CVS Health (CVS) 2 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, good morning, and welcome to the CVS Health Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow CVS Health's prepared remarks, at which point we will review instructions on how to ask your questions.

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

Health. welcome Shawn earnings and Vice CVS third Chief Chief for Health of Karen Officer. morning Good President Financial Executive Lynch, and to Vice webcast. XXXX and CVS Relations Investor call Development Officer; Senior joined I'm quarter this Business by and morning, Executive and the I'm Guertin, Larry President and McGrath, President

Finke, President, Shah, President, Co-President; session prepared Benefits; that a will Pharmacy remarks, Services; Co-President. Alan Dr. and Officer our Chief Daniel Following Peluso, Retail question-and-answer Lotvin, Healthcare Retail Michelle Customer Chief we'll include and and host Officer Pharmacy Prem

Our press call broadcast archived on XX-Q been Form that year. to release we it for our filed one website, is our being where with have will Today's posted website, this be along SEC. our slide and with morning presentation the

make and to will our and statements, we related benefits impacts future our call, COVID-XX as the and acquisition opportunities. products projections and performance, current financial the to market future our of expected benefits the financial Signify this certain events, industry expected of plan, pandemic synergies integration as Health, Inc. of the views the associated and including related well forward-looking During ongoing and services consumer conditions, revenue reflecting proposed

the significant of recent and our Our results, XX-Q. our on release SEC pandemic, uncertainties, including projected review currently and Signify morning's forward-looking Form to file actual the uncertainties these ongoing Health. regarding risks are differ Form subject current COVID-XX most materially Form reports from and X-K on annual including press we risks and this results recent to you strongly with reports earnings statements reports acquisition the to that XX-K to our encourage the We and with could cause the proposed respect integration

in this measures of like During call our portion you morning's document of and to that, reconciliation Relations company's measures about in over website. and a these can and reconciliation find to this release Karen. use we the With talking the will the to financial non-GAAP call, Karen? posted when Investor turn non-GAAP performance conditions the press I'd

Good outstanding Health on per progress third Thank year are our earnings Based everyone, consecutive execution, for the our today. another and range $X.XX delivered of $X.XX. Larry. morning, raising joining and our CVS this quarter. confidence call for strategic our share you, in thanks time to a we to guidance adjusted

billion. over operating over by $XX of versus During nearly by the to X% grew was $X.XX, revenue income year prior third quarter, the the the per grew and year XX% prior the prior to increase we year. adjusted over an share billion $X.X in from quarter earnings X% Adjusted

was from on we've Throughout strategy our $X.X around Our executed operations in expanding capabilities billion third centered and consistently billion quarter $XX.X XXXX, year-to-date. in care cash flow the health our delivery.

We access are journeys our increasingly quality channels. better care across to lower and at delivering costs simpler broader outcomes

With the will with Health, strengthen engagement Signify consumers. we acquisition our announced of

Together, as agreement care that first actively for that we in close and exploring consistent as product value-based In developing new will half for platform payer-agnostic XXXX. continually will to a We portfolio accelerate October, best-in-class enable this enablement. alternatives our do assets in-home bswift, the add priorities. a strategic project capabilities not our evaluate we are long-term sell Omnicare. of We transaction areas for to We of fit nonstrategic an that coordination physician reached our and will foundation approach. have strong services with well offerings

claims substantially on made This Health a we late resolve opioid against important October, to As to an we will by and In we divest began subdivisions assets, announcement opioid our approach in mediation aligned We agreement to allocation. XX morning, and continue that help lawsuits a with states, areas is in an approximately beginning invest our with legal disciplined continue to of put rely behind years health as tribes. CVS in old us. ongoing outcome principle the strategy political we for matter. capital focus that and XXXX, issue us a a reached billion in all millions decades to on over of we consumers $X the will parties delivering pay on one all experience an best interest superior who

had turn another discuss the grew year-over-year each adjusted their with Revenues The for Care Benefits to and our foundational strong businesses segment nearly strong $X.X income of Let's XX% results. Health billion. quarter. operating of segment

versus remain medical basis premium market businesses dollar The cost our Commercial growth another dual-eligible annual by for portfolio and more a than individual offering was in year, of from well positioned with growth quarter enrollment XX% category. ratio plans that year our trends lower period individual we points this once are benefit XX.X% by medical driven remained impact improved Medicare underway We in plans and Advantage again. a of Medicare Medicare PDP strong and XXXX prior zero Medicare leader Our is and our in favorable. our with in products. exceeding of the and XXX COVID Enrollment that

X.X more our at also X now were disappointed star after a XX% than decade-long the rating X% national PPO eligible track of expansion record market the our D-SNP continued plans to better. population fell We nearly of geographic and star in that year-over-year. contracts stars or offer DSP to on of We performing

of our a history Improving strong commitment the plan continuous to high-quality top to affordable, a be benefits improvement. delivering for performance and continues a priority star have We company.

our as star address on the efforts measures specific to scored place in experience the the we contribute member to surveys that Star ratings. ongoing have our We right with improve ratings and quality actions

key members structure, for to This We benefit commercial our more our the than with point provide offerings, will important improve customers quarter important our our services by that members milestone and our cost competitive on business, X CVS achieved combination utilize driven design is of growth proof invest specifically experience. a and strategy. enrolled focus our our Health this programs combined their and This capabilities. to we million Caremark and company. Aetna continue our CVS through designed value an integrated of integrated We Health and platforms our In strong in priority in goal the the a health and is care processes products. demonstrates simplify

XX% to X.X of exchange our covering will in in expanded the Turning January population. lives total and ACA states exchange of or platform. our We a beginning individual footprint individual be XXXX, available nearly of million XX

product locations. instant Our with our XX/X include MinuteClinic access to providers in co-branded care offerings face-to-face access and virtual

access care to committed are affordable to helping We provide all for Americans.

their our their area eligible successful a We been a caregivers of be program grew the children, to and after we've children for Medicaid families. State and growth. to Louisiana Ohio important deep to RISE their the continues platform Medicaid portion our engage built support Finally, implementation have due serve expertise by an and to of chosen

nearly billion underway growth portfolio differentiate rate season of for of driving Last with service members. by expanded and a have year-over-year that income excellence us another Services, XX%, to member In to adjusted a our new Health revenue successful of grew competitor XX% grew as management CVS Pharmacy in and the Specialty selling to Efforts in through a with XXXX. XXXX $X.X are a a to their we industry-leading client our our week, billion. on XX% that for strength driven bid move welcome our business We nearly enter our focus our we cost pharmacy decided capabilities engagement We robust in evidence and continue capabilities. period. marketplace. quality community revenue of closed of $X.X of channels support successful the out season learned business retention Centene operating

our we maintained pricing with and Centene discipline. While to we hope do to continue so, our relationship also bid

to we customers power a of drive be not seamless remainder contract, Centene for will the our transition with Even our facilitate contract, after value the for our and diminished. purchasing moving work will For members. this to ability

success in pharmacy our excellence. capabilities lives demonstrated management is service, compliance and high-quality testament Our under specialty a to and revenue growing

segment will years an Our remain of the come. CVS within important Pharmacy driver to Health Services in growth

vaccines remain in quarter propel of excluding the Performance outperform up Front to were X.X%, In in share cough, across X%, quarter products and Demand scripts our flu X.X% by market the grew approximately pharmacy Care billion and growth high. of to Revenues a quarter cold majority or helped pharmacy expectations. prior operating sales $X.X grew store year-over-year in income. as trend business and the with as both over-the-counter front strong. also categories. This nearly extending year-over-year test Retail/Long-Term of XXXX. gains, year started well pharmacy, in that driven another in adjusted our versus X% Our for segment retail store growth third quarter the was continues COVID the COVID first the vaccines.

a play consumers destinations health well-being in overall serve. retail role community we the the Our strengthening of

seamless be and products health we convenient new capabilities elevated, are provide to for implementing demand a consumer digital and As experience. continues services that

our of are most Paxlovid antiviral COVID to treatment. Now pharmacists prescribe empowered

Our overall investments helping omnichannel health manage enhancing in their and health. consumers better transparency are

there potential across in positioned our through foundational and we manage well growing While headwinds. businesses is uncertainty recession are economic XXXX, expectations these to

efforts Health CVS health to health improve strong Throughout our vision we and important our also offerings developing experience moment care for solutions Dr. consumers' and will expanding more, delivering consumers. October, in products. presence and every value-based health there healthcare our the we XXXX leading delivery digital a delivery of accelerate joined increasingly Dr. lead Desai's and health has our care for are In We meaningful are our system Desai our advancing well-being. healthcare capabilities. solutions Amar that our connected strategy, XXXX, for transforming becoming experiences progress driving made health. significant and has that we for been and strategy. healthcare the year overall announced foundation an company and growing More improve to building of service new

than approximately time This more quarter, million million serves XX another million more this Health unique since customers. year. customers, we impressive added XX an now last X CVS digital digital

experience to and Our that higher engagement advancing led prioritizes our health This convenient seamless leading and matter a experience, for digitally includes tools satisfaction. approach most for digital omnichannel consumers.

choice pharmacy. For prescriptions, for example, their to status, have visibility patients expedite order into that before we our even can urgent prescriptions. drives recently and filling functionality launched track a more out-of-pocket convenience new Patients coming costs and in all

continue progress ESG. to make on strong We

health care. working we relates focus disparities quality are on women's and accessing with convenient example, For as health it decrease to our to

launching this our initiative, are XX/X. women's and part again will faced to thank Here take we available Florida Puerto health new to colleagues, services As virtual for MinuteClinic CVS disasters. those want finally, variety of natural Health And to care in I who especially be of Rico, opportunity support that a Her our

and results our care look pulled the customers over now and turn will I to outlook. serve. to into and teams we a ensure Our our continuity operational that together financial deeper it for for communities Shawn

Thank everyone. Karen, and you, good morning,

results quarter to us and few performance. per third share. of guidance the of share. continuation Our of flow This momentum earnings in allows exceeded adjusted as range $X.XX regarding performance the A to expectations for observed half revenue, our $X.XX first XXXX EPS to a strong generation overall reflect the XXXX per highlights our we raise again cash company adjusted

increased operating and income of Third our across over $XX respectively. X.X% quarter $X.XX, year, of X.X% of revenues robust of We prior XX% billion operating $X.X versus reflecting billion growth EPS each adjusted by segments. adjusted representing of increases and year-over-year, delivered

strong. to Our remains cash ability generate

fourth to from and benefited from expected third flows CMS of the the normalize billion quarter in timing flow billion in quarter year-to-date. that cash operations payments in the the Our are was Cash quarter. $X.X $XX.X

at operating performance income and Health strong growth year. segment. Benefits, revenue Looking Care the delivered adjusted prior versus business we by In

of earlier lives X.X% Membership XXX,XXX grew despite from year over Third prior the year-over-year of International billion, this increased the XX% nearly revenue $XX.X year. quarter quarter. Aetna by divestiture

commercial across for for Our strong. XX,XXX solutions strong remains Underlying growth members Medicare and of business remains employers. franchise in a growth our individuals our sequentially portfolio opportunity also us, adding

primarily income in loss, by portfolio to of investments business third The are about pricing includes and XXXX, quarter previously due which membership ongoing strong of billion exchange contract individual in by the prospects excited investment decline by took of growth performance, we is incremental XX.X% increased the support our of the underlying XX January suspension net offset year to partially $X.X realized of the disclosed costs partially operating We actions a X, and Adjusted states losses. driven this higher as now redeterminations. COVID the COVID year-over-year offset sequential business, XXXX. Medicaid impact in

Overall, line days improved with commercial our in Consolidated slightly XXX XX.X% our cost medical impact in that Our generally ratio X.X medical lower for as baselines. our quarter confident reserves XX.X, COVID to of reserves. government remain modestly reflecting the payable continue management quarter, end benefit In rate trend ability modestly service points of trends a outstanding in higher pre-pandemic to capabilities business, adequacy trended pre-pandemic grew than and remain our days remain up Services the at business and growth. our at of pricing Consistent claims clients, Pharmacy year-over-year, cost was trends remains with the drive favorable deliver basis the trended specialty assumptions. drug last from our lower customer we premiums. medical and levels than sequentially industry-leading to baselines the

year. and year-over-year, by Quarterly our was XXX and X% pharmacy including XX% in utilization. and of primarily improved driven members over client During pharmacy lives ongoing offset growth client trends mixed Care entities operating helped purchasing the conditions increased as by and nearly of growth, third year-over-year. quarter, services processed of membership revenue exceeding in program Retail/Long-Term expectations of $XX above membership nearly the continued attributable in with Total $X.X driven new by our from the address claims increased commercial quarter, partially and products specialty XXXB losses the claims COVID-XX increased billion and pharmacy steady, improvements. year improvements. our estimates business to above XXXX X.X% despite group product third we income significant In price as increased revenue economics, participation. pharmacy from delivered economic grew carve-out purchasing impact the This by in by contributions our excluding brand from lines billion California by price Adjusted prior covered operating strong Total and inflation, Medicaid uncertainty. organization. that remains when offset this government COVID-related started X.X% tempered million for growth segment, manufacturer partially to line contribution income our improved adjusted vaccinations, continued

the front revenue a diagnostic Specifically, over-the-counter reimbursement well in as segment's These of $X.X brand impact XX.X% and front during operating as decrease by store billion in the testing offset income utilization. X.X% vaccinations, increased year, testing inflation. and favorable the by partially generic mix test drug COVID-XX well third COVID-XX and increases were including continued decreases quarter, and increased and business initiatives. billion prescription as declined improved grew of driven nearly and kits volume, recent generic the reimbursement operations introductions by offset of diagnostic prior pharmacy the Pharmacy volume, pharmacy decreased $XX.X pressure. These of and X%, partially drug reflecting increased versus were of pharmacy volume and Adjusted investments purchasing sale impact vaccinations, as prescription store prescription grew pressure increased continued COVID-XX the year-over-year, capabilities. reflecting

the X.X% impact Excluding pharmacy COVID, by volume of increased year-over-year. prescription

Turning balance sheet. to the

the flows billion $X.X were normalize $XX.X quarter remain which subsidiaries. position cash and billion CMS with receipt ended generated capital $X.X Year-to-date, operations billion, from and of of liquidity by the during in unrestricted fourth of payments the at the Cash quarter. early quarter parent will impacted the Our excellent. we of flow cash and positively

During we for $X.X maintaining A to repaid for deploy $XXX long-term other debt. our highlighting the we remain investors. investment-grade Through items our returned committed ratings, dividend, while having billion to million M&A. strategically of worth capability-focused also shareholders. few the We flexibility capital to quarter, quarterly

of pretax volatility and to recorded write-down of of market These the the held $X.X experience the on damages the $XXX in we in the to and segment. the capital loss in losses our care storm. long-term are process of We recorded impact losses to of exploring immune continue approximately where We on for portfolio assets business, net Hurricane Omnicare, realized not emerged to related Ian $XX quarter. were the losses from approximately impacts HCB of predominantly billion investment strategic recorded our a of sale million We related alternatives. million

and with governmental been pretax past $X.X opioid recorded metrics. also impacts certain practice, excluded with We resolve settlements for Consistent these states GAAP legal in of principle agreements to adjusted our charges operating from related entities claims. have to billion

our XXXX to outlook. Turning

the adjusted the increase anticipated HCV; quarter improved share guidance outlook QX in $X.XX underlying full earnings We midpoint tax an and for the in the $X.XX $X.XX. outlook by favorable a per to range performance segment improvement share volatility year third by impact business. and of HCV for This of LTC are net retail the on reflects our to count, of offset slight rate and partially market for raising income retail investment

our to full This by on investment income given operating fundamental reflects our adjusted offset strong underlying for rate continued the guidance income to billion the a $X.XX narrowing in We environment. billion. performance, outlook of are previously range healthcare $X.XX year volatile caution discussed benefits

outlook Our into the of public XXXX. the quarter the health also extension contemplates of of early first emergency the part

narrowing LTC billion are of to increases billion. segment, as increases We For billion $XXX operating to $X.XX year follows: retail administer the $XXX.X quarter raising administered the million with a million guidance already third XXXX guidance full we and XX% now Adjusted that forecast approximately to at revenue range in by income we a XX midpoint of $X.XX $XXX.X vaccinations billion. XXXX. through of the to will range COVID-XX

of We XX outlook. down expect from year which approximately our diagnostic volumes is prior million, full testing

reflective of our decline sales $X of expect COVID-driven items these a over-the-counter approximately the revenue of business. of we million to but kits or versus higher tail kits over XX% XX test produce of endemic exceeding on number XXXX, now billion nearly retail expect of to aggregate, continue in year. XXXX, units COVID three In of sold triple However, last the categories we

as our Pharmacy and Services, quarter narrowing fourth and continue spending billion $X.XX adjusted our project customer of full year are we also in Our operating range to updated outlook we enhance $X.XX income now the invest guidance In outlook our between be workforce contemplates billion. to levels higher experience. investment in to

a the XXXX to raised have we of capital $XX.X from at guidance Looking a in range billion. unchanged at as $X.X of anticipate $X.X our accordingly flow and enterprise billion cash strong billion with $XX.X operations billion, a expenditures range to whole, continued to

We are tax and count also updating our billion rate of guidance X.XX XX.X%. to share billion X.XXX our on shares range on effective a to to

paid agreement paid As all this an resolve principle amount have XXXX. results of beginning annual CVS against multiple billion settlement cash we to an over to be in Health, and The to our reached clarity payments invest earlier, issue. over to years be substantially enables will flows Karen claims to spread increased regarding agreement providing impact $X opioid and timing The strategic us lawsuits continue XX priorities. in in our noted years in is that approximately cash long-standing

XXXX offer as high-level several XXXX. early factors investors our some wanted quarter I to need While our offer baseline. we the XXXX on consider think determine fourth we will through financial detailed as February, guidance performance commentary potential call in to We in

year-to-date year periods. development recur $XXX adjusted development million adjusted and per share, prior earnings income reserve our we improved forecast to reserve First, operating in do or of year future prior over approximately XXXX not $X.XX by

due net the turbulent to experienced Second, our rate environment, in headwinds in XXXX. have unanticipated income investment we

to how vast EPS. that look the to could full excludes and majority of gains the we plan income, bears exceed from consistent or losses prior convention $X.XX these acquisition. the in adjusted Aetna, $XXX we million headwinds In impacts, items at As reported over reporting these operating with which adjusted a use capital these XXXX, year,

$X.XX by or the will XXXX. this adjustments do the we not our over to those additional insurance operating was year share. per time the we Term businesses XXXX, will income legacy we this have drive make and the Third, progress our Care focus for long great Aetna need reserve made second this quarter to strengthened acquisition, which to reserves the in reduced we adjusted adjusted since in adjustment Fourth, in approximately term. in that of growth business, reserve million enterprise This rationalizing first $XXX significantly our Aetna Long portfolio highest on currently we project

of their none While business are a collectively, and of they $X.XX Payflex, in present these own, divestitures, EPS. International of approximately portions material bswift adjusted which on Aetna include headwind XXXX our

of health testing change COVID-based to that LTC not our a will which the are vaccines have happen which XXXX expect in revenues over have from the quarter following robust in of And early economics specific similar profile. revenues addition margin we a public those It will expiration diagnostic In part that projecting the project XXXX. prudent is we adjustments, billion COVID, level going to the we retail forward. of emergency first segment anticipate on will $X and of of

divested our Benefits, group XXXX. in Advantage In wins and line to growth. In strength targeting growth, result, including Care XXXX, efficiencies. in in continue to December with dynamics midpoint individual of XXXX and our baseline offering our view segment to store We detailed business, on baseline to and will we adjusted with slide to sales Day presentation, consistent income biosimilar items headwinds contemplating we Health In $X committed XXXX target optimization approximately redeterminations adjusting in losses of as of our store mid- on adjusted will we improvements Shifting creates of we plan drive As our in are continued these a a and over this improvements mid-single-digit Medicare script Medicare continued wage number generating of there EPS from help top outlook. growth. specialty guidance third to targets efforts. and our $X.XX. retail single-digit as assets of focus continued starting growth to outlined with least from and are range footprint of quarter in the $X.XX offset to in New we and operating tailwinds Medicaid will that offset XXXX, the The PSS, high of help our continue and membership a develop this and Investor growth well updated as benefits for we at are drive remain purchasing XXXB billion combined growth pressure at launches and reimbursement in with generic our front growth our our stabilization

adjusted Continued repurchase our important we to and operating help drive disciplined opportunistically and dilution. achieve deployment of growth. to will XXXX equation, efficiencies Capital our income in to targets pricing remains we part shares growth and ensure an expect offset to

which the XXXX impact our consistent announced in our first to grow to of EPS of midpoint, of preliminary any be last outlook Taking XXXX Signify the does will factors $X.XX. a we from At with initial is to acquisition and half $X.XX Day high continue Our not project single-digit adjusted this consideration, accretive goal our in include the range is all close these into Health, to adjusted the range to outlook at Investor EPS. we December. provided

Before I updates. want we Medicare discuss conclude, to recent XXXX the Stars

disappointed Medicare for dedicated are high Stars results quality our come providing very remain to our they Medicare expect. that Advantage with have We the But service to members and XXXX. with

to is our competitive also not to We to star product membership period. change projected we to ratings including guidance, XXXX ratings. throughout improve XXXX, able manage The benefits our in and impact maintaining remain to to grow this impacts offering to a Medicare committed expect star XXXX and cost in XXXX be continue to the Advantage and

to loss the combined of further with appropriate efficiencies. is on it contract financial lower headwind, this gap. places a significant Centene XXXX not recently of contract magnitude successful, announced outlook. efforts if the ratings entire of we in is that these additional ongoing diversification intent assume will work find through of close our alone potentially while The to to Our operational mitigate pressure the the of given impact Even initiatives as our XXXX variety stars efforts some

produce the with our our provide of consistent Importantly, $X.XX of $X.XX XXXX. had absolutely to capital repurchase us capacity and in in powerful range and and generation billion be excess remaining implied our in the capabilities to EPS with which Investor XXXX to outlook; $X enterprise of clear, EPS increase of financial authorization Day adjusted the share adjusted

will achieve strategic share towards While EPS this deployment Health. XXXX the deploying strategic all achieve expect XXXX deploy advance sustainably the XXXX repurchases, accretion positioning rate to EPS goals. objective, but our we the near-term accelerate and our strategic from as of our committed Absent may address and that our guidance. yield full repurchasing To advance in core adjusted care XXXX we business capital our pleased CVS remain results EPS We our both same will alone further headwinds. quarter towards of are Investors shares would acquisitions earnings capital liquidity segments adjusted reflect capital conclude, the our to a to adjusted company. should continued repurchases not help delivery using strategy share could third help raise long-term Alternatively, growth and further strength year to EPS not

and Our and our operational focus persists on to growth execution continue we strategy. progress on long-term

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

take with Instructions] first question [Operator our We'll Lisa Gill from JPMorgan.

One, going that haven't want they you think Healthcare want come you think we your I out as one, But to to Delivery. there's you term, Dr. comment investors that as something buy do you acquisition an organic really you about about you hiring fits? as propelling of are think found Two, about the to and Shawn, Desai for thinking last you're about is longer the that think all do strategy how along, shares. appreciate doesn't forward, year. laid I just I Karen Head made that really going And back this. go thank strategy if opportunities? detail. talked you understand see back last story and that you that And and that it, Karen really just

would first So question. my that be

Karen. Lisa, Yes, it's

me start. So let

expand and to that services. do healthcare wanted care. strategy, that to said we said that. a out have an to We laid We acquisition right. we we primary We wanted would into You're need thought we

extend this That want the to provider Signify through we said acquisition. and enablement year also the strong strategy. of into home We our have execution represents

to options to options M&A as need those continue evaluate to our I care. in that and we will marketplace. we believe evaluate said, continue primary the we on And We do

and echo. just that embrace the months we lot obviously, assessment. capability will talked remain critical and I would Investor future. you this, think something the value we've to continue at XX have mean, I demonstrated Lisa, I to the with And think for we discipline I've Yes. be our around since will that and I a we've about And been Day

given I pertains of closing here we've to asset but said opt and than of capacity something strategic that accretive that, ultimate share byproduct specific where an levels we is mind the At M&A keep So and enhanced and deal, my Having have less changed, a use at it's think, repurchase. we has sheet after our terms share the that, some comments, the M&A in embraced capacity. balance we not these to in cash as could I certainly current is balance of answer of would a of repurchase. any it time right our attributes deal still for are sheet say valuation, is even likely what the

Great. Okay.

so area. Just But understand in giving you'll And around kind something be for know idea guidance you're think give about cash any have not for flow how available flow. different when to so this should this, we yet anything is of I just an cash much I 'XX? cash flow there that of us

provide as position byproduct in my capital growth we be level Again, will QX of the neighborhood. sort about think the this Obviously, behind in in the I and our year. detailed similar capacity, look for 'XX sound the of and cash a be well. it's to think year of commentary similar think, more is very the we'll I call, a a the we're that talking But CapEx strokes at a is flow of baseline year, we'll intact. regulatory but is the business, guidance that assumption comparable broad is on and in obviously, same going that today I think

Wolfe And Research. question with Justin from next we'll take Lake our

follow-up Lisa's my the on impression prepared was physician position if-then repurchase an comments deal gave question XXXX. there, during at potential that your the to at to here. statements me you -- share the least I'll end and start on a there hit for versus ability the of kind with Shawn, this

the that, and physician saying are back double-digit if the group do So XXXX probably but just low you you want enough purchase, obviously, buy hit shares do that strategy, I clarify, large estimate. capital to to EPS you if advances you have don't still that a

digits. So you can hit the low double

if physician -- If that risk you becomes a deal? a physician you don't do a number you do deal,

What asset, the job modeling you is when when fund saying always we're so answer And say try that think we your to the it's timing talking have and both I to of the And specific the your obviously, -- management can ultimate will for where it's objectives. Yes. to long-term me around dictated is definitive achieve by we for we to a Again, hypothetical be will about of hard we objectives. that completely done right? I'm near-term to achieve asset. asset have and be what

continue remarks, think specifics to the a if So clarify, I'll and sort don't hand. let march of We as was both. in where absence in But hand be objectives. achieve deal, the clear proceed of of goal those me think but actual clear, be achieve then to towards more definitive. sort in will ultimately, try our pathway we the have an both of we a having there I could we also is my achieving is having repurchase deal pretty with I to I deal to in

So that's of absence that, framework in the about, I think, talk to specific I'd again, I to you understand. think something sort like of the having

the in of the it assume a my there's Centene That's a could just to exact just in I that. to targets businesses stars. businesses of talk for those in to probably with those digits little the you benefits, over question view you healthcare Maybe it's lens context think But around, view high. loss was in headwinds? the those could it's to for helpful. mid-single much XXXX specific growth impacts And from XXXX, mentioned I ask PBM, about to you how potential put mid- the maybe then and the couple headwinds long-term specifically the

Yes.

and capacity, that cash any have And about 'XX debt specifically. commitments, amount metrics obviously could leverage share and XXXX. we're me on That handle at comments can Let this about up amount to underway, Lisa's assumed or little approximately leave that share and assume an cost impact XXXX headwind. in on be billion. My of more of not billion combat $X.XX based successful headwind question the Day headwind a a would $X But to be The for stage. repurchases And process repurchases billion we financing. sheet that project combined this Investor capacity half required of to basis. headwinds certain going that mitigating this is price work a for and Centene XXX% within today of to balance but our is and actual the about on achieving to and vary We XXXX. the in of unmitigated amount the $X stay our stars regarding approximately talk bit the an $XX obviously,

from We'll America. with next Bank Michael take question our of Cherny

have know Maybe $X.XX regards bridge, terms high a include Any a, health contribution what target question. just investments a out X mid- what's out the let couch clarification headwind, to performance? some on, With the to -- way what and just COVID COVID single-digit stars 'XX around that benefits in can separate then to growth. to in that preliminarily or you care does the the tease of us you and is there net then relative

glad whatever We've will obviously, you been investments want and just has sure we that make contemplated. contemplated then you that everyone's I'm to need in because SG&A make COVID grounded we and next for and outlook asked that some to year, that Yes. about retail make in that.

that before. margin guidance each $X talked business over categories the the way the in kind what item which we other back operating billion through or retail, you're probably COVID-related income like guidance about the there's In revenue. an actually in two We've As $XXX you that still we're goes if mentioned, the around increase, on of profile we've that's for million year. of hurricane, that example. about went of But of course sort the talking raised quarter's of removing about $X.XX,

to the I going there's that to is of resetting number endemic that's we're this demonstration there an of something for year a closer kind to a forward. good how comparison year. business Again, think purposes sort entered So we back tail to this

billion And into $X year. so again, business. of we some baked as that's to not are high contribution on our into expecting as coming But this that we also getting outlook likely thought

with M&A. And I or fruition? on to on or deal the you're I'm obviously, not what an in not I'm don't organic basis? completely to And build-out but hypothetical, a ask how to this happen doing going could mean it. making should about you're investments for going then to to what we going keep on to ask you the side primary think come Got care could you do to be going place wait come you're putting while be to that about not

Michael, it's Karen. Yes.

clinical our of all, obviously, we first Dr. delivery hired Desai strategy. really longer-term So us just to care help clarify

to have in And been We've really of clinic extend We products delivery. we're investments health across integrated our top to the growth all support made front we're our our in making drive our in investments at around services. been that. We've progress strong healthcare wellness store very businesses the and to to of driving having and investments making extend the line.

the we to continue to we in are So that invest capabilities sure marketplace. service and competitive make products in

to I investments on So is advance continuing And our strategy. all across to we that perform strategy. making the say company, what would been this we've our are

that acquisition. a I is Signify our evidence of think good

we in you said think around I expect of we're we first I We'll We gives be And home. to XXXX. that. the half a that investments make said, the wanted sense good to executing strongly. as in that close

A.J. We'll Rice our take with from question Suisse. next Credit

hopefully, two I previous quick questions. guess I'm from cleanups, here doing

just the it's to maybe might 'XX think range sounds there, more potential like on 'XX little half of Omnicare, I'm negative the move mitigation in pursuing. Signify to offsetting, bit -- signify with the It of the in mitigation about Omnicare sale members. you close an all a of you of it's be but the PPO, half about positive way outlook, a that? we know little year of to or just you're the talk you and to but the plans, outlook? to half represent? these how you're used a Can a so a half you Any first tougher you that. specifically the bracket yes, you're to would what national with what or mitigation. move collapse I For doing And have days your accretion efforts. wondering said, don't can for headwind of be going you And little with have able then this

Omnicare. up. A.J., to will I'll go Shawn I start clean and just to and then Relative, Dan on back question want your

Omnicare recognize bswift decisions are as and that. important that well. is of also example and for a year, portfolio good that continue good around into made divestitures part evaluate as as is Payflex said we And Shawn our don't strategically, we example assets of a earlier that. making you portfolio this fit our international strategically think to I it's our business of

stars, a Shawn I'll let Regarding about in and talk financials the second.

in extremely in just comment But strong stars across challenged stars, of rating continue know, a star say were stars, we And invest. Just been I X.X decade. to on as was we very you a our leader and everyone we kind have would disappointed plan. the performance industry, with a for

to continue in will star performance. invest We our

activities, it scores, have there. doing investment to specifically I the diversification we stars turn me really about am we're ask is talk let approach of talk number to CAP XXXX. to driver. survey relative the the with Dan confident We a a which then of and on part member Shawn actions to do effort. have I'll have pick mitigate what and and But to the about will divestitures that up for Dan And that, stars. the We

Okay.

or be there's closing, the But add another I But on timing when divestitures range. it to closing I to the again, have for in do about the baseline, on all the change Again, But there asset. is about Just the when bridge -- obviously, we our a specifically date, Omnicare, of on definitive idea obviously, a right small outlook right we for right, accretion X the think is will on described $X.XX the long-term potentially item. -- think be get to small this we that we for our get this would the But more not still more to I think additional do business. probably you're accretion. the about we is and that determined. $X.XX But talk thinking in would of something successful we'll XXXX. that that Signify, so $X.XX divested thing think that if anything would And is you're I navigable -- strategically we sort the when talk not we that. this can on on now.

Yes.

of is of we're Let flavor I initiative mitigation I there that me are way about specific two approaches we're do would little we it you our bit mitigation have pushing. that mean but give think very a broad the strategy. and a strategy,

a focus we intense And opportunity like said, that give impactable Karen on to shows said, as that adherence that to we around we've enhancements it's have Those and we medication the continuous program. to to example all, the moved record score. drugs is enterprise is our star, of track through improvements. benefit those measures. where lower CAPS taken improved and a are have really operational things tier ones An robust actions XXX,XXX of stars that that program in us greatest First improved the some that some domain our performance also With the We've efficiencies. XXX move targeted for of already a about and members. actions some programs very drive some across

program things member incentives efforts improvements, there. care, in So like intense so really experience and gaps

a that in that we've do the you as contract of update On contract that, progress. tactics to a in we'll had It's and been that expansion own And we we're contract have this some of efforts. taking we've been additional for achieve popular progress. one things working contract. diversification. concentration success on And largely members we recognize high-quality That's using result diversification, our in

next question from our Research. Eric take with Nesson We'll Percher

were chains have billion. distributors very $X of Obviously, different settlement but state buy-in. pharmacy potential the on ring-fence all on I'm to your where interested penetration. want the national in view Question state you liability,

sign your municipalities? view what's that So And states reasonable all what's states will among the on and goal for likelihood on? the a

agreement October, want of did on kind let substantially And against a in in that we late discussions. that. lawsuits the I'll of company. I mediation and the on begin our an principle me give claims opioids. just the perspective have as you today, just Eric, broad opioid to to close we view disclosed all Yes, give of reiterate we our

means As the in. that to satisfied, conditions and you buy to face be mentioned, all have

in experience have Florida, those have conversations. where We demonstrated our have we to ability

had on our also I the So we this and across do company. we tell more the opioid have behind has for and it as would conduct board. provides we gives that just said, through to quality this us in you and focus our combat -- can to would we'll years abuse us on a that monitoring our But clearly be continue crisis and I care so our opioid that the many recognize and say issue behavioral And of so the that health Sean certainty so seriousness to significant it over Americans. I us leadership both puts of made investments customers. clearly improving decade-long access strategy health the

work the you So are with we'll we'll very -- and along updated Eric, the -- keep we working states, closely way. we're

this to appreciate finish to get required I minimum line? should of there we And any think that. is of as the type

the At period. AGs point, mediation kind the not that to need were having table there's through recognize But these states. this at minimum work a this all have we the over necessarily of and discussions

confidence. of So we have a degree high

with Evercore from question next ISI. our take we'll And Elizabeth Anderson

maybe we of a Services takes which growth for I the the talked question as that Pharmacy business, puts you XXXX? Can that outlining had haven't through of about that outlook of XXXX walk and regards to you're sort mid-single-digit sort on us much. specifically provided the in

would it's straightforward fairly year. good we to a another next I renewal good sales season. story Obviously, Elizabeth, it had Yes, and say as season pertains

the normal volume revenue drivers. and of have We sort

like things headwinds the for. We of need to around solve normal have sort that, also and pricing that we

that a is obviously, some was year-over-year little in year in I us we'll on the that a drag, the direction. So stabilization I think, whereas bit other now, should growth, turn have this think XXXB, big thing

a anything biosimilars effect. like little we add will specialty that generics bit So pushed -- But helpful. the also think into to that that? Obviously, still year we're be will the you'd Alan, be and and out timing to around

thing management, I optimizing is would continued I on on focus No, only expense add, the Shawn, guaranteed think all exposure. minimizing

stabilization So changes. usual business of sales growth it's, and the XXXB very as say, I as with would kind much

Ricky And our question Goldwasser take we'll with Morgan last Stanley. from

Wright then do follow-up. about signed trade-off But as to this a home partnerships provider And and to Ricky Erin the between you health I necessarily did gap here. opposed How care week. that announced you as assets? a this the value-based you help is can M&A? have And with partners we owning think contract outright This health and home such fill see that quick

in services, as Well, that platform we gaps Health Erin, home, the and believe will provider of a Signify close us it on will accelerate the to and enablement. that to know, have you give care return our we home some

acquisition health country. a to their we're an anything the of network Dan ask continue And look So that make we've to decision, there's we'll sure Aetna in coverage else I'll -- to they wants to ask. made if the the across space. variety to obviously, home continues do he different contracts, and have at Obviously, have the business adequate

our a our of be. way a to can provide to I strategy Karen, in not our value value-based long portion for only time a but add that contracting it also been Yes. and has It's key customers. just to HCB, we would providers, that continues

only think network. to ability you that enhances acquisition strategy, our As really about a the strong provide

sitting would value to and our we only customers. strengthening side by so side think about And I have to as opportunity provide that the those

achieve we as based on follow-up targets more as well this will about when is those And Okay. then this debt? is for Or near-term targets EPS your taking all you, Great. think the involve strategic ability to cash? on long-term

actually leverage below and our now, We're our metrics balance sheet sort No, to continue would of some capacity. well use that. we'll we of do

XX thereabout. as we sheet on worth billion those I rule about of structure. both more is have our to debt committed debt-to-EBITDA objectives, cash to on investment-grade both thumb, $X we rough of capacity. a our basis take need And remain or of accomplish balance we and again, building points And to been So debt. would can, just rating But

small like numbers, significant they're of terms in they sound So but capacity. actually

So yes, today. do we investment-grade would sort to we our of would that, ratings but committed remain

This concludes Q&A. the

next for joining the your you today. talk and you We call to participation, quarter. appreciate Thank we'll

Third and Call today's Quarter Webcast. CVS This Earnings concludes Health XXXX

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