CVS - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, good morning, and welcome to the CVS Health Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow CVS Health prepared remarks [Operator Instructions] 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. Please go ahead.

Susie Lisa

morning, good and you, everyone. Thank CVS Welcome year quarter full fourth earnings to call. the XXXX and Health I'm Senior Health. Susie for Relations Lisa, Vice President Investor of CVS Chief Guertin, this Officer; Chief joined morning Karen President I'm by Financial Officer. and Vice Executive and Shawn President and Lynch, Executive

Lotvin, remarks, Benefits; Alan Retail Michelle Shah, Customer and Pharmacy our Peluso, will prepared question-and-answer Chief that Finke, Roberts, Chief John Prem both and the will Chief segment; we Following Services; Co-Presidents Pharmacy a Dan host session Officer. include President Healthcare of Officer, President, Officer; Operating

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

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

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

our on the be company's non-GAAP website, you GAAP financial for During the this posted and and can release about these is where reconciliation call, it we being financial measures performance year. Investor a broadcast earnings the our in press call the measures morning's of Relations one of talking will portion Today's use document In on comparable when website. SEC archived will find accordance reconciliation this non-GAAP condition. to with regulations, measures

over Now, I'd the to Karen. turn like to call

Karen Lynch

We the we exceeded morning, strategy pandemic brought an Susie. advanced we year our you a Health. our everyone value a XXXX playing quarter. for nation's in final critical response. was financial $X.XX $X.XX in adjusted XXXX and We the quarter row and the important people and our to in for quarter ended serve call another of a EPS you, role year. today. CVS goals, thank EPS Good we delivering full Thank EPS joining with expectations greater exceeded fourth the adjusted adjusted for XXXX strong We for our strong the

We are entering with XXXX powerful momentum.

care increasingly health We delivering solutions connected are personalized, digital. are and that

destinations is engaging their millions We consumers health becoming businesses CVS America. our community bigger of are part a Health in across across of our and health. everyday

to our now performance. Turning

We grew of For by year-over-year, and X.X% the strong $X.XX XX%. $XX.X from generated adjusted to recent full $XX.X for nearly the to year we maintaining at us of by billion earnings performance income early billion. stage this $X.XX. year the $XXX per XXXX, CVS billion, up are full billion. year, exceeding delivered flow We per operations revenue $XX.X adjusted cash Health XXXX of well our share X.X% adjusted share our increased guidance for earnings least guidance At strong most of we adjusted full of XXXX. year, positions This operating

quarter at boosters our pulled sales volume will results guidance more our vaccine store the provide of offset of shortly. testing details to Our front timing Shawn COVID Investor retail accelerated business reflects in our on XXXX. the relative from forecast and by forecast into increased fourth and Day,

address terms, and the a care. in XXXX the more integrated and their Consumers driving anticipate, the and virtually are chronic superior conditions, providing Our our we successfully costly and those value disease. cancer complex prevalent, realize health with major expectations to home continue most health are that our we in and and deliver, kidney in diabetes, individuals and clients to consumers' to their for Customers such solutions, on ability engage performance local care change health health in community. places demonstrates as force continue particularly exceed with

growth Health growth members driven expectations. segment lines. by delivered with for another initial Turning as X.X% Benefits, highlights. year increases Care We product XXXX at X.X% grew in in Medicare XXXX, revenue strong of full adjusted Medicare In our across XXX,XXX over year-over-year the all we Advantage our growth Services. a exceeded we Government year Total to basis, membership on added the and had performance new

result of needs plans, dual-eligible on XXXX. enrollment doubled a our special As strategic nearly focus in

guidance of our expectations. XX% line was Our in ratio full medical with year benefit

the aggregate year with normalized services total historical levels. baseline line utilization the of For health in care XXXX, full was in

XXXX, to business. we period in Medicare our enrollment had Turning an annual impressive

we year, over and versus XX% respectively, industry the all X%, prior our grew consecutive year, and of this Medicare the year growth all lines, XX.X% categories. product year-over-year. Advantage rates second the We increases Medicare For grew group in averages Medicare membership total and Advantage in individual exceed by reflecting

We industry This Medicare in Commercial net the added membership accounts XXXX led market decline. overall also nearly while growth. solid a continues business. season absolute selling members, national new had our net to XXX,XXX We PDP PDP the in

We the membership maintained in full grow and low to strong client of single the retention expect XX%. for digits year

integrated in capabilities, Membership combination CVS year. and medical Virtual expected Diabetes as the services and ACA Health exchanges cost Our than including Care pharmacy, we was success such competitive the is this enrollment products designs, eight Care entered Transform our and our individual lower driven benefit of and Primary utilize that by structure, programs.

consumer this Aetna offerings. Health results our will this gradually, do not product excellence geographic select XXXX. we offering our needs, expect innovative our contribute of with We with and continue to our segment. in service guidance, prior Overall, financial a portfolio deep and Health our focused discipline growth build expansion, Consistent co-branded price to Benefits appeal understanding business drive in materially CVS to of Care the

strong of health selling benefit a key and fueled range a products comprehensive season. consumers' and that whole design remains Our address needs differentiator

income growth XXXX, to adjusted X% For forecast X% operating to revenue we XX% growth. and XX%

delivered revenue operating Pharmacy XX.X% X.X% in and income we adjusted XXXX. Turning Services, to growth

continue excellence commitment product partner and service to our clients our trends We to and and with broad create transparency. better-than-market and a a be to savings, consistently value We We're and trend. drug members. a delivering customers cost consultative clients our for industry-leading portfolio

programs ensure continue our the that clinically access to to enhance are to utilization therapeutics We the most appropriate.

For XXXX, XX% achieved rate and retention of new $X.X net client of over we a business billion revenue. drove

growth XX.X% quarter We for leader are the delivering fourth X.X% in full versus pharmacy, the prior specialty year period. revenue of a and for

Our digital a deliver capabilities specialty drive and programs marketplace with programs we convenient the pair in pharmacy to connected value experience. as differentiate us they and

X% in income Services X% to X% create our Pharmacy we as long-term we our revenue for X% operating and and adjusted growth to clients, expect For members. growth, XXXX, value

community health an of over for We who for growth this This delivered plays retail in nearly history Health $XXX the sales Americans. and income Our in increased X% adjusted Pharmacy millions prescriptions came marking CVS of Health X.X% COVID-XX administration. XXXX. the as role both year-over-year driven a year-over-year. business. segment filled billion, industry by XX% to This XXXX. an and by to consumers segment revenue exceptional destination grew a expectations CVS our important just vaccine outperformed notably critical We in operating milestone was

fourth more million XXXX administered during tests vaccines Health quarter. full million For in CVS COVID-XX XX than COVID-XX year administered and more XXXX, the were XX XX% vaccines. than the of Over

tests, throughout Our is strong building sales powerful relationships new leads store a we of Health. work services with XXXX, test Front other health which range for as to versus a customers in was X.X% with million COVID growth consumers, of prior fourth cold, America consumer year. example to the vaccinate the sales beauty seeking as over-the-counter the well and CVS sold cough and of are were at up the and quarter. care led We personal over by XX approximately They demand products. COVID-XX tests, XX% COVID-XX OTC for

into our We pivoting portfolio health formats: care and are retail locations. enhanced pharmacy clinics, stores CVS on hubs progressing traditional primary three and optimizing our

We to U.S. preferences shifts health consumer stores in executing and on our population. buying are the omnichannel plan dedensify needs, and based

maintaining vaccine in operating now year, XXXX given to retail XXXX, income outperformance or pull more provide XXXX, our as Shawn mentioned, details. XX% growth. decline This of guidance. a For I be forward will in prior implies versus X% earnings we low the boosters minus adjusted are and and plus revenue

Our a more experience a superior and creating consumers delivering on is connected digital by for focused seamless approach health journey.

digital X We for are progress standard of health consumers. making up the for year. cvs.com visits over XX% billion the a over is one care XXXX, with nearly new setting towards health prior websites in top

We XXXX, XX% several to new interactions quarter, program we as increased by now businesses. year-over-year. prescription and than CarePass adoption the advanced our health for join up digital digitally, all up vaccines, We the sales testing excited serve of six are we members made XX% to such COVID easier in engagement are capabilities have digital in seeing. last dramatically alone. wellness and services Commercial health personalize X.X We and about customers integrated months it reaching analytics CarePass Aetna In Health approximately more CVS products powered across our million for health the the services launched million subscribers consumer XX Our and experience.

in consumers, subscribers. all more driving simplified enrollment growth CarePass also the is which We for

check-in For our and HealthHUB we MinuteClinic process patients, patients. for digitized the and simplified

for promised capability. consumers Our advance Day, complete of paperwork At a XX% self-service broader lower Almost this patients digital cost in are utilizing individuals that will health appointment. Investor improve to care outcomes, and care. their superior to of access tool we experience provide enables traditional already health our

portfolio our and several complementary driving care and products services. to moves our both retail through delivery seeking initiatives vision internal the for evolution advancing by and capabilities, capability-focused that we are for We're care. M&A execute realize further diversifying offer. optimizing making We're our health health to this services We health

our of all will determinants more launched center equity as in growth customers experience. with In delivering place we sustainability digital-first the These to that and enhanced We communities. businesses. address health places, our as Zones technology-forward consumer all our connect on an and the this our their more recently terms, the our focused do. to commitment strategic approach on We communities. will We shareholders, health accelerate well will social and in aim advance Health in of to moves for foundational work, ways at omnichannel we of our consumers high-risk on health CVS remain

through local We national collaborating six local and are investments. of the determinants health organizations key trusted confront social to with

is Health goal needed XXXX. in to pledged environment conditions remain overall active additional health with Zones committed for to communities diabetes such markets the and and heart specific is resources Our the as close have gaps in five to geographies consecutive our Xth in with chain was Sustainability care reduce Health named to planned In equip CVS now disease. and across consumption, Dow to especially paper World American for operations gas XXXX Index Xrd for December, North impact, and the Dow Index consecutive plastic. decreasing the resource supply cutting the year. year greenhouse Jones emissions and our S&P the Sustainability Jones We and

role every day difference. to strong over Our our have the played nation we colleagues differentiated continued financial and I of a over strategy and of to to recognize me pathway pandemic. performance, proud double-digit moment am let and who adjusted what to portfolio vital of clear create execution, time. make EPS in XXXX a the like a over prevail that, helping doing to momentum have into achieve done growth With I turn our also it Shawn. all contribution a take low would assets are

Shawn Guertin

Karen, you, everyone. morning, and good Thank

again enterprise the serve continuation cash adjusted year, quarter fourth quarter growth, We fourth of an our the of strong as and performance prior XX.X% adjusted we share. earnings our as EPS a pandemic increased reflect as $XX.X supporting versus in expectations and operational exceeded delivered three the for of of whole. revenue, of XX.X% adjusted operating flow the execution the $X.XX, per maintained with and first income $X.X billion XX.X% adjusted communities Total on representing billion effects We focus of Our results reported by once quarters year, we of respectively. the persists. the year-over-year. revenues and increase the Starting

flow segments. of robust growth and we an $X.XX, income of from total a year-over-year, $XX.X versus XXXX, all $XX.X respectively. and from prior approximately for financial This CVS of revenues focused and the delivered billion. flow year business year, operations our XX% Health results, and cash of billion working reported year earnings operating marks reflects X.X% up adjusted strength generated significant improvements cash position. We per nearly of across our full reflecting And X.X% and collections billion, of operations accelerated record capital we $XXX.X adjusted adjusted share For of increase

over Services driven billion XX.X% Turning by and by business of membership year-over-year, our slightly to revenue Benefits offset the segment. quarter by growth the in Health repeal Fourth Government adjusted of investments, lower Care $XX.X increased COVID-XX-related lower of operating higher year. XXX% COVID-XX to fee. grew compared investments year-over-year medical the improved and COVID-related by by performance, health prior related $XXX partially by underlying driven Adjusted costs offset million insurer income

benefit medical related improved of points by health the investments, ratio XXX offset fee. by adjusted year-over-year, Our partially basis driven insurer XX% lower of repeal the COVID-XX

our government variant, seasonal growth was lower revenues driven therapy Overall, of programs. was the confident and membership offset of and our reserves. XXXX, by of in offset billion XX.X% purchasing growth particularly impact year-over-year, reflecting our and As quarter, approximately in inflation, vaccine Retail a by this sequentially, $XX.X versus costs, $X.X payable successful experienced welcome representing group new growth delivered and improved exceeded are organization, of price improvements. by XX expected, by Omicron up operating growth a contributing There prior specialty Fourth quarter revenue of the historic and Total than Long-Term investments also $XX.X again in support season. of with quarter of with and was client reflected COVID the revenue The year Services XX.X% services Care of the also largely processed increased economics, quarter segment, adjusted to Adjusted the income and by year-over-year, grew and we our In once levels. income we billion. an exceptional continued increase billion the result pharmacy. growth X.X% treatment end products claims of of purchasing and driven specialty quarter claims and additional $X year-over-year, approximately increased business and of prescriptions volume. two pharmacy Medicare testing the fourth over-the-counter pharmacy including main the front pharmacy Approximately treatment to kits X.X% was components vaccines reflecting Total was and sales, at increase; pressure. in adequacy pharmacy offset by strong testing, by and In attributable to Medicaid. combination sustained trends by continued XXX,XXX we demand new but well year-over-year categories, claims brand XX% growth. strength adjusted billion segment, was front sustained was, pharmacy by normal XX% COVID-XX above billion. one, growth in as pharmacy operating as net this the this growth in produce for non-COVID underlying trends, revenue volume, attributable half to and driven prior increased administration remaining to in as a COVID by related broad quarter strong COVID-XX prescription partially third costs lives increased The operating fourth of of test year. in sales the reimbursement administration partially store This helped Days store Pharmacy lower $X.X higher COVID-related remain income expectations. consistent the

adjusted COVID-XX by front a The in operating strength key administration the store exceeded in increase of an stable components; a result quarterly gain which impacts vaccines, antitrust million prior was sales, and XX% pharmacy underlying of forecasts. wage few and the reimbursement income investments, year This significantly including improvements. and from was and offset ongoing and business above our settlement, legal by partially the minimum were pressure, $XXX increase but store driven combined

primary sales dose previously two COVID-XX the impact by remaining with was stronger terms are for and quarter underlying nationwide was boosters, in testing, components. in front the largely there combined of over-the-counter XXXX. expectations, the expected quarter first the to the XX% our store performance. surge performance And demand In diagnostic of driven driven versus improved by vaccines, third we XX% Approximately which

the and sheet. balance Looking at cash flow

position the the fourth proactive a we capital of the flow $XX transaction long-term and the billion. to the total down bringing quarter billion. of over repaid full $X.X liquidity $XX.X long-term in strong management from we December, debt transaction operations in remained with of at our close total nearly in since cash of billion paid of cash $X.X end billion quarter, year have non-restricted the debt net Our liability Aetna Through and

dividends shareholders over returned our to $X.X In billion XXXX. addition, through we quarterly in

Our multiple protocols, consistent in to head XXXX momentum during our government setting XXXX outperformance predict, outlook year, stage additional the despite vaccine such variants, unknowns that COVID initiatives. as solid and as continued this testing into and challenging remain we for provides strong testing

X% As this the in Karen early adjusted noted dose to of earnings given retail pull $X.XX. revised range into our the earlier, earnings represents we full-year forward of versus are share XXXX share at of especially this year, maintaining $X.XX. in XXXX. administration per our third to appropriate from stance largely earnings QX $X.XX guidance to X% baseline per XXXX, an feel growth was due adjusted outperformance the of is This point vaccine We

growth, in As a you like per adjusted you keep about to mind. to earnings encourage and year-over-year think share baseline the things I'd few

First, items recall investment It year's the minimum and profits an our of includes in realized development, forecast, removes annualized returned wage. gains. $X.XX customers in net of also impact net through that our XXXX capital not we prior colleagues to baseline do increase our of

integrated is of lead COVID-XX health Second, driven also the attributable share. COVID-XX help vaccines important note business $X.XX to engagement that CVS power destinations. and Health testing favorable clearly community nation's pandemic per demonstrating component continues to now a to the the it model, response, baseline net approximately by and consumer of includes our local

detail change for COVID-XX no segment more XXXX. on While like there retail guidance, our is volume would I our assumptions Retail to to provide

approximately to in-store to XX% decline volumes volumes at testing volumes outlook in-store decline anticipated In diagnostic vaccine reduced offset XX% and XX% to vaccines. XXXX, Day, compared at We we expect and COVID-XX testing by that XXXX. diagnostic Investor to on a continue both expect to than XX% will over-the-counter higher

full-year does impact outlook our modest we XXXX. growth assume For fourth vaccines, volume a to versus administration of not booster. over-the-counter Relative test the from kits, expect any COVID-XX

contribution we first the of COVID-XX weighted such, As the the vaccines year. heavily half expect more be to of to

I new mentioned, including testing coverage mandates or impact most challenges, of factors, supply challenging risk aspects guidance potential to test vaccine the surges, of government the kit the such changes, As of and developing of remains as due protocols, OTC dynamics COVID-XX many our one legislative and additional initiatives.

additional posted updated presentation the find morning. regarding slide our will we details this guidance to website our in You

be expense that items to income income statement, our adjusted Turning interest expect to operating are our $X.X below on XXXX billion. for we approximately

are that to be we And as versus We flat count approximately offset expect diluted dilution. shares a share to result, purchasing XXXX.

for Our tax XX.X%, rate approximately consistent expectation the income is effective with XXXX.

terms In we anticipate as are capital flow flow expected results to improved cash for billion, deployment, the updating expenditures $X.X $XX of we range as the flow consumer XXXX. the strong cash to well as we and range community operations are our continued and to in guidance $XX XXXX, billion to from improve invest of locations. experience Capital cash reflecting $X technology enhancements billion our in be to digital billion and in

we our XXXX strong deploy ratings, M&A. As XXXX December, continue To investment-grade we capability-focused maintaining our in flexibility of the having also to to Health execute while as performance we conclude, strategically for into capital strategy. to to is expected committed the detailed carry remain CVS

our as leadership consumers in We a have healthcare partner solidified their our and role communities. delivery to trusted

ultimately trust, people build engagement build upon and healthier live of we access convenience, lives. we drive to this improve meaningful improvements that enabling will care, lower the and continue to cost As

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

Operator

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

Lisa Gill

the offering? services, services enhanced how breakdown to Karen, around Thanks in secondly, you you'll I about Primary enhanced to between bring how the talked incremental think clinics need think about back thanks acquisitions I to traditional, HealthHUB each want stores do the other to that go do then those? And think And the physicians making about by do of very the make to primary the how you care and to about about detail. the you just overall for healthcare and work? CVS much. Good the all made care, morning future. comment I that

Karen Lynch

morning, Lisa. Good

portfolio. with me let of So retail three parts just the start the

to back the which The also typical care and care. home. care your primary have our they'll medical ancillary think specific we'll serve our the serve will like HealthHUB, as clinics, panel kind virtual you of of and the lower-risk medication leverage and to said, as the patient's CVS as about use just size provide have extender pharmacies in extend services care the pharmacy. with primary primary HealthHUB allow serve which existing will ring, for will cases, primary would should touch which would the care the expand we a us patient As then cost. obviously, way programs. HealthHUB lower quarter And And you'd kind points third inherence the complementary actions be And that is and

-- where we'll digital And have experience. So front have that workflows We'll connecting a connect services. that we're the assets. provider we and bring breadth kind provider have digital then if goal. of of the a -- data, and the primary have We'll care patient about that we'll ecosystem. invest you the a experience patient think the seamless end, clinics. We'll single we'll we'll through That's coordinated in have differentiated making sure so

evaluate look we are our when Now you to that to that be -- we care Day, M&A options on we'll at with supplement continuing that Investor we sure we front, would we about to you. will talk And have our there. primary at mentioned -- share to services, activity mentioned Lisa, more

Lisa Gill

number is half -- will each way is a about when of them of them primary pharmacies, about Karen, there each -- there of the a one-third number put think you like can the bucket? you've care any number clinics, put around just as As is around number in think of far -- we you the to them? that be and three

Karen Lynch

number. population. today, HealthHUBs coverage. bit of you And specifically a have think coverage have MinuteClinics focusing over do and the we're on a little really of wouldn't on actually I how our US of -- about focus if is XX% What we Yes. the XX% we

good, want our as So and for customers Caremark Aetna strong we health -- to have our coverage we'd well. plan wouldn't and

I coverage, not necessarily at it look So numbers. as

Lisa Gill

you. Thank Great. Okay.

Operator

question our take We'll next Wilkes go with Lance Bernstein. from Please ahead.

line is open. Your

Lance Wilkes

Medicare, Kind morning. primary how like question on you that was types, what a Good I'm with I to of sorts integrate more that helps focused and, about Aetna. capabilities if in as the what looking such you primary sorts add related and employer, define, Yes. into interested Medicaid on our patient segments Thanks. of overall, in thinking for of And be you're care strategy you'd the to care? targets?

Karen Lynch

Lance. said Medicare Hi, Good successful, growth. company. start, Shawn as you here. to our we a we to I is supplement was ask the with That I'll What I'll very morning. largest and We've would obviously, been look for -- driver. our growth mentioned, growth engine is

clinics on would these we would So would build variety a focused obviously, not of different and But we that. out. serve patients, them be primarily,

the support our care those ask primary Shawn -- clinics. would to other members to let opportunity So And with here. we me have with add

Shawn Guertin

business would And also for an a today, there. broad right, think, that the of conditions our model obviously, Yes. from aspiration, that tremendously customer the have of to especially with types. given make the I clearly, is Frankly, I size I of No, that Medicare chronic in a it company, Lance. an I important of of mean the strategy. economic population, think preponderance that. would long-term population sort there's benefit Aetna. cross-section works is sort that agree But

assets aspiration the the our local of key, that of And of I populations important we communities footprint ultimately, exist. Medicare a and is the the community local sort So will think flex reasons. a But is to would But nature ultimate cross-section but serve is populations. Medicare broad customers. and of for to the serve variety look the

Lance Wilkes

initially think being the that care we additional services as on of looking as also those like home Medicare potential areas kind targets? focused and sorts maybe at health be of of you'd Should more expansion

Shawn Guertin

rather exact you're would a yes, It's you'd a things is and extend to that on to show will hard you high potentially care be sense make particularly which population Medicare if if -- Yes. to acquire things than the lot with something continuum. absolutely up make But decide this of sense order sort build. sort of list. predict the Again, the they'd of that

Lance Wilkes

Thanks.

Operator

with ahead. there? will are And from Matt, come Markets. go Matthew our next Please Borsch question you BMO Capital

Matthew Borsch

companies. Oh, there's being of clicked all I’m Advantage, click. the sorry. My for lot this that from chatter, year coming about, impressive Are a given sort numbers as I an it, and the competitors some backlash that you been all you're issue confident growth of the achieve into other mute to didn’t your Medicare know growth open pointing increased you button, in but very I enrollment? of strategy from competition

Karen Lynch

a had of broad we that on And for everyone individual. just we've I'd Medicare. remind long-standing products growth a Matt, strategy portfolio have isn't Medicare that just focused

strong services, of connections that with have. We to we have business Sup. We obviously PDP the very and assets products enrollment broader in group our portfolio We our that period. Med Medicare, our our and had our strength attribute a open product designs, our Stars performance,

we was look like continued design. CMS XXXX, positive. benefit to will allow us It keeping notice was that flexible rate looked with the As to stability clearly, have the

a here. our Dan our if me in strategy. to wants play has to he confident continue we're And ask anything to add and it's So competitive -- Obviously, we'll strengths. let there he marketplace,

Dan Finke

Thanks, Karen.

footprint around you deliberate and out really benefits the it our entire portfolio, provide population we've think said our I really during across our coverage, solid been played strategy on Look, growth that really that the of really making focused to inclusive we AEP. well. senior here sure can D-SNP

like And XXXX. growth in we confident for expectations said, feel so our really you

Matthew Borsch

you. Thank Okay.

Operator

go next our Barclays. Please Steven Valiquette take with we'll from And question ahead.

Steven Valiquette

guys a month, on so MA. for individual you also to was it touched your I was guess on ask morning. investor part internal Good conference Medicare, Thanks. of going last question answered. distribution capabilities at But I

color able and distribution driven much is of total marketing you're sales, the MA growth your the if external book either capabilities just MA curious the the mix by on in internal provide membership I'm channels. how So just book or to versus -- of the Thanks. the more

Karen Lynch

Yes.

we've across So own other and in growth. more educated too all we resource channel. Clearly, tele -- locations we we the Steve, broadly. had national pretty we on channels have a this And distribution, of the is people for strength that Obviously, distribution internal our the so have Medicare service did channels. good rely those number Medicare year on centers we we CVS added could get Health the thing continue that proprietary

our that important current and what's look focus gives where book of all that in our on retention strong distribution marketing sales areas let the in us see very is not here with served we we continue is as the think our if feel to gear We well future growth distribution channels. necessarily and we've is channels kind growth capabilities across that to done the a sense marketing I me good of persistency. generated towards Dan for But the market right has and us. Coupled – are you distribution the anything has the going, because at do of have that well. add really had that capabilities for Medicare, to what the solid

Dan Finke

We those to force, think Karen, a you use think speak robust to distribution results partners. said and it our channels Look, have success growth, our our our digital, personnel, really optimize I I internal do really the across channels. ability diversified all to of our for sales really well. strategy is that

Steven Valiquette

Okay, great. Thanks.

Operator

from next our take Bank Please of Michael question go America. ahead. we'll Cherny with And

Michael Cherny

so for the you just I just hopefully again seeing $X.XX baseline; what B, COVID-related -- the far in what forever the right the as detail I with for world? get baseline, that's regarding you're relative regarding that further morning, right. that a sure expecting pandemic, into got and think towards business. store performance, impact new was customers how to to the I something, stores is that or now you thanks and can that to clearly, I the post-vaccine growth signs the the of side the and want Good them But to factors there's A, it of then make are got continue you I same-store roughly how double-digit this into brought Shawn, post-testing, far. in you customers And make clarify said you want

Shawn Guertin

bit start about back Michelle on sort you give and talk first, Karen are of let some And But going I'll customer the little have the $X.XX, me Yes. acquisition. insight, the or you and to a correct. Yes. I'll

at way it of to about plus retail side. a we've of fee one we OTC this or in relatively most sort pressure on we're minus of testing, And organization, the the had $X.XX line. for $X.XX between including it's year, was the and COVID is, about HCB effect In fourth vaccine expectations. the getting the almost quarter, think sitting neutral the for and came consistent of and been when with the So in HCB in the that looked revenue

diagnostic having really from to a neutral a the gone And kind stream But from decrease the seen right. I kind we've OTC year, revenue in mean, I be XXXX, item contributor and customer the all XX% during quarter. obviously, about have you're we of significantly. this being vaccine itself of of the what in testing So new acquisition. will testing and fourth manifesting call

increased itself basket more We in stores, a prescriptions traffic that's some and have instances. seen in sizes in lot and manifesting the more

excellent to some momentum definitely beyond that an question that which it's we're do I think of But to have momentum. kind continue line we direct the built sort how is maintain we on, COVID here. work product going of So

Michelle Peluso

loyalty add things. I perspective, Shawn, just three would a from And

First, important has strong. everybody and great overall comes testing we've seen is, vaccines on satisfaction extremely for working through the And the most we've sure making that been who a is door thing experience.

do in our Secondly, digital loyalty of to using they finally, seeing then next vaccines programs digital best we actions, their see code, take strong other and this many things back critical. vaccine so are that these their customers. to the And from drive these customers QR we're to like, adoption adoption, get like come record need potentially

up see mention, is people Karen When CarePass year-over-year. engagement. over XX% we become members, CarePass incremental heard You

And loyalty so it's build critical new as you amongst our customers. retention and many

Shawn Guertin

Yes. And XX% have I might let and Michael, meant $X.XX. clarify, just me I said

be I about. was I but clear, was It that think to clear. $X.XX abundantly was talking just

Operator

And with we'll ahead. Cowen. next our Please take Charles question from Rhyee go

Charles Rhyee

Thanks for question. the taking

just here in XX-K about the working maybe And thoughts of your you give company's the the on and the DOJ. sort touch disclosed CID. sort broad of currently? on if Just stance with kind been you've I wanted to could opioids of know But

Karen Lynch

want Shawn, that one. grab to do you

Shawn Guertin

of course. Yeah, yeah,

similar all it's our along. think So very to is here stance been where I

system We not fill fundamental pharmacists Our not these market rely written is necessary. legitimate position health care on prescriptions doctors did these. manufacture to pharmacists. prescriptions by does doctors, are that were or that the deeming And

we on liability at that, point, – sort will based and in there damages. play interest we we in company's if the recent our not on think we was our and in I'll position. and Ohio, we And like convicted it's ruling resolve the that, lot firmly to decision early – a So there's very only, court matters, that of But remind pretty appellate will. still on this But court strongly with a that we the disagree look in it's to interest any forward out remain review of you and litigation, to case.

Susie Lisa

Next question, Ashley.

Operator

from go Please We'll Kevin our Caliendo next with take question ahead. UBS.

Kevin Caliendo

question. for Thanks Great. taking my

you the are your another you how – how might would surge a year impact fourth business, part And/or it of the this COVID year? contemplating have a hospital? weren't – for that drug would care do there's the assume impact vaccine, given you doesn't guidance the different earlier but the said benefits new no how the keeps You of COVID retail booster think people health that expecting surge shot, later a cadence business? or we if out or And potential

Shawn Guertin

Yes.

And But it that have Kevin, which navigate different. again, So have – we the later little sort whether these Delta in of of bit two large in to forecasting that and surges in have us largely all or allowed a Omicron. directions remind are I'd have them – had a these surge to business been we not, opposite have businesses successfully. be we everybody move tended year,

now actually second hypothetical, say, example, cadence very lot volume, the more the have we right So the if half is for of vaccine year. I that the would earnings assumption but overall of don't bit are XXXX, of front It's earnings our – of with right little a a all we in than half to year. the similar now in

did that that But the on booster, sort we obviously, or if a even something retail there side. would have if if certainly be pick offset would up that the there that or fourth of lift side. testing more some was the was on of HCB So activity,

a lot the to performances of been these businesses are we've frankly, because parts, the of fortunate sort the moving there surge. of in face surges of of the navigate both but So the of opposite two kind

Kevin Caliendo

Thanks.

Operator

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

A.J. Rice

a ask there's about lot mandate testing. discussion Hi, forth. at-home about the might for so commercial insurers of thought Obviously, everybody. I that the been cover I to and

the bit side. the dealing of retail strategy network, You're you and you've of can seen modest that the on of in different be would lot what sort flavor the you network, how you're on guess, retail on got potentially on then for in saying a first little your guidance, I'm have you've at-home ways as side with Do benefit January. side Can on as that your cover testing? benefits beyond the much continued comment growth. And a the participate year-to-year of quarter? side you well I out assuming really maybe that give that

Shawn Guertin

test half can have A.J., the I talk and first forecast, quarter. in now, year first third to about because in I'm here, meaningful all volume quarter Michelle a is almost most quarter in didn't the of the – funny we of volume volume of side. fourth in little right start any and really The or Karen, first our is OTC But are the other the the forecast. happy sort certainly, on until and year-over-year the the the have the comparisons

conversely, it think, forecasting an that for front-end think will back-end great insurance from play the are awful the I is coverage loaded chain area is the the hopefully supply right that example the the a make is where of we of out our have informed this this issues. something now. pieces moving think see there's of of example pretty was more lot that good So in full Obviously, and year. lot that pretty an XXXX. test here be view government, QX This I of also dynamics benefit, But whether free a forecast, loaded And in challenges. there's moving on a I largely a around,

Karen Lynch

we how of when could it about Dan and testing the see benefits, And way COVID the what thinking could spread help necessary, more minimize A.J., think the just earlier we're coverage doing today. to we're about therapeutics to the drive let me fewer it's and disease you on of diagnosis. kind Relative to and And is comment ask lead hospitalizations. actually

Dan Finke

have convenient plays I that really the way. Karen. access really mean Thanks, priority in top Yes. members into supply to been a our tests our Obviously, to has ensure this.

retail that can solution looking we access, to And bring broad sure members. our for we're using making we're be network so partners are our on, have as out with even digital working early convenient at our that very opportunities. But members closely into more play our convenient more

Karen Lynch

comment on. And I'll maybe have Michelle Yeah.

we our digitally have oriented, is strategy strategy. to new become we're We working on -- of are -- and digital a part

was So maybe what that. share in Michelle,

Michelle Peluso

Karen. thing, Sure

test vaccine and we’ll and what more a consumers, be great best figure for solution, the store believe with did next be free. our up information, come stores and up and will for can -- online, we near kits we them. stores the consumers like Just immediately testing, the their week that to the enter out Pick be launching pick experience aim adjudicated in is provide really

digital will our be an for So incredibly customers. smooth it experience

we're that So excited to week. next launch

A.J. Rice

a Thanks great. Okay, lot.

Operator

ahead. And Baxter next our Stephen will Fargo. Wells take from we go question Please with

Your line is open.

Stephen Baxter

a trending Hi, you of That there? about release, us you a Thanks. an big positions on day. thinking virtual that the quarter from the open have, staffing through number wanted the ask career during out you many market your labor strategy mentioned on hired today, to associates Obviously, thanks. turnover staffing workforce. and puts you how headlines you're challenges And your relative side. for in to how the labor latest seems is the and pretty some update like there. XX,XXX give I you Hopefully, thinking play your size how that can where on for

Karen Lynch

we the throughout been hiring might were a As a focus. And you we country. market, talent as Omicron And pharmacy get year. as store strengthening the This top labor to hours we and of is some imagine, despite to of immune know, able the maintain sick, strong colleagues significant did and have is workforce very you big across some priority. our weren't we issues our tight our always hours did mentioned, but you have

we labor mentioned wage mind minimum that place that or should the evaluate be see helped we think address more continue us. doing the shortages in Keep that as could to we wage if in that continue that to in has to we minimum there's I put country. I

Next question?

Operator

our take Please ahead. Wolfe. next go We'll Lake with question Justin from

is open. line Your

Justin Lake

Good Thanks. morning.

you're and risk see gave to how little impacts Hoping you're can side. that on us that specific book, Thanks. thinking detail what maybe how with the through can wanted a sure membership run Just on Commercial missed. the bit expecting you Medicaid I more membership redeterminations if have Medicaid might you a follow-up membership. if I'm play out Medicare Advantage number not your I And

Karen Lynch

do Dan, to that? grab Thanks. you want

Dan Finke

Yeah, sure.

strong mentioned we seen and sales. quarter, the in retention those strong I book, first strong retention mean, related really fourth we've to fourth part. take Karen accounts. saw also let So certainly the all, quarter, some In me national of the as Commercial in continuing

little shift pandemic that change overall were in bit there. dynamics expecting, lower due and of a saw to also the force good, which in growth is that's we leading We our that to single-digit

had mentioned momentum. team making sure The focused and sustain season. really that that OEP we Medicare, as far strong on we is really As AEP

growth we're to the is to watching so something deliver last individual we're the following Redeterminations that. our the that then are, Medicaid XXXX. in really really closely. really, it confident double-digit Look, that on ability in relates And as piece. And we're PHE obviously, piece

of be the event, gradual expect be to monitoring closely. working timely quarter, partners that. and then process, appropriate. our reasonable one closely make that's a course, the second continue the occur, state We will that will consider And we'll we'll but to does sure that a through around it's day it that redeterminations and with sort a to states be it think that with when of I work of suspension don't

Justin Lake

going your if to flat in also Medicaid up going slightly of Commercial grow, of offset XXX,XXX or membership kind to decline clear, the Advantage is give maybe guidance, year Advantage, to is members, be the be to Medicare most Medicare is going to think, decline growth to just for in is I But and year-over-year? that or take,

Dan Finke

play. component known will of That redetermination that's the on recall mostly had Medicaid. well. books in at we It coming also as large the off group focused is But a Yeah. Medicaid be

Justin Lake

Thanks. Great.

Operator

question from take Percher Please Research. Nephron go Eric with our next We'll ahead.

Eric Percher

are? the the In Thank back offset of XQ, have store? Raskin did store, in either up to store providing to relative or needs in store. the a back how the related is stop a you. you flexibility Eric view ramp ramp some of from And desire to that Percher the and down And Josh ramp tests? labor maybe the more pharmacist a in see what back as require of labor services to here, do of of and the decline of by question the to the Omicron vaccine change you you a in expectations

Karen Lynch

Go ahead, Prem.

Prem Shah

Thanks, Prem. a question. This Eric. great Yeah. is It's

grow taking we're saw a efficiencies say vaccination stress, we question a about So in pharmacy to is We say I creating One so of very the bit or absolutely really be down. and store. obviously led your quickly would The things. three come has the that back about little of doing is, part of out around how Omicron, would duplicative work then of are what is thinking focused, right? our digitally consumer-led, what assets I volumes think lot and you would if challenging,

be also value assets that very, but store. say, the of experience also back pharmacy at leverage digital-first in of how look a care that store say back what I'd January. in in to efficiencies and at the that And and -- we you customer those across of our and high creating, we're the December a the when can to and stores in I'd across to deliver stores consumers, we back is way for efficiencies creating able the definitely what absorb is were look So store continuing in able our

a stores to looking opportunity we see come. efficiencies. absolutely large maximize So our there of at fleet that, there's And our to with more tremendous really

Eric Percher

Thank you.

Susie Lisa

question, last please. One

Operator

from our take final go Rich Sachs. with Nathan ahead. Goldman we'll Certainly, question Please

Nathan Rich

if the back care could maybe to your primary comments Great. I on Karen, Thank you. go strategy.

about we these You about that a way physical talked as Thank connect do for look Health for internally, think scale integrating the that strategy? about business? the to to have. Is this best into you externally of the to think point strategy something platform as look could you. capabilities you And have see you care starting or this assets this you to you'd develop kind primary digital the as CVS that

Karen Lynch

question, that for Nathan. Thanks

not driver. I of the digital necessarily part a is the it's think strategy

continuity you have have of think experience it's the care, to you when important of the about I connections. digital think connectivity seamless the care, those

And strategy. we continue like do things we what that will that part externally as internally at opportunities and there to at will So be and think what versus look our we we're are today. tech about target overall of looking can that stacks companies

to the I'm going So wrap-up call.

So for us all, joining first thank you all today. of

And powerful and As financial and strong across businesses momentum our of we across our was we XXXX businesses. by performance said, with growth our strategy. strong all all XXXX very very really progress are into on entering marked good

thank today. So our for joining you call

Operator

Fourth CVS Health this does Year today's Call conclude Webcast. Quarter you. Thank and XXXX Full And and Earnings

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

CVS Health (CVS) 9 Feb 222021 Q4 Earnings call transcript