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CVS Caremark Provides Strong Growth Outlook For 2013 And Beyond, Announces 38%Dividend Increase And Outlines Strategic Growth Framework

Stocks in this article: CVS

WOONSOCKET, R.I., Dec. 13, 2012 /PRNewswire/ --

2013 Guidance:

  • Adjusted EPS expected to be in the range of $3.84 to $3.98, up 13% to 17%
  • GAAP diluted EPS from continuing operations expected to be in the range of $3.59 to $3.73
  • Free cash flow expected to be between $4.8 billion and $5.1 billion
  • Cash from operations expected to be between $6.4 billion and $6.6 billion
  • Expect to complete $4 billion in share repurchases

(Logo: http://photos.prnewswire.com/prnh/20090226/NE75914LOGO)

At its annual Analyst Day in New York City today, CVS Caremark (NYSE:CVS) outlined its strategic growth framework, which leverages the company's unique suite of assets to provide unmatched solutions to today's health care challenges.  Company executives provided an in-depth review of CVS Caremark's strategies to drive long-term growth and enhance shareholder value.  The company also provided 2013 guidance, highlighting a healthy outlook for growth across the enterprise.

"Going into 2012, we set challenging, yet achievable, financial targets and I am pleased to report that we outperformed those expectations. Earnings per share and cash flow are expected to be solidly ahead of our initial plan," said Larry J. Merlo, president and chief executive officer of CVS Caremark. "These strong results set the stage for continued enterprise growth in 2013 and beyond."

Guidance At the meeting, Dave Denton, executive vice president and chief financial officer, reaffirmed the company's guidance for 2012 and outlined CVS Caremark's guidance for 2013.  The company expects to deliver adjusted diluted earnings per share from continuing operations of $3.84 to $3.98 in 2013, an increase of 13.25% to 17.25%, and GAAP diluted earnings per share from continuing operations of $3.59 to $3.73 per share.  The company also expects to generate substantial free cash flow of $4.8 billion to $5.1 billion in 2013, and cash from operations of $6.4 billion to $6.6 billion in 2013.  This guidance assumes the completion of $4 billion in share repurchases during 2013. The guidance does not include the anticipated benefit from the company's recent debt tender and refinancing, which is expected to result in annual EPS accretion of approximately two cents due to the reduction of interest expense going forward.  Denton also expressed confidence in the company's ability to achieve the steady state earnings growth targets established in late 2010, for 2011 through 2015.

Dividend Increase The company also announced that its board of directors has approved an increase in its quarterly dividend of approximately 38%, to $0.225 per share on the common stock of the company, payable February 4, 2013, to holders of record on January 24, 2013. This increase translates into an annual rate of 90 cents per share, up 25 cents per share from the previous annual rate of 65 cents.

"The board's decision to increase the dividend by 38% reflects our strong performance and outlook as well as our very significant cash generation capabilities," stated Denton. "In late 2010, we set a dividend payout ratio target of 25% to 30% by 2015, which implied a compounded dividend growth rate of approximately 25% per year from 2010.  Today's increase allows us to meet our 25% dividend payout ratio target two years early and marks our tenth consecutive year of dividend increases. We remain committed to using our free cash flow to enhance total returns for our shareholders through a combination of high-return investments, dividend increases and value-enhancing share repurchases."

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