CVS 2008 Annual Report Download - page 40

36 CVS CAREMARK
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
events or developments that the Company expects or anticipates
will occur in the future, including statements relating to revenue
growth, earnings or earnings per common share growth, free
cash fl ow, debt ratings, inventory levels, inventory turn and loss
rates, store development, relocations and new market entries,
as well as statements expressing optimism or pessimism about
future operating results or events, are forward-looking statements
within the meaning of the Reform Act.
The forward-looking statements are and will be based upon
management’s then-current views and assumptions regarding
future events and operating performance, and are applicable only
as of the dates of such statements. The Company undertakes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise.
By their nature, all forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those
contemplated by the forward-looking statements for a number
of reasons, including, but not limited to:
• Our business is affected by the economy in general including
changes in consumer purchasing power, preferences and/or
spending patterns. These changes could affect drug utiliza-
tions trends, the number of covered lives and the fi nancial
health of our PBM clients. Further, interest rate fl uctuations
and changes in capital market conditions may affect our ability
to obtain necessary fi nancing on acceptable terms, our ability
to secure suitable store locations under acceptable terms and
our ability to execute future sale-leaseback transactions under
acceptable terms;
• Our ability to realize the incremental revenues, synergies
and other benefi ts from the Caremark Merger as expected in
accordance with the expected timing;
• Our ability to successfully integrate the assets acquired in the
Longs Acquisition and realize the synergies and other planned
benefi ts in accordance with the expected timing;
• The continued efforts of health maintenance organizations,
managed care organizations, pharmacy benefi t management
companies and other third party payors to reduce prescription
drug costs and pharmacy reimbursement rates, particularly with
respect to generic pharmaceuticals;
• The possibility of client loss and/or the failure to win new
client business;
• The frequency and rate of introduction of successful new
prescription drugs as well as generic alternatives to existing
brand drugs;
• The effect on our Pharmacy Services business of a declining
margin environment attributable to increased competition in the
pharmacy benefi t management industry and increased client
demands for lower prices, enhanced service offerings and/or
higher service levels;
• Risks related to our inability to earn and retain purchase
discounts and/or rebates from pharmaceutical manufacturers
at current levels;
• Risks regarding the impact of the Medicare prescription drug
benefi t on our business;
• Risks related to the change in industry pricing benchmarks
that could adversely affect our fi nancial performance;
• Increased competition from other drugstore chains, super-
markets, discount retailers, membership clubs and Internet
companies, as well as changes in consumer preferences
or loyalties;
• Litigation, legislative and regulatory risks associated with our
business or the retail pharmacy business, retail clinic operations
and/or pharmacy benefi t management industry generally;
• The risks relating to changes in laws and regulations, including
changes in accounting standards and taxation requirements
(including tax rate changes, new tax laws and revised tax law
interpretations);
• The risks relating to adverse developments in the health care
or pharmaceutical industry generally, including, but not limited
to, developments in any investigation related to the pharma-
ceutical industry that may be conducted by any governmental
authority; and
• Other risks and uncertainties detailed from time to time in our
fi lings with the Securities and Exchange Commission.
The foregoing list is not exhaustive. There can be no assurance
that the Company has correctly identifi ed and appropriately
assessed all factors affecting its business. Additional risks and
uncertainties not presently known to the Company or that it
currently believes to be immaterial also may adversely impact the
Company. Should any risks and uncertainties develop into actual
events, these developments could have material adverse effects
on the Company’s business, fi nancial condition and results of
operations. For these reasons, you are cautioned not to place
undue reliance on the Company’s forward-looking statements.