CVS 2010 Annual Report Download - page 46

Management’s Discussion and Analysis of
Financial Condition and Results of Operations
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 utilizations trends, the number of covered lives and the financial health of
our PBM clients. Further, interest rate fluctuations, changes in capital market conditions and regulatory changes may affect our
ability to obtain necessary financing 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 anticipated long-term strategic benefits from our integrated pharmacy services model;
• Our ability to realize the planned benefits associated with the pending acquisition of UAC’s Medicare Part D business in
accordance with the expected timing;
• The continued efforts of health maintenance organizations, managed care organizations, pharmacy benefit 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;
• Risks related to the frequency and rate of the introduction of generic drugs and brand name prescription products;
• The effect on our Pharmacy Services business of a declining margin environment attributable to increased competition in the
pharmacy benefit 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 and
to earn and retain retail network “differential” or “spread”;
• Risks regarding the impact of the Medicare prescription drug benefit on our business;
• Risks related to the change in industry pricing benchmarks that could adversely affect our financial performance;
• Increased competition from other drugstore chains, supermarkets, discount retailers, membership clubs and Internet
companies, as well as changes in consumer preferences or loyalties;
• Risks related to PPACA and other health care reform laws and the regulations promulgated under those laws;
• Litigation, legislative and regulatory risks associated with our business or the retail pharmacy business, retail clinic operations
and/or pharmacy benefit 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 pharmaceutical industry that may be conducted by any governmental
authority; and
• Other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission.
The foregoing list is not exhaustive. There can be no assurance that the Company has correctly identified 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, financial condition and results of operations.
For these reasons, you are cautioned not to place undue reliance on the Company’s forward-looking statements.
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CVS Caremark 2010 Annual Report