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CVS Caremark (CVS)
Q3 2012 Earnings Call
November 06, 2012 8:30 am ET
Nancy Christal - Senior Vice President of Investor Relations
Larry J. Merlo - Chief Executive Officer, President, Director and Member of Executive Committee
David M. Denton - Chief Financial Officer and Executive Vice President
Mark S. Cosby - Executive Vice President and President of CVS Pharmacy
Previous Statements by CVS
» CVS Caremark's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» CVS Caremark's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» CVS Caremark's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Per G. H. Lofberg - Executive Vice President
Deborah L. Weinswig - Citigroup Inc, Research Division
Lisa C. Gill - JP Morgan Chase & Co, Research Division
John Heinbockel - Guggenheim Securities, LLC, Research Division
Ross Muken - ISI Group Inc., Research Division
Meredith Adler - Barclays Capital, Research Division
Thomas Gallucci - Lazard Capital Markets LLC, Research Division
Scott Andrew Mushkin - Jefferies & Company, Inc., Research Division
Steven Valiquette - UBS Investment Bank, Research Division
Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter CVS Caremark Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded Tuesday, November 6, 2012. I would now like to turn the conference over to Ms. Nancy Christal, Senior Vice President, Investor Relations. Please go ahead.
Thank you, Silvanna. Good morning, everyone, and thanks for joining us today. I'm here with Larry Merlo, President and CEO, who will provide a business update; and Dave Denton, Executive Vice President and CFO, who will review our financials. Per Lofberg, Executive Vice President of CVS Caremark; Jon Roberts, President of Caremark; and Mark Cosby, President of CVS/pharmacy, are also with us today and will participate in the question and answer session following our prepared remarks.
[Operator Instructions] I have a couple of quick reminders today. First, we'll host our 2012 Analyst Day on the morning of Thursday, December 13 in New York City. At that time, we'll provide 2013 guidance, as well as a comprehensive update on our growth strategy. In addition to Larry, Dave, Per, Jon and Mark, you'll also have the opportunity to hear from Dr. Troy Brennan, our Executive Vice President and Chief Medical Officer; and Dr. Andy Sussman, our President of MinuteClinic and Associate Chief Medical Officer. If you haven't received an invitation and would like to attend, please contact my office. Expect a big crowd, and look forward to seeing many of you there. For those of you who can't attend in person, the meeting will, of course, be webcast.
Second, we posted a slide presentation on our website this morning, which summarizes the information on this call, as well as key facts and figures around our operating performance and guidance. I recommend that you take a look at the slides. Additionally, please note that we plan to file our Form 10-Q before the close of business today, and it will be available through our website at that time.
During this call, we'll discuss some non-GAAP financial measures in talking about our company’s performance, namely free cash flow, EBITDA and adjusted EPS. In accordance with SEC regulations, you can find the definitions of the non-GAAP items I mentioned, as well as the reconciliations to comparable GAAP measures, on the Investor Relations portion of our website. And as always, today's call is being simulcast on our website, and it will be archived there following the call for 1 year.
Now before we continue, our attorneys have asked me to read the Safe Harbor statement. During this presentation, we'll make certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. Accordingly, for these forward-looking statements, we claim the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We strongly recommend that you become familiar with the specific risks and uncertainties that are described in the Risk Factors section of our most recently filed annual report on Form 10-K and that you review the section entitled Cautionary Statement Concerning Forward-Looking Statements in our most recently filed quarterly report on Form 10-Q.
And now I'll turn this over to Larry Merlo.
Larry J. Merlo
Okay, thank you, Nancy. Good morning, everyone, and thanks for joining us today. As Nancy said, we have our Analyst Day coming up next month. So our business update this morning will be a bit more compact than what you typically hear on our quarterly call.
Now that said, we're very pleased with the strong third quarter results we announced today. Adjusted earnings per share from continuing operations were $0.85. That's up 21% from the same quarter last year and $0.02 above the high end of our guidance. Results were strong across the enterprise. Operating profit in our Retail segment was up 16.1%, within the expected range, while operating profit in our PBM was up 19.4%, well ahead of our expectations.
Now in addition to posting strong third quarter results, we're raising and narrowing our guidance for the full year. We now expect to achieve adjusted EPS for 2012 in the range of $3.38 to $3.41. That's up from our previous range of $3.32 to $3.38. Our revised guidance reflects the overperformance in the third quarter along with the anticipated $0.01 per share benefit from the accelerated share repurchase program announced in September.
Additionally, it reflects our optimism about exceeding our initial goal related to the Walgreens-Express dispute. For year end, we now expect to retain at least 60% of the scripts we picked up during the impasse. So obviously, we're very pleased with the continued upward trend in our expectations. And Dave will provide the details of our third quarter results, as well as guidance for the fourth quarter during his financial review.