Cvs Health Corporation · NYSE:CVS
Cvs Health — Q4 2020 Earnings Presentation
24 slides from Cvs Health's earnings presentation, Feb 16, 2021
Slide 1: Fourth Quarter 2020 Earnings Conference Call
FOURTH QUARTER 2020 Earnings conference call February 16, 2021 Karen Lynch | President & Chief Executive Officer Eva Boratto | Executive Vice President & Chief Financial Officer
Slide 2: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This presentation includes 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. By their nature, all forward-lo
Slide 3: 2020 highlights
2020 highlights Strong underlying performance; FY 2020 Adj. EPS of $7.50 Q4 Adjusted Revenue FY Adj EPS Q4 Adj EPS of $1.30 growth of 3.5% growth of ~6% Reflects Primarily in Reflects year-over-year outperformance in PSS HCB and Retail/LTC growth in PSS and HCB Q4 estimated COVID adverse FY Generate
Slide 4: Accelerating aspects of our consumer-focused strategy
Accelerating aspects of our consumer-focused strategy meeting the diverse health needs of consumers in communities across America Demonstrating Enhancing the consumer Expanding our Building high- the integrated experience through our innovative, consumer- performing value of our digital services and
Slide 5: CVS Health continues to lead nation's COVID-19 response
CVS Health continues to lead nation’s COVID-19 response ~15M ~8M >40% >3M tests New customers of Return Ready vaccinations administered to CVS Health clients are new administered at through testing to CVS Health LTC facilities >40K LTC Facilities using CVS Health • ~90% of second doses complete at S
Slide 6: 2020 Financial Review
2020 Financial Review 6 ©2021 CVS Health and/or one of its affiliates. Confidential and proprietary.
Slide 7: Consolidated results (Full-year 2020)
FULL-YEAR 2020 RESULTS Consolidated results Achieved over $900 million of in millions, integration synergies except per share data 2020 2019 Change % Total adjusted revenues1 $268,395 $256,776 4.5% Interest expense of $2.9 billion Adjusted Adjusted effective tax rate of 25.9% operating income $16,00
Slide 8: Capital and cash flow allocation
FULL-YEAR 2020 RESULTS Capital and cash flow allocation FY20 results demonstrate strong cash flow from operations Strong cash generation Continue to prioritize paying down debt • $15.9 billion full-year cash flow from • Repaid $4.25 billion of net debt operations, ~23% growth over prior year • Exite
Slide 9: Consolidated results (Q4)
Q4 RESULTS Consolidated results in millions, Interest expense of $678 million except per share data Q4 2020 Q4 2019 Change % Total adjusted revenues1 $69,243 $66,889 3.5% Adjusted effective tax rate of 26.8% Adjusted operating income $2,945 $3,766 (21.8%) Weighted-average diluted share count: 1,317
Slide 10: Health Care Benefits segment
Q4 RESULTS Health Care Benefits segment Adjusted Revenue growth primarily driven by membership growth in Government products and HIF, partially offset by divestitures of Aetna’s PDP and Workers’ Compensation business, Commercial in millions, except MBR Q4 2020 Q4 2019 Change % membership declines an
Slide 11: Pharmacy Services segment
Q4 RESULTS Pharmacy Services segment Revenue decline primarily driven by previously disclosed client losses and continued price in millions Q4 2020 Q4 2019 Change % compression, partially offset by growth in Specialty pharmacy and brand inflation • Specialty pharmacy revenue growth of ~4% YoY Total
Slide 12: Retail / LTC segment
Q4 RESULTS Retail / LTC segment Revenue growth driven primarily by increased prescription volume, including strong flu immunizations, as well as increased COVID-19 in millions Q4 2020 Q4 2019 Change % diagnostic testing and brand inflation, partially offset by continued reimbursement pressure and im
Slide 13: Retail pharmacy
Q4 RESULTS Retail pharmacy Same store sales growth driven by strength in in millions Change vs. Q4 2019 Pharmacy; Retail pharmacy script share increased Retail pharmacy script share of 27.24%1, 2 Up ~30bps 5.3% Growth in prescriptions filled primarily driven by Same store sales3 continued adoption o
Slide 14: Estimated impact of COVID-19 on Q4 financials
Q4 RESULTS Estimated impact of COVID-19 on Q4 financials Retail / LTC Health Care Benefits • Pharmacy volume impacted by reduction • Planned investments made in our in new therapy prescriptions, including customers and members and provisions lower seasonal flu prescriptions; for potential payments t
Slide 15: 2021 Guidance
2021 Guidance 15 ©2021 CVS Health and/or one of its affiliates. Confidential and proprietary.
Slide 16: FY 2021 Outlook
FY 2021 Outlook Focused on delivering long-term sustainable growth for our shareholders Adj EPS between Revenue growth Cost Savings Initiatives $7.39 - $7.55 between 3% - 4.5%1 Expected to drive between 4% to 6% growth Expect growth across $900 million to $1.1 billion in savings vs baseline of $7.11
Slide 17: Enterprise outlook
GUIDANCE: FULL-YEAR 2021 Enterprise outlook Proven agility and strength of our Enterprise driving continued growth In billions, except per share data FY 20213 $276.1 to $280.6 Guidance reflects return to traditional Total revenues1 3.0% to 4.5% levels of medical costs and physician visits throughout
Slide 18: Health Care Benefits outlook
GUIDANCE: FULL-YEAR 2021 Health Care Benefits outlook Projected total revenue growth is driven by continued strength in Medicare products in billions, except MBR and trend FY 2021 Projected adjusted operating income Total revenues1 $79.4 to $80.7 reflects removal of HIF, strong growth in 5.5% to 7.2
Slide 19: Pharmacy Services outlook
GUIDANCE: FULL-YEAR 2021 Pharmacy Services outlook Projected revenue growth attributable to net new business, continued strong growth in Specialty pharmacy and brand drug In billions FY 2021 inflation Total revenues $144.5 to $147.0 Specialty revenue growth expected to be 1.75% to 3.5% mid-single di
Slide 20: 2021 PBM selling season
AS OF JANUARY 2021 2021 PBM selling season ($, billions) 4.9 (1.6) 2021 Selling season largely complete with retention rate of ~98%1 3.3 Driving pharmacy penetration in 2021 Aetna book to deliver ~$350M in incremental revenue2 Gross Net new business Non-renewals new business 1. Retention rate is def
Slide 21: Retail / LTC outlook
GUIDANCE: FULL-YEAR 2021 Retail / LTC outlook Projected growth in adjusted operating income driven by pharmacy volume, COVID-19 diagnostic testing and In billions FY 2021 vaccinations and cost saving initiatives, partially offset by continued reimbursement Total revenues $93.8 to $95.1 pressure. The
Slide 22: Other items
GUIDANCE: FULL-YEAR 2021 Other items In billions, except tax rates FY 2021 Expected gross capital expenditures are Interest expense above historical levels as we expand ~$2.6 investments in technology and digital enhancing our apps and system workflows Capital expenditures $2.7 to $3.0 and we contin
Slide 23: Other considerations
GUIDANCE: FULL-YEAR 2021 Other considerations First quarter expected to be the lowest earnings quarter for the year In Retail/LTC, lower front store traffic and script volume have persisted into the first quarter in part due to the weaker flu season. Q1 is also affected by investments to advance our
Slide 24: ©2021 CVS Health and/or one of its affiliates. Confidential and proprietary.
24 ©2021 CVS Health and/or one of its affiliates. Confidential and proprietary.