“Over the past several years, CVS Health has been preparing for the changes in the health care landscape by expanding our extensive suite of leading assets and capabilities,” said president and chief executive officer Larry Merlo. “We are now positioned more broadly than ever with the right strategy across the health care continuum to create real value by enhancing access, driving better health outcomes and reducing overall health care costs. We are the only health care company that is truly channel-agnostic, and we can help drive superior health outcomes as people move through the continuum of care. Our consumer expertise gives us an edge in the increasingly consumer-directed health care environment.”
He described CVS Health as a “one-of-a-kind company” that is not standing still. “Over the past year we have made long-term, value-enhancing investments and introduced innovative new products. We continued to add to our competitive advantage, expanding our core pharmacy business while broadening our reach into new health care channels. We have become an integrated health care enterprise, and we manage the business through an enterprise lens. We hold leading positions in multiple interrelated health care and pharmacy areas, including retail pharmacy, pharmacy benefits management, specialty, infusion, clinical programs, retail clinics, medical claims editing and long-term care. No one is better positioned than CVS Health to respond to the health care challenges that millions of Americans face.”
The company raised the midpoint of its 2016 outlook and now expects adjusted earnings per share to be in the range of $5.73 to $5.88, reflecting solid year-over-year growth of 11.25% to 14.25%. The bottom end of the range was increased by 5 cents per share from the preliminary outlook provided on the company’s third quarter earnings call.
The company also announced that its board of directors approved a 21% increase in its quarterly cash dividend, to 42.5 cents per share on the common stock of the company. The increase translates to $1.70 per share annually, up 30 cents per share.
Merlo said that key accomplishments in 2015 include strong financial expectations consistent with previous guidance; a strong 2016 selling season for the pharmacy benefit management business with $11.5 billion in net new business and a client retention rate of 98%; superior specialty revenue growth of approximately 33%, outperforming the specialty market; enhanced generic sourcing through the Red Oak Sourcing venture with Cardinal Health; the acquisition of Omnicare, a leader in long-term-care pharmacy; continued advancement of the company’s front-store growth strategies with a focus on enhancing health and beauty offerings, store brands, personalization and digital; and elevated awareness of the CVS Health brand.
Merlo also announced that the company has completed its acquisition of the pharmacy and clinic business of Target Corp. for approximately $1.9 billion. CVS Health purchased Target’s 1,672 pharmacies across 47 states and will operate them through a store-within-a-store format branded as CVS/pharmacy. As well, a CVS/pharmacy will be included in all new Target stores that offer pharmacy services.