Item 2.02 Results of Operations and Financial Condition.
Members of CVS Health Corporation's ("CVS Health," the "Company," "we" or "our")
senior management team are scheduled to meet with investors beginning on January
9, 2023 and will participate in a webcast at 11:15 a.m. (Eastern Time) on
January 10, 2023. During the meetings and webcast, the Company will disclose
that it has reaffirmed its estimated full-year 2022 Adjusted earnings per share
("EPS") guidance range of $8.55 to $8.65. The Company expects its full-year 2022
Adjusted EPS to be at the high end of the guidance range primarily due to
certain non-operating items, including a lower share count. In addition, the
Company expects that it will exceed its full-year 2022 revenue guidance range of
$309 billion to $314 billion and will reaffirm its full-year 2022 adjusted
operating income guidance range of $17.5 billion to $17.6 billion and its
full-year 2022 cash flow from operations guidance range of $13.5 billion to
$14.5 billion.
The Company will also reaffirm its projected full-year 2023 Adjusted EPS
guidance range of $8.70 to $8.90, which does not include any impact from the
pending acquisition of Signify Health, Inc. ("Signify Health").
During the fourth quarter of 2022, the Company repurchased approximately 15
million shares at an average share price of $99.99. The Company also entered
into a $2.0 billion fixed dollar accelerated share repurchase transaction, which
became effective on January 3, 2023.
We expect our total Medicare Advantage ("MA") membership growth to be in the low
to mid-single digit percentage range in 2023. During the annual enrollment
period for 2023, our Individual MA enrollment came in below our expectations,
while we are growing strongly in the dual eligible special needs market and our
Group MA product continues to resonate in the market place.
For 2023, we expanded our individual public health insurance exchange footprint
to 12 states, covering approximately 40% of all addressable lives. This
expansion, combined with overall market growth and several market exits by
competitors, has allowed us to add more than 700,000 new members through open
enrollment this year, exceeding our expectations and bringing our total exchange
membership to over 750,000.
An audio webcast of the presentation will be broadcast simultaneously for all
interested parties through the Investor Relations portion of the CVS Health
website at http://investors.cvshealth.com. The accompanying presentation
materials are available on the website and will be archived for one year along
with a replay of the webcast.
Our financial closing procedures for the full-year 2022 are not yet complete
and, as a result, our actual results may change as a result of such financial
closing procedures, final adjustments, management's review of results, and other
developments that may arise between now and the time our financial results for
the full-year 2022 are finalized, and our results could be outside of the ranges
set forth above.
Non-GAAP Financial Measures
This Current Report on Form 8-K includes adjusted operating income and estimated
and projected Adjusted EPS, which represent non-GAAP financial measures. The
Company uses non-GAAP financial measures to analyze underlying business
performance and trends. The Company believes that providing non-GAAP financial
measures enhances the Company's and investors' ability to compare the Company's
past financial performance with its current performance. 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. The most directly
comparable GAAP measures are GAAP operating income and estimated and projected
GAAP diluted EPS.
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.
Estimated and projected GAAP diluted EPS and estimated and projected Adjusted
EPS, respectively, are calculated by dividing estimated or projected net income
attributable to CVS Health and estimated or projected adjusted income
attributable to CVS Health by the Company's estimated or projected weighted
average diluted shares outstanding. 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.
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As there is uncertainty in connection with calculating the adjustments necessary
to prepare reconciliations from the non-GAAP financial measures to the
comparable GAAP financial measures, including the inability to calculate
transaction-related items such as gains/losses on divestitures, asset
impairments, legal contingencies or acquisition-related transaction and
integration costs, the Company is unable to reconcile the non-GAAP financial
measures without unreasonable efforts. Therefore, no reconciliations are being
provided at this time. These items could result in significant adjustments from
the most comparable GAAP measures.
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 estimated full-year 2022 Adjusted EPS, projected full-year 2023
Adjusted EPS and the other financial information in this Current Report on Form
8-K, all of which are preliminary. 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,
including the potential emergence of additional variants, vaccine and testing
protocols, government testing initiatives, the geographies impacted by and 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.
Certain risks and uncertainties related to CVS Health's proposed acquisition of
Signify Health include, but are not limited to, the occurrence of any event,
change or other circumstance that could give rise to the right of CVS Health or
Signify Health or both of them to terminate the merger agreement, including
circumstances requiring a party to pay the other party a termination fee
pursuant to the merger agreement; failure to obtain applicable regulatory
approval in a timely manner or otherwise; the risk that the acquisition may not
close in the anticipated timeframe or at all due to one or more of the other
closing conditions to the transaction not being satisfied or waived; risks
related to the ability of CVS Health to successfully integrate the businesses
and achieve the expected synergies and operating efficiencies within the
expected timeframes or at all and the possibility that such integration may be
more difficult, time consuming or costly than expected; risks related to
disruption of management time from ongoing business operations due to the
proposed transaction; the risk that any announcements relating to the proposed
transaction could have adverse effects on the market price of CVS Health's
common stock, credit ratings or operating results; the risk that the proposed
transaction and its announcement could have an adverse effect on the ability of
CVS Health to retain customers and maintain relationships with each of its
business partners, suppliers and customers and on its operating results and
businesses generally; the risk of litigation and/or regulatory actions related
to the proposed acquisition; and other business effects, including the effects
of industry, market, economic, political or regulatory conditions. Certain
additional risks and uncertainties are 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 our most recently filed Annual Report on Form 10-K for the year
ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2022, and our 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 preliminary financial
estimates and projections, 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.
The information in this Current Report on Form 8-K shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934 (as amended,
the "Exchange Act") or otherwise subject to the liabilities of that Section, and
shall not be or be deemed to be incorporated by reference in any filing under
the Securities Act of 1933, as amended, or the Exchange Act, regardless of any
general incorporation language in such filing.
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