comprehensive loss
 
(182
)
 
(181
)
Total shareholders’ equity
 
38,209

 
37,704

Total liabilities and shareholders’ equity
 
$
66,068

 
$
65,912

 


5


CVS CAREMARK CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
Three Months Ended
March 31,
In millions
 
2013
 
2012
Cash flows from operating activities:
 
 

 
 

Cash receipts from customers
 
$
28,018

 
$
29,207

Cash paid for inventory and prescriptions dispensed by retail network pharmacies
 
(22,270
)
 
(22,515
)
Cash paid to other suppliers and employees
 
(3,889
)
 
(3,751
)
Interest received
 
1

 
1

Interest paid
 
(104
)
 
(128
)
Income taxes paid
 
(116
)
 
(28
)
Net cash provided by operating activities
 
1,640

 
2,786

 
 
 
 
 
Cash flows from investing activities:
 
 

 
 

Purchases of property and equipment
 
(318
)
 
(376
)
Proceeds from sale of property and equipment
 
5

 
—

Acquisitions (net of cash acquired) and other investments
 
(254
)
 
(74
)
Proceeds from sale of subsidiary
 
—

 
7

Net cash used in investing activities
 
(567
)
 
(443
)
 
 
 
 
 
Cash flows from financing activities:
 
 

 
 

Decrease in short-term debt
 
(390
)
 
(750
)
Repayments of long-term debt
 
—

 
(52
)
Dividends paid
 
(277
)
 
(211
)
Proceeds from exercise of stock options
 
150

 
278

Excess tax benefits from stock-based compensation
 
13

 
—

Repurchase of common stock
 
(393
)
 
(810
)
Net cash used in financing activities
 
(897
)
 
(1,545
)
Net increase in cash and cash equivalents
 
176

 
798

Cash and cash equivalents at the beginning of the year
 
1,375

 
1,413

Cash and cash equivalents at the end of the year
 
$
1,551

 
$
2,211

 
 
 
 
 
Reconciliation of net income to net cash provided by operating activities:
 
 

 
 

Net income
 
$
956

 
$
775

Adjustments required to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
502

 
423

Stock-based compensation
 
34

 
36

Deferred income taxes and other non-cash items
 
66

 
21

Change in operating assets and liabilities, net of effects of acquisitions:
 
0

 
-776

Accounts receivable, net
 
(113
)
 
(70
)
Inventories
 
193

 
(776
)
Other current assets
 
238

 
286

Other assets
 
(135
)
 
(189
)
Accounts payable and claims and discounts payable
 
(230
)
 
1,044

Accrued expenses
 
105

 
1,250

Other long-term liabilities
 
24

 
(14
)
Net cash provided by operating activities
 
$
1,640

 
$
2,786

 

6


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
 
2013
 
2012
 
 
 
 
 
Income before income tax provision
 
$
1,573

 
$
1,272

Amortization
 
122

 
118

Adjusted income before income tax provision
 
1,695

 
1,390

Adjusted income tax provision(1) 
 
664

 
542

Adjusted income from continuing operations
 
1,031

 
848

Net loss attributable to noncontrolling interest
 
—

 
1

Adjusted income from continuing operations attributable to CVS Caremark
 
$
1,031

 
$
849

 
 
 
 
 
Weighted average diluted common shares outstanding
 
1,241

 
1,309

Adjusted earnings per share from continuing operations attributable to CVS Caremark
 
$
0.83

 
$
0.65

 

(1)   The adjusted income tax provision is computed using the effective income tax rate from the consolidated statements of income.


7


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
 
2013
 
2012
 
 
 
 
 
Net cash provided by operating activities
 
$
1,640

 
$
2,786

Subtract: Additions to property and equipment
 
(318
)
 
(376
)
Free cash flow
 
$
1,322

 
$
2,410




8


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:
 
In millions
 
Pharmacy 
Services
Segment(1)
 
Retail 
Pharmacy 
Segment
 
Corporate 
Segment
 
Intersegment 
Eliminations(2)
 
Consolidated
Totals
Three Months Ended
 
 

 
 

 
 

 
 

 
 

March 31, 2013:
 
 
 
 
 
 
 
 
 
 
Net revenues
 
$
18,311

 
$
16,051

 
$
—

 
$
(3,599
)
 
$
30,763

Gross profit
 
768

 
4,952

 
—

 
(138
)
 
5,582

Operating profit (loss)
 
499

 
1,537

 
(199
)
 
(138
)
 
1,699

March 31, 2012
 
 

 
 

 
 

 
 

 
 

Net revenues
 
18,300

 
16,024

 
—

 
(3,526
)
 
30,798

Gross profit
 
616

 
4,572

 
—

 
(75
)
 
5,113

Operating profit (loss)
 
349

 
1,298

 
(168
)
 
(75
)
 
1,404

 

(1)         Net revenues of the Pharmacy Services Segment include approximately $2.2 billion and $2.3 billion of retail co-payments for the three months ended March 31, 2013 and 2012, respectively.
(2)
Intersegment eliminations relate to two types of transaction: (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. The following amounts are eliminated in consolidation in connection with the item (ii) intersegment activity: net revenues of $939 million and $798 million for the three months ended March 31, 2013 and 2012, respectively, gross profit and operating profit of $138 million and $75 million for the three months ended March 31, 2013 and 2012, respectively.


9


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
 
2013
 
2012
 
 
 
 
 
Net revenues
 
$
18,311

 
$
18,300

Gross profit
 
768

 
616

Gross profit % of net revenues
 
4.2
%
 
3.4
%
Operating expenses
 
269

 
267

Operating expense % of net revenues
 
1.5
%
 
1.5
%
Operating profit
 
499

 
349

Operating profit % of net revenues
 
2.7
%
 
1.9
%
Net revenues(1):
 
 

 
 

Mail choice(2)
 
$
5,869

 
$
5,666

Pharmacy network(3)
 
12,392

 
12,584

Other
 
50

 
50

Pharmacy claims processed(1):
 
 

 
 

Total
 
227.6

 
218.9

Mail choice(2)
 
20.5

 
20.4

Pharmacy network(3)
 
207.1

 
198.5

Generic dispensing rate(1):
 
 

 
 

Total
 
80.5
%
 
76.5
%
Mail choice(2)
 
75.4
%
 
69.0
%
Pharmacy network(3)
 
81.0
%
 
77.3
%
Mail choice penetration rate
 
22.1
%
 
22.8
%
 

(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.


 

10


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
 
2013
 
2012
 
 
 
 
 
Net revenues
 
$
16,051

 
$
16,024

Gross profit
 
4,952

 
4,572

Gross profit % of net revenues
 
30.9
 %
 
28.5
%
Operating expenses
 
3,415

 
3,275

Operating expense % of net revenues
 
21.3
 %
 
20.4
%
Operating profit
 
1,537

 
1,298

Operating profit % of net revenues
 
9.6
 %
 
8.1
%
Retail prescriptions filled (90 Day = 1Rx)
 
184.7

 
179.5

Retail prescriptions filled (90 Day = 3 Rx) (1)
 
221.5

 
210.0

Net revenue increase:
 
 

 
 

Total
 
0.2
 %
 
9.9
%
Pharmacy
 
(1.1
)%
 
11.1
%
Front store
 
3.1
 %
 
7.1
%
Total prescription volume (90 Day = 1 Rx)
 
2.9
 %
 
8.4
%
Total prescription volume (90 Day = 3 Rx) (1)
 
5.5
 %
 
10.4
%
Same store increase (decrease):
 
 

 
 

Total sales
 
(1.2
)%
 
8.4
%
Pharmacy sales
 
(2.3
)%
 
9.8
%
Front store sales
 
1.4
 %
 
5.3
%
Prescription volume (90 Day = 1 Rx)
 
2.0
 %
 
7.2
%
Prescription volume (90 Day = 3 Rx) (1)
 
4.7
 %
 
9.2
%
Generic dispensing rate
 
81.2
 %
 
78.1
%
Pharmacy % of total revenues
 
69.0
 %
 
69.9
%
Third party % of pharmacy revenue
 
97.8
 %
 
97.7
%
 

(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.

11


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, 2012 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.
 
In millions, except per share amounts
 
Year Ending
December 31, 2013
 
 
 
 
 
Income before income tax provision
 
$
7,257

 
$
7,435

Amortization
 
495

 
495

Adjusted income before income tax provision
 
7,752

 
7,930

Adjusted income tax provision
 
3,007

 
3,076

Adjusted income from continuing operations
 
4,745

 
4,854

Net loss attributable to noncontrolling interest
 
—

 
—

Adjusted income from continuing operations attributable to CVS Caremark
 
$
4,745

 
$
4,854

Weighted average diluted common shares outstanding
 
1,221

 
1,215

 
 
 
 
 
Adjusted earnings per share from continuing operations attributable to CVS Caremark
 
$
3.89

 
$
4.00

 

 
Three Months Ending
June 30, 2013
 
 
 
 
 
Income before income tax provision
 
$
1,780

 
$
1,843

Amortization
 
123

 
124

Adjusted income before income tax provision
 
1,903

 
1,967

Adjusted income tax provision
 
746

 
771

Adjusted income from continuing operations
 
1,157

 
1,196

Net loss attributable to noncontrolling interest
 
—

 
—

Adjusted income from continuing operations attributable to CVS Caremark
 
$
1,157

 
$
1,196

Weighted average diluted common shares outstanding
 
1,229

 
1,227

 
 
 
 
 
Adjusted earnings per share from continuing operations attributable to CVS Caremark
 
$
0.94

 
$
0.97

 

12


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, 2012 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.
 
In millions
 
Year Ending
December 31, 2013
 
 
 
 
 
Net cash provided by operating activities
 
$
6,350

 
$
6,550

Subtract: Additions to property and equipment
 
(2,200
)
 
(2,000
)
Add: Proceeds from sale-leaseback transactions
 
600

 
500

Free cash flow
 
$
4,750

 
$
5,050



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