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15
2013 Annual Report
Dear Fellow Shareholders:
The U.S. health care landscape is currently undergoing its most transformative change in
decades, due in large part to the implementation of the Affordable Care Act (ACA). More than
30 million Americans are expected to gain health care coverage by 2018, with enrollment
expansion occurring primarily through Medicare, Medicaid, and the public exchanges. Health
care consumers are taking on greater responsibility for choosing their own plans and con-
trolling costs – what we’re calling the “retailization” of health care. In this environment, payors
and physicians are increasingly looking for new ways to improve the health care value equation.
As a pharmacy innovation company, CVS Caremark has
the unique combination of ability and agility needed to
capitalize on these changing market dynamics. Our PBM
business serves more than 63 million plan members and
has strong positions in the rapidly growing Medicare,
Medicaid, and specialty pharmacy markets. Through
our 7,600 retail pharmacies, we engage directly with
more than five million customers daily. We also operate
the nation’s largest retail medical care clinic, with 800
MinuteClinic® locations. The combination of these
assets allows us to offer innovative and cost-effective
solutions that enhance access to care and deliver better
health outcomes to our clients and customers – all while
we gain a greater share of their pharmacy and health
care spend.
Integrated pharmacy health care model is driving
significant shareholder value
This letter will expand on these and other topics shortly.
First, I want to share some highlights of our outstanding
results in 2013. They reflect our ongoing focus on the
three pillars that we consider keys to enhancing value
for CVS Caremark shareholders:
• Driving productive, long-term growth;
• Generating significant free cash flow; and
• Optimizing capital allocation.
Net revenues for the year increased 3 percent to a
record $127 billion, while adjusted earnings per share
from continuing operations rose 23 percent to $4.00.
We achieved solid growth enterprise-wide, gaining share
in claims dispensed and managed.
CVS Caremark dispensed more than 80 percent of
prescriptions with generic drugs in 2013, thereby
lowering costs for patients and payors while driving
greater profitability. Despite an unprecedented level of
brand-to-generic conversions in 2012 and 2013, we
still anticipate significant new generic introductions over
the next few years. We recently announced an exciting
LARRY J. MERLO
President and Chief Executive Officer