CVS Health (CVS) 4 Aug 212021 Q2 Earnings call transcript

Ladies and gentlemen, good morning and welcome to the CVS Health Second Quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow CVS prepared remarks, at which point we will review instructions on how to ask your question.

As a reminder, today's conference is being recorded. I would now like to turn the call over to Susie Lisa, Senior Vice President of Investor Relations for CVS Health. ahead. go Please

very good Second And Senior I'm and and forward. Chief Vice and Guertin, Welcome the Health. to President this you Executive call on Thank you XXXX morning, today Earnings to Health I'm President with CVS Karen for Quarter Executive Investor Lisa, to call. CVS be of the Financial have you. Officer Relations everyone. excited to with morning I'm Vice Officer. and opportunity by the work going joined President Chief Lynch, Shawn Susie

our question-and-answer Pharmacy include Following prepared Healthcare Retail that remarks, Finke, Roberts, Dan and a we'll Benefits, President session Chief Lotvin, Pharmacy, Montgomery, Officer. President host and Alan President Neela will Services, Jon Operating

and website, presentation to morning. that slide form XX-Q posted been along filed our release with SEC our we have Our the this with press

will this as projections. our views future services financial to our current call, Forward-Looking market and products During as our future and we Statements benefits reflecting our of related expected industry consumer conditions, performance, make financial and certain events, the well

Form Annual on Forward-Looking XX-Q. statement these Form, risk risks Report and and uncertainties. this factors Statements most In to included Forward-Looking what file materially subject Our to are press you be uncertainties risks described information strongly Statements release, and concerning the the review with may regarding We in encourage recent our differ indicated them. in from particular, the cautionary morning's SEC actual cause those the in to in that could we and in that are results section, earnings our XX-K, significant reports

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the to Karen. my it's pleasure to turn Now, call over

and everyone another This morning, CVS strong joining call today. Good our Health. you quarter was thank for for

healthcare We in better healthcare however that truly are solutions, In generates U.S. This we our deliver across proven outcomes. health evolve. differentiates to the playing health integral the what to needs rapidly is bring us connecting have system individual meet experiences environment, role and an can at scale, growth. we they changing

and millions investments. where access growth just is Americans and Our vaccination meet how when COVID-XX it's where our focus for customers they there innovation they and are. of to want We're we'll and our campaigns Company what's are testing example. to across continue driving We one That care.

and of During share earnings $X.XX operations the quarter, revenue billion. growth generated adjusted of Xnd cash of from per $X.X flow We we XX%. delivered strong

raising announced investment new $X.XX our reflects $X.XX. Today, are in markets. the per we adjusted in current continued across and both This We our to momentum with growth an earnings share business, employees. guidance our important positive to

hour employees that $XXX by million $XXX an needed XXXX. will the our Increasing in in impact X the in edge our retain creates wage for July boost estimate and talent year. help $XX Approximately, X labor customer-centric We over retail competitive minimum our approach. business years. a of will months our final this an labor for million hourly of will the raise tight attract colleagues wage wage be for will This costs We incremental market. to it minimum increase a

by strong customer in CVS new outperformance our retention our our performance, improvement. growth results our we in increased wins. people. aligns a business. by are government Healthcare delivered and value earnings as our In Health our which in the critical, Just rates and sales it of margin Customers businesses and values and history overall of highlighted our on across and with purpose, providing builds Each realize were results sequential Benefits, assets powered investment

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We exceed baseline the half medical modestly level to of cost aggregate during believe will second continue the year.

In addition performance leveraging strong co-branded are our unique core and business, to we with CVS-Aetna offerings. portfolio our our of assets in broad first

entrance local believe that healthcare With new for offering We benefits are a something exchange have that strategies compressed, This Aetna's creating we earnings The work CVS our a pharmacy, return materials. health strong developing by selling have retail is been a our marked deliver. XXXX can X significant and Employers presence, industry national states submitted networks regulatory in our supplemental for presence, health filings we January in pipeline. account outlined and compelling behavioral on combines insurance, XXXX wide other has to and no one vaccinations been else in activities. services. focused season ' somewhat

strong a client result XX%. on As of we a result, retention, delivering concentrated

XXXX, were for have securing For products. new bid new and we in that cases successful to those business, out differentiated introducing been

offer national program For and primary example, including our long-term only network, is product virtual first care MinuteClinic primary HealthHUB. and virtual to dedicated a the care nationwide traditional in-person

Services, operating Turning to very delivering and outperformed we X.X% Pharmacy strong income growth. growth expectations, revenue

up year-over-year. We Pharmacy continue in to revenue momentum build Specialty X.X% with

rate impressive complete. more Looking XX% XX% an we renewals with than ahead, have maintained of retention

specialty the $X of integrated the from testament year. billion also next XXXX winning differentiation mail we for over The and business well-positioned alone. growth remain a in in integrated to bring specialty It have particularly We sales offer seasons nearly customers. added our with order, is This new in-store, is success important. driven growth value We the pharmacy and we members through and interest results, marketplace and our our X,XXX,XXX XXXX. reflects new offering in aligned medical for strong new selling We services. pharmacy XXXX and continued

continues to role strategy. a Our part as our community-focused segment crucial of Retail play

fueling macro normal improvements destination and millions We in vital activities are are a for local who resuming the Americans economy. health of more

our retail share market grew prescription market. XX%. Our to and outperformed we pharmacies, results over for second-quarter our In the expectations,

vaccines customer-centric sales, XX% store a at growth strong, the to than the script vaccines of vaccines. pharmacy than with or is tests rebound up administered was which more XX% past Approximately Importantly, through XX of the XX administered our the the categories. saw X improve XX% the higher X/X attributable all COVID months million the At nearly quarter, to million our Similarly, rate members health continue programs underrepresented we communities, population. a over X/X by driven that adherence in strength products. which year-over-year, now inception quarter wellness We benchmark Nearly in growth of of and to were of we program. and increased time, front patients. for same across solid in was

Our effort convenient to for Americans all and make the continues. vaccine accessible

a in April, new from impact slowing are rates variants. vaccination despite of peak the However,

work presence COVID powerful by tools. and example digital with augmented is of consumers, are building our Our the local a and trust relationships we

through us strong. testing, Health. to strong have subsequently introduced their the chosen prescriptions customers script vaccine new drive For growth at testing COVID This XX% in overall CVS to fill get helped quarter. approximately remains outlook COVID COVID or The

tireless public prevail in grateful a recommendations the to dedication I'm colleagues. efforts play and and the of the Americans against XXX,XXX continue As are prepared, for nearly evolve, pandemic. helping critical continued role health we

growth. of key across progress drivers considerable making are our We

The delivery. our in role care first is

that our include of We designed of as one Concierge HealthHUB address and a integrated behavioral chronic need sites program engagement needs. of and will expanded diabetes, the like in care members health promising our and benefits. such without low variety health We S high affordable, allows they HealthHUB in co-pay these services cancer. continue demonstrating commercial close as our strong care care. many screenings management, as common to than on intervention that more health, utilizing co-pay XX% to as services beyond the the members for to planned, represent critical such and in program Aetna is reach to are us access continue HealthHUB no local, individual a connected. Medicare product often MinuteClinic members. of done of our are rate platform diabetes Care quality spectrum and lower-cost health settings, care, and the out as our as care results We twice focus are Stars channels, of Early area to expand to frequently, Rolling the offer of usually to more gaps a pandemic. that support primary we expanded

technology. is area key second The

accelerating using assets. expanding the power serve digital experience across consumers capabilities of solutions. are our and access, flexibility, we new our while health Today, speed, launch to Health are We regularly and choice, And XX the reinvent customers how sources unique million creating CVS than value we more digital care of complexity. by creating new of reducing their

more in to pharmacy data that customers remain scripts, with have behaviors. customers retail than spend Our us store, customers digital longer important. medical manage engage personalized times two-and-a-half our health patients. more front are related costs guide one-and-a-half customers lower other times who And digitally insights Digital and

This program. digital saw of initiated Building trusted than quarter, the members prescriptions our pharmacy specialty we XX% these XX% relationships digitally and growth with to all into both of our our simplifying also our from colleagues. our have digital of who opted opportunities more At time, same customers operations the by customers we reengineering across generates new benefit structure cost specialty businesses. are own

pharmacy impact. to and are eliminating script a results while leveraging benefit authorization. One program yield better and results as quickly, programs verification to more technology-driven automation, uses greater processes AI and intelligent generate driving is streamlining migration, such cloud accelerate Our steps, specialty XX that blockchain, automation and manual example prior than more

communities in the the commercial work we not commitment important shareholders, an and Our CVS live, offering. customers, at and vitality stop we plays health Health does role communities to where and serve, serve. product of

a to these our healthy commitment Health our the healthy It sustainability ambitious, advancement Together, agenda investing Healthy known wellness, as goals. Transform on responsibility Health long-standing communities, for our and areas. and of development an economic people, roadmap, healthy and corporate Our UN's development, is with X X inclusive business, XXXX. represents create planet. sustainable that suppliers. focuses achievable efforts opportunities colleagues but CVS social aligns

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but our Health In we to provide to XXXX XX% set targets am broad solutions do a addition, we've and more about is from and set much I I'll achieved, CVS reduce assets. science-based In health greenhouse leading of closing, gas a is there Company unique of updates with XXXX proud by progress. by continued the our regular have what emissions baseline.

progress people, pace our We are to accelerating our drive our customers, for of value and shareholders. our communities, our

acumen, Company. reach Our who multiple growth an throughout for avenues now sustained the uniquely lifetime, while capabilities Guertin, for turn unparalleled joined enduring them our recently positions support their consumer, us to to with I'll also relationship providing financial Shawn President, Vice Chief expertise, Executive successful be already made Financial and the impact. in mindset our has Officer as will and strategic to of deep Health His execution May strategy. CVS and instrumental Shawn. late an healthcare

CVS not you, morning, dynamic system be a such and at important as Karen for our our everyone. good very Company, only I'm to but healthcare whole. Health, Thank particularly for a and at time, excited

that community Quarter serve. on advantage portfolio across and of healthcare strong presence, differentiated the a while improves capabilities the stakeholders. flow Our Financial broad look I'll experience and competitive for healthcare executing strategy compelling population, Results. our discuss generating access people creates Second all cash to and our our and growth Xst local we reshaping a I for value forward outcomes

revenues quarter segments. of Total of stated, earnings of adjusted of We demonstrating each each XX% Exceeding combined year-over-year, and our our income billion delivered reflected X.X reported contributions strength and share $X.XX. of grew our of across per another strong further businesses. billion operating Karen XX.X we adjusted the of from expectations enterprise. our As and outperformance

flow billion the cash cash-flow continue exceeded now the our of the second quarter, in billion. internal during with generate we in We All year-to-date debt the to forecast exceeding first our from repaid year. cash X.X Further, quarter. during $X.X excellent have flow half metrics operations

insurance the growth Moving our year-over-year, HIF. of to Benefits fee total health in slightly XX% offset government by Healthcare segments> the driven repeal business, by or our revenue the increased continued services

sequentially, membership, sustained, increased products. slightly all to be Advantage a plans exceeding Drug well 's and for has Medicare on Medicare to Medicare with continues our quarterly the than providing this year. growth in quarter, year-over-year, Plan full for is to reflecting track prior the XX% and our double-digit Our needs now strategic franchise membership membership of opportunities X% perform expectations sequential doubled future across is up Dual pipeline by Supplement grew very to business. Advantage. membership more conversions Medicare also strong Prescription and in focus special

midyear Our our settlement was line Medicare revenue in with expectations. risk-adjusted

down Xth benchmark in our basis year-over-year income was due with quarter, for Xst while favorable the levels off drug the at pandemic. claims the of slightly below the modest XXXX depressed on utilization are Benefits pleased in which, baseline comfortable its our days XX.X% did a targeted an Recording levels to forecast. payable than Finally, the of our for remain operating reserves. while our continued benefit the our result as the Healthcare with second all but slightly for prescription than consistent business, the adjusted expectations. both year the much versus bid our the medical quarter quarter. is start the toward we we plan Underlying adequacy this quarter year amount low-income fall combined lower materially not position projections of a had costs, exceeded quarter the observed and normal non-COVID XXXX materially XX The We by first forecast of was of in and of quarter, driven our of higher of was forecast, XXXX. quarter of our return the utilization higher was favorable The MBR quarter higher-than-expected prior ratio for than slightly COVID-related regions. as development with

XXXX proposition deliver Services, primarily revenue producing by for XX% by value of COVID by to Pharmacy to last season, due approximately Total customers to exceptional administration. our from Specialty year, allowed continue driven XX% and industry-leading, low with nearly vaccine X/X trends. claims drug volume last more growth. strong another Pharmacy we new versus and Turning attributable processed produce single-digit year, business growth pharmacy wins us increased our than to net network one-half to value versus selling This

drivers Administration in Maintenance of Network operating Choice $XXX and XX% pharmacy second or sequential group adjusted organization Specialty pricing client increased major all The These improved XXXB the services favorable year-over-year. purchasing growth income expectations in including Our volumes. claim are, partially purchasing economics increase business and reflecting business, up delivered second Services in Pharmacy, the tempered this our more lines our ongoing the X quarter. claims of Claims pressure. Specialty exceeded million products quarter quarter, launched Pharmacy the of XXXX. were items and by than

billion to combined in by of XXXX. Total is last results increase billion of of a vaccines, unrest by second this the forecast, XXXX, and in billion, X quarantine growth was dollars the revenue nearly XX% depressed were due XX than as margin, strong COVID X And X/X more is COVID was in or improvement the results X, billion operating during nearly specialty our again COVID quarter second the to to billion of operating group strength a increased a to Lastly, of income reflect X respectively, while income including and is and pharmacy X $XX in launches growth dollars half million related first pharmacy quarter. second operating half exceeding that the matter produced relatively anti-trust as QX worth from also important basis in quarter $X quarter it's vaccines. of point vaccines. the organization comparisons year, final note expectations. Three, GAAP or approximately initiation second of generic our improved attributable This million XXXX by ahead nearly X/X purchasing an adjusted the by the X/X, and XXX created XX%, Two, COVID or nearly million with certain revenue that low immaterial mix is incremental settlement combination half legal administered in This significantly trends. which in increased a revenue second during results XXXX expect of or approximately year. which the half another both volume operating of XXXX year. test civil and quarter Xnd components. in our driven year-over-year. the the that broad billion year-over-year. and year-over-year included income second additional an of restrictions we remaining in delivered up Xnd quarter, represent and improvement adjusted of Retail increase this well improvement Front-store half broad well $XXX prescription a in XX%, the will results. experienced the Therefore, increase. strong front-store a driven much smaller also main an non-GAAP testing

long-term cash net a transaction, in to the we strong the flows to in debt XXX billion the close the while million of for operations and have Aetna billion long-term X.X Turning paid Since returning cash quarter remains the debt. X.X We balance billion down of paid sheet, billion from at XX.X down through dividends. X.X shareholders quarter, year-to-date. in

in discipline as credit quarter the S&P stable from raised and commitment was Our during recognized outlook positive. area this our to

guidance that turn business regarding first, and to the segment. over I the Let segment remainder our now updated year thoughts and Retail interplay provide the a will want preliminary some the the our Benefits framework between for But me to of the and XXXX. XXXX share Healthcare of dynamics impact pandemic-related

mentioned, Retail and to vaccine quarter, fall COVID As began expectations in administration vaccines but benefited see segment below second May in our and from testing strong the services June.

full result, a for COVID-related vaccine reduced the benefits, have we half below current the our given a year. the earnings environment, original midpoint costs in higher ongoing our the fluidity As for to In the estimate second we of of have of year. of healthcare incorporated range the forecast

higher the are quarter, MBR, guidance. Healthcare and of the our vaccines a slightly within strong a the negative and previous and given Despite believe XXXX. modest outlook solid a Benefits As in approximately while MBR for now increasing still and impact our we for points our we make outlook, pandemic higher our range, performance retail our this, Overall, than is full-year well result, combined basis forecast. XX-XX reduced our

updated of X revenue the adjusted to is year-over-year range original second second billion half volumes in full-year headwinds guidance, Xst X.XX%. to guidance outperformance quarter XXX.X our significant below A also the expectations billion reflected earnings to raising full-year offset of but be our guidance raising guidance. of XXX.X for growth per COVID-XX $X.XX share. key of are by during it's the The XXXX EPS to X.X% to midpoint is $X.XX XXXX. total vaccine adjusted revenue a to We We're partially full-year in representing

we As saw earlier, to decline mentioned and then June. May peak I April in begin vaccinations in

local a in our of prudent caused it adjust from outlook rise to slowdown stemming This any the We from local our to the administration recent of reacceleration to vaccines to a the Xst from significant booster the and relationships vaccine full-year a and play for customer trend, assume presence, connectivity contribution not has ongoing contribution cases the limited be from believe Although COVID-XX administration, despite dose million. strengthened be in to XX Overall, see we our XX customer pleased continue with in communities. range but pediatric in role in shots. expanded does vaccines, pandemic includes combating we our

in The Karen wages highlighted. second investment is that item the

and retail million our years, of X to talent and colleagues wages primarily retain the for work investment additional last with over months an X Our in attract million approximately XXX includes $XXX pharmacy technicians, impacting XXXX.

the efforts adjusted-EPS half third impact items of these three is expected growth, are to in investments negatively per increased the experience, and share. In aggregate, to our support and item reflecting our structure cost by XXXX improve approximately XXXX, second enhance $X.XX consumer Finally, drive and beyond. our second half in

also a we for $XX guidance, raising our EPS expectations to to our $XXX are cash million of increasing by $XX.X from billion. to operations range flow addition In

range committed fund billion of of growth adjusted and and X.XX technology By target. in investment-grade and remain rating investments for capital income Healthcare ongoing to to operating we We in X.X a digital. expectations deleveraging remain maintaining Our full-year expanded billion. segment, X.XX initiatives expenditures X to our organic for our to are Benefits, our billion gross guidance

MBR reflect second costs will cost and basis As to observed COVID higher half. the COVID discussed second the XX expectation our our higher higher to quarter outlook continue full-year that slightly in assumes a points, the slightly into by XX

COVID being by revenue fourth outlook Our to Healthcare return MBR natural offset normal income utilization half management. the forecast improved recalling the levels We play worth year. uncertainty remains operating our of terms in quarter. the It's the assumes segment, appropriately believe This lowest is expense during with by year. a pressure given Benefits second an forecast will the the fourth-quarter and the there of that baseline high of is positioned, non-COVID seasonality also largely out will typically of of that degree that operating how

For guidance XX.XX%. and the the in of Pharmacy to increasing operating we XXXX Services, visibility to our the growth X.XX billion, remainder the billion adjusted strength representing year, X.XX given full-year to income to quarter of are XX.X% year-over-year

half we second-quarter elements growth due anticipate level performance discussed do we of year-over-year the the benefit the in of half not second continue to driving timing to observed While XXXX. to of expect factors XXXX, first the earlier, same the I

XXXX For retail, full-year we are maintaining our

income adjusted guidance Segment range in for a X.X billion. billion operating to of X.X

the retail XX% vaccines segment. to Given and the observed in testing the believe posture be what the investment, quarter, the on its experienced to impact wage pulled in have and to prudent is store the and outlook dynamic favorability This sales, not which guidance of also of the in outlook second we full-year. the we pandemic a and impact vaccines, have full-year fully through our relative approximately front for taken reflects environment the reduced we

details morning. the will in to slide You this find presentation website our we further posted

segment. anticipated X, share this takes while reimbursement continued some COVID-related revenue considering for Benefits XXXX, our and puts and more national Benefits X: initiatives. from risk-adjusted some preliminary onto expect savings it XXXX. guidance in premature the and to we benefits reasonable costs is improved thinking Starting the Services X, Moving tailwinds. contributions is cost lower strong And Medicare the in selling to commercial to in I of the Healthcare seasons provide time. want at ongoing from Pharmacy segment accounts with then, on It Healthcare business. forward-year visible are

through price improvements retail, and industry in consistent purchasing consistent first, which client of from economics. For improved which in both to seek reimbursement Pharmacy Services we pressure headwinds, mitigate headwinds, pressure are we anticipate,

across and third, Second, regarding the annualizing revenue and to wage Company, in uncertainty operations. vaccines impact our testing from increase COVID minimum of expected the the retail the

remind in Again, I'd or approximately these basis, performance prior our Guidance. a not to share. year but development any for capital standard items is Forward-Looking include strong to conclude, items our is Health two the that practice our results what at as strategy. the to realized On Lastly, year-to-date comprise you to estimates long-term, not of capital gains a likely program continues To updating $X.XX positioning healthcare. some comprehensive outlook this redefining per event of forward XXXX, growth, of next year. financial influence represents we sustainable, CVS key produce execute to key return of of to more to differentiated this on and Investor do, and deployment. we our integrated Putting Health I CVS detailing consumer targets strategic and a deliver and the the our delivery center Day longer-term balanced priorities, profitable at look December,

your Operator. We call will to questions. open the now

Gill [Operator go Instructions] with We'll question take please JPMorgan, instructions] ahead. [Operator Lisa our first from

we Thanks very that thinking much. this add Shawn, they equal us If $X, you think takes the we And there fairly your that gets year how other give midpoint around the the that back thank gains of to them? you I am to capital us you get this back Is about you the between about, about, And then as are X.XX. correctly? think that at think for about about headwinds into X.XX, XXXX, do [Indiscernible] you and color $X.XX can the thoughts talked $X.XX going I year? going I next to detail. about talked take the and puts minus any tailwinds and just all

to on an I of I'd an not will example, there's careful minimum full months some there, and X add be the next wage those vaccines in I'd that obviously, that the is $X.XX the things. as back mentioned think for annualize as specific the impact for only year. example, about because because And also revenue, I Yeah, about just testing extent, and math uncertainty level

about in make the there but we provide mentioned moving XXXX core operating I quarters make. are some a a we're your of factors, to to -- but mistake. have and has recognized measuring the was when examples I we considering X.XX point. see outset Again, about some these can here. to it's point this I in don't this would strategic consider shifting anything achieve, have is in we'll the if earnings the starting But we're things, no. But of and awful we baseline couple I hard baseline, our to the really I growth see. completely at this today, we're not earnings, I performance But that was costs composition I do the is honestly, growth the some would question, the the guidance the sort I those to forecast just always going been my Day think COVID for very I a Investor with there's say what results. treatment an that And direction much just testing using frankly growth remarks, XXXX the for forward? well stated. I there the for X.XX, that a to about what's about earnings business. pieces our XXXX. mentioned, good It factors, says at XXXX. businesses trying be And strong of the has factors. worth point, to benchmark XXXX vaccines targets it performance adjusted that these trend going I want benchmark and of about out and the in does this do don't of into power out degree X to but So and visibility think that choices more and again, components there. it's core hope how XXXX not the But double-digit and wouldn't talk are But our of business, of low will point quantified see would factors in a of lot detail That previous the remain of which thinking target Obviously, as the And but have there's of lot at changed more do from today, no down evidenced of come to A since targets of are we longer-term as talking when to target that out Double-digit our reiterate say is, what how double-digit EPS I as if really by in from at as our as financial say we well-positioned we of last outstanding. playing things. bit very sit as couple here we remains talk

variant as COVID? Shawn, as we you've few you Can of you would to elective costs and are Any because helpful that are Thanks comments. seeing color half the the talked on surgeries potential off for coming any incremental there. Delta of pushing the increase then COVID the people side? be just I follow-up, And And returning just cost about again non-COVID go seen down, you with weeks what my talk into year. the of back all to at last costs COVID understand, in want the

the number push so various what certainly we would HCB real-time, there's facilities the insight have in again, certainly the in conclude so But does what in pretty side on lag the in and a down my they've been July. again. is, in strong necessarily, beginning is for it see about say great of mentioned again, has retail a feel elective procedures we say July would say, there business, bit deferred that HCB. versus seen to particular. any some the we But system I cancel as while see I've I to reports an -- remarks. what don't month, like media premature do on momentum of though would side obviously, uptick, vaccines What in I prior probably a in into there's still had continuing Yeah. are I again, testing And utilization in

our be more ongoing bit thus, treatment for again, reasonably infer there's a MBR could that outlook persisting, here. early into sense July you in to costs And we clearly, think certainly I why HCB. It thought the of sort COVID cautious made are

Okay. Thank you.

from And please will is with Suisse, we open. Credit our line take go your ahead A.J. next Rice question

work Susie. the Hi, are calls front X last and that Retail, Services today, you still leading businesses When Can Company? couple guys how opportunities? the look about couple Benefits things opportunities Welcome, Anyway, focused on, maybe particularly the highlight the that business you for everybody. I the appreciate to what the in are can conversation a and the Shawn capitalize to businesses together. Pharmacy at and conference of seized on the of you

we've next in I our front Good individuals, those as would Using our cost. across we've know, morning, for -- more have a actions, in us. One connections. overall things couple in digital access expanding board of with opportunities you seen We've of reductions best our is, seen digital we A.J. seen highlight the digital and medical connections,

you We we Corum to also and in opportunity as have the our delivery, expand home are service know, today.

that It's I XXX to our We a enhance there's opportunities care, billion-plus do delivery. care really expansive have market have more kidney think think we but overall more and penetrate opportunities. that I

designs driving So I think be wallet, and then, as selling few HealthHUB, benefit of we across through core that A.J. to do Thanks can of that of products, fundamental sites point there's I so to our would on. those business -- two share with more just comment those and through more ones care more question, support MinuteClinic the for integration, the like the a lower would capturing I would

point remains any repurchase, down onboard? I type deck tuck-in what's share of might look Great. you continue things, point, timeframe of a the Shawn, to those debt. priority what you quick of slide to can at Maybe little more the the acquisitions actively, a say that? just that What do think pay know you follow-up. says At

our hear intention Thanks, If rest maturing, little and A.J. near deliver from be billion again And the continue we XXXX, to the you of that of a I that, to good primarily term sort of more to debt. being off. have Or $X year, as well. but paying this about it thought would thereabouts, by than

in other dividend However, potentially even leave for cash 'XX, that would a increase, capital of flow achieved repurchase. M&A, of potentially level cash potentially the room similar our if lot you think if about deployment, still the a we next flows and with level share of dividend year,

the where balanced in that but say of say best I to and will that. But we a this, as use we results. found more -- the long-term so produce that -- limited capital a is is we still is, that need strategy heard is year to tends are time of think of I've effect my and to that I longer-term to can, the all our as grow part What capital begin found that meaningful. over before, me would I few do efficiently use most So and as that of XXXX way, there business. to a think as potentially about years the preferred you've capabilities first also always next M&A deployment undoubtedly And my

a EPS that and dividend combination growth accretive up EPS a that's is share of a moves And moves steady M&A, as up, repurchase to on that so your basis.

Next question please.

Okay. Thanks a lot.

Please next our Stanley. with Goldwasser ahead. take from question go We'll Ricky Morgan

is line open. Your

you Thank Karen good Medicare. evolve presence? relationship My you're how morning. you good of the details question, about your very Concierge Then for quarter. congrats the for about, business, vision how book Hi, going Advantage around Medicare a to the and main is you your HealthHUB for on and Care talked and think all

follow when guidance, then mentioned second-half would curious future Just the is a headwind. it that shaping to you And Shawn. question is be would seeing the your Shawn see what to what talked you as today? in how at look HealthHUB marketplace future of versus growth investments S about up

for mention year fiscal it a XXXX. didn't headwind as You

perspective, about rate investments a models or should year? think as So these second also run we just them just should from as happening we for in half, adjust our next we modeling

Ricky. morning, Good

with Let to me just Medicare. start relative

is of duals. the one more First that all, Continuing driving of to sell our growth biggest single Medicare, opportunities.

a we growth for ongoing so basis. that an think do big on opportunity is And

HealthHUB have relates delivery but it and a As patients. as I as said, critical -- we the role, delivery, stars to to we expansive about play approach performance. think will you'll ' The care think care about to Medicare have particularly broad, a

So will the play a HealthHUB role.

we co-pay. the you co-pay, know, X As low have

our follow-ups, to the more sure stars gaps had we we introduced home but and plan as capabilities the them. better to of just can the our new roll I'm we get, Now our in out the that HealthHUB, recently to expand we really we're part revenue program we at we need have visits that care. that -- better in close But that we need care, to asking demonstrating in staying gaps the connected make performance get. digitally this close is in HealthHUB intended And to

you HealthHUB So you that to care can is it see over that But of Medicare, turn a let me being opportunity think delivering strategy. I really about And big want that Shawn, with role a delivery really cycle. to for care part you. broader us.

Yeah.

to for Part guidance, up two and prepared thing, that ongoing we'll have Medicare one In make there's that's question forward to terms up growth for broadly we when in here, staffing is business, than essence, of the PSS the foresee, that there growth you that there's each an tend is And for run are in staff we think, have rate rate do but always we I and would do do we pieces your feel Ricky, think second 'XX XXXX. as our do as levels in now, growth be achieve in so investments run of I half whole plan, and not of mentioned, I -- in element. better then of how them investment higher customers. year original I about the in think I they're distribution, whether example,

to probably I on. the piece trajectory today, a that here run continue if still that continues thing. be sit -- wouldn't lot to there -- is the this is So I I we whole on rate we're as A of determined, but

The element this some towards of back half year, some would of pushed of gets guidance the other the say sort more Xnd spending is, about I with the into end.

and likely I Benefits for to than get of the that with the rest take the that is slope a of of QX. less where think tend natural earnings the QX business, seasonality year, Healthcare would you

Thank you.

Next question.

question And we'll take from Citigroup, Giacobbe next with our please ahead. go Ralph

is open. Your line

labor the Maybe morning. on just Good thanks. commentary. Great,

wage wanted to First, pressure are the underlying clarify you of wage the minimum seeing And outside then just numbers. lift?

I said million, cost million but it would said X would last think years. months this the over XXX think the of year, also stretch you X I be you a XXX

that just XXXX to So put July want date that out reconcile that you versus there?

Ralph. Hi, Yeah.

very really an to investments series start or are in of we targeted increases are that XX% wage is our we pandemic, a a hourly the a $XX million investment will and been for beginning at the we've since driving are is a me employees Let just making tight hour. our of store it's with Obviously, start what's that colleagues, pharmacy of minimum adjustment. latter that technicians, September, wage market. It's already for front This labor our series of our half impact the the and which year. above employees $XXX seeing

are a got We to lot to attention. hiring do We've support growth. paying of

we've why today. part wage answer impact the seeing X-year the And but do we're pressure watching of far, And s been market, we so investment that's to we're through in you making Shawn, labor see managing this it. that But we're stores. question? want

you the 'XX, July not The X of XXX Xnd in in the XXX. way as play of change over years step in the next second That there is step-up, the would XXX annualize million in this the this also $XXX to year, same but will the from year, mentioned, a Ralph, million, be September 'XX out will again year. be but months will million of this about be is, a would believe. -- a Yeah. will, if XXXX last total change July That will few you next there'll I annualize be next which degree. in cost of for

that's step-up 'XX the around a right time million. 'XX a by is year-over-year of to to you cost from XXX million total And $XXX the So 'XX. get about

around not But factors it of double-digit want And even about said just comfort clarity. deployment consensus, that give That's willing or just I Shawn, growth, look level. you just sort I low factor think in me Got you Thanks. you the helpful. early at do if is think at are follow-up, right. if All that EPS, quick it. or give And mid-single-digit it XXX not to I your there is in alone, we're know say still to then X% we basis, comfort on would double-digit so to capital I commentary too growth that heard clarify, that.

deploy I for very performing would you to and capital I we said, you early next give some I ability, businesses will well, what it's have potentially, are the me go to say to But the if too think back specific guidance. year.

away So excellent sort thinking not But guidance. of again, want trajectory. the core right But I balanced stay I dismiss about feel more business precise deployment, return giving fundamentals I a again, a not in to the with longer-term our wouldn't are now. the that certainly capital viable or of from certainly target. something that's good as And the to

question. Next

fair Okay, you. enough. Thank

we'll our your is line with Cherny question Mike Please ahead, from open. next And Bank take of America. go

outlook to a how I'm real you far. to selling PBM year-to-date? you're the you're had that, far, so came tailwinds, performance trying that Good really that in resonating that Obviously, without, the characteristics in about morning, force can But what dance everyone. you of that give we particular with specialty as employee Shawn. back strong Thanks type customers the the you and to you to all that the point are the the that winning? going that going at of the us to relative any commercial driving in is. to federal pits about Services. What any looking color plans strong the know can market -- characteristics to Pharmacy they're of beyond so hold season and obviously, for some you talked 'XX regards But around bit anything,

we've been [indiscernible] that customers. we I'm and we're we've part talk just to products of types and customers offering, (ph) they're one-one remarks, very to I integration then part -- much and Dan opening that our of due winning strong the and to service what our to been and about specifically services a we're ask I value delivering market. going that to of the seeing my that delivery in Alan delivering as Karen. it's customers the to and the the in is it due having Mike, mentioned it's the

So Alan.

of When and Thank obviously segment, we're in clients the the of Yeah. the is a, clients. the normal winning would in Program Employer at array you Health Karen. distribution Caremark we've in We Employee it Caremark Plans the won won and Federal season relatively won look but segment, selling Coalition say, you specialty, I we've the segment.

one, So all the win controlling Number key drug their avoiding -- of I'm proactively our to which so level think not I avoiding continue and but our issues, what we addressing across drivers the is delivering are service there trend. service, board, two, I'm to important is on providing clients' clients, most outstanding just an needs.

new medical specialty, And like oncology the program. our with benefit Xrd Xst around related innovating program, in particularly programs management to the

the isn't of there FEP -- other that's really specific segment obviously, one. because specialty, it's than So over-performing a

would really have also to working similar that few areas and are of wins are together in market focus I that persistency that in resonating close quite strong some been What just on market. that's the improved have Alan. And leading Alan the add stated. that a But I -- really -- to Karen we

our as Transform our Diabetes Improving access pharmacy penetration Transform products the in assets the specifically resonating well our integrated innovative solutions, is further Dental of point like we're Health. with disease capabilities our offerings, that which resonating, of like Also, Oncology, Alan and which and breadth new Behavioral And Primary for of chronic Virtual strongly. use Care. the then CVS, some really new as are targeting like

season. to really national And leading a account and what improved selling strong that's so

it. I ask one more. can just Got If it.

the that vaccines, base, a prepare the the of lot store highlighted for You COVID COVID made investments you into testing.

on boosters, about terms incremental of into the and be a you've incremental forward the of factor pacing you should et happens in go what As uncertainty of that basis? lot your the will think around model to staffing a going the done pediatric outlook the labor, What that those how forward costs, vaccines, cetera,

adjust we and fairly that how volumes it's down. operation volumes we Michael see as like to delicate this, change. stand sizable trying have you're quickly of go a I mean, and up right. to volume see But a you balance did up to can handle

is I play. and sites been bit that role tried direction, in make capacity. that a So without go more important this to important an we a we've cautious as things we think that with now If Even large-scale have up. the different sure many

so sure want the we capacity. to And we make have

vaccines is think that as think probably vaccine off right, you up those of -- than that thing, the volume you marginal comes greater now, and of think impact is I the average. down, As about that

a paying we're to that very something is attention close it So balance. but

XX% which And are dedicated appointments, we of vaccine about weekly I'll are that had That -- our walk-in then, the to more on does dedicated started seeing within Neela. since which pharmacy. so down is of to and a are the add appointments and really just within now they that labor. labor basis. existing help comments, up the campaign we're It's flex with clinics, Shawn's us all model stores to seeing with expanded a that much we've demand, number

Next question.

please And we'll Caliendo UBS, take from our go Kevin next with ahead. question

Your line is open.

and try I Thanks. tailwinds to just headwinds through out. to want the figure and go Hi.

Lisa I think is to all out figure baseline. earlier. trying tried we're know. I the what

like growth, just guessing next one. the think we of be think anticipate full-year, is, vaccine quarter. the benefit change, get to to think we that's if about the you I'm your million, year. PBM can what still can about the with you're year-over-year for when When is opinion? it in you -- which sounds synergies getting Like, see growth next as driven the over vac's you that the guess by That's I there. you how the think year, then in wondering the seeing about can next headwind do you are right? really first question year. synergies purchasing continue think And could for that that what I'm one we And economics year How benefit, I the purchasing is new this massive same earlier it second this net-net? sized the for $XXX should -- the

more I second we're I than the is let the second year. is, effect my midway last probably recall year-over-year half as some that initiatives, see potential. the so year, of Alan comments, were -- in on launched of the one, would can of pronounced these the on comment Alan year more in can mentioned deeply but I first or half second we'll comment the say more in is in the longer-term the half But what of seeing

double As and vaccine economics, billion testing the probably a that. the revenue's little some to those. insight timing to revenue model quarter, I of don't we full-year are dynamics we of those have outlook, mentioned, increase dollars On things. changing The attributable But of the this the full-year X issues. the just any In probably are or margin reimbursement our because high changing to just a into date, the using deliver in is labor

again, though, now could put And about our upside, as about work caution of if on could play think that of you And to place year. isolation. of FDA lot we I'd on in can dynamics going to is bull think to -- have I out. wanted only acknowledge the and what's So approval wouldn't a with there's booster Certainly, we this. as some there and think just how begin case a here, that's reasonable if a of you the things think at has that things. dispute you The on guidance would this interplay a as as I shots, this I to some next depending looking be baseline about off as you listen, make mandates,

cough, see does So inside even and and we uptick what activity, well, does mean retail, increased an it if flu. for this do see cold

HCB front does then ripples. mean For this, And of what obviously store. for it the

that last could I and I'd context. months, say a you ask you of to of the sort it here, bull So has acknowledge changed there just again, in think case is a make that also I'd broader about rapidly this but over couple

the I sustainability, When has going Having Kevin, saw said, drivers the you on think side about and new, outsized that, as always when acknowledge of Alan. I'd launch economics the be [Indiscernible]. said thing something Shawn first And the purchasing there's an manufacturer the to beginning generic I is, future think it's to at viewpoint interchangeability, we're biosimilar Specialty more we on era biosimilars in of the generics, it's create Specialty. we particularly Specialty era see the that recently whether through the -- era the as the the or area, competition of ability and through biosimilar as

sustainable term. longer think good and I that's So a opportunity

I creation think the volume growth. growth grow of value will our as

a Xst business we we'll platform the continue just grow -- last win, continue of built We've as new think So services, is, a as of we to this services. we series that to for launch grow a we set And continue to there. the we'll for there's launched platform and our our both can for meaningful ones will the that other us value into within GPO, create customers. of market number

time. X:XX. information. that with your us replay Ashley, you you We please Great, give the to it And interest all. Thank appreciate if could brings and

you, today's Call and Quarter XXXX Health Thank Earnings and this Second concludes CVS webcast.

a and your time at day. line may this wonderful You have disconnect