Q4 2021 CVS Health Corp Earnings Call

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Ladies and gentlemen, good morning, and welcome to the Cvs Health fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow Cvs Health's prepared remarks at which point, we will review instructions on how to ask your.

Speaker 2: Ladies and gentlemen, good morning and welcome to the CVS Health fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow CVS Health prepared remarks at which point we will review instructions on how to ask your questions. As a reminder, today's conference is being recorded. I would now like to turn the call over to Suzy Lisa, Senior Vice President of Investor Relations for CVS Health. Please go ahead.

<unk> as a reminder, today's conference is being recorded I would now like to turn the call over to Susie Lisa <unk> Senior Vice President of Investor Relations for Cvs Health. Please go ahead.

Thank you and good morning, everyone welcome to the Cvs Health fourth quarter and full year 2021 earnings call I'm Susie Lisa <unk> Senior Vice President of Investor Relations for Cvs Health I'm joined this morning by Karen Lynch, President and Chief Executive Officer, and Sean Girton, Executive Vice President and Chief Financial Officer following.

Speaker 3: Thank you and good morning everyone. Welcome to the CVS Health fourth quarter and full year 2021 earnings call. I'm Suzy Lisa, Senior Vice President of Investor Relations for CVS Health. I'm joined this morning by Karen Lynch, President and Chief Executive Officer. And Sean Gertin, Executive Vice President and Chief Financial Officer.

Speaker 3: Following our prepared remarks, we will host a question and answer session that will include Alan Lotvin, President, Pharmacy Services, Dan Finke, President, Health Care Benefits, Michelle Peluso, Chief Customer Officer, and Prem Shah, Chief Pharmacy Officer, both Co-Presidents of the Retail Segment, and John Roberts, Chief Operating Officer.

Our prepared remarks, we will host a question and answer session that will include Allen Latvian President Pharmacy services, Dan <unk>, President and health care benefits Michel Police Chief customer Officer, and <unk> Shah Chief Pharmacy Officer, both co presidents of the retail segment and Jon Roberts Chief operating officer.

Our press release and slide presentation have been posted to our website along with our Form 10-K that we filed with the SEC. This morning. During this call we will make certain forward looking statements, reflecting our current views related to our future financial performance future events industry and market conditions as well as the expected consumer benefits of our products and services.

Speaker 3: Our press release and slide presentation have been posted to our website. Along with our Form 10K that we filed with the SEC this morning.

Speaker 3: During this call, we will make certain forward-looking statements reflecting our current views related to our future financial performance, future events, industry and market conditions, as well as the expected consumer benefits of our products and services and our financial projections.

And our financial projections are forward looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from what may be indicated in them. We strongly encourage you to review the information in the reports we filed with the SEC regarding these risks and uncertainties in particular those that are described in the cautionary statement concerning.

Speaker 3: Our forward looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from what may be indicated in them.

Speaker 3: We strongly encourage you to review the information in the reports we file with the SEC regarding these risks and uncertainties. In particular, those that are described in the cautionary statement concerning forward-looking statements and risk factors section in this morning's earnings press release and included in our Form 10-K .

Forward looking statements and risk factors section in this morning's earnings press release and included in our Form 10-K .

During this call we will use non-GAAP financial measures when talking about the company's performance and financial condition in accordance with FCC regulations. You can find a reconciliation of these non-GAAP measures to the comparable GAAP measures in this morning's earnings press release and the reconciliation document posted on the Investor relations portion of our website.

Speaker 3: During this call, we will use non- GAAP financial measures when talking about the company's performance and financial condition. In accordance with SEC regulations, you can find a reconciliation of these non- GAAP measures to the comparable GAAP measures . In this morning's earnings press release and the reconciliation document posted on the investor relations portion of our website.

Speaker 3: Today's call is being broadcast on our website where it will be archived for 1 year. Now I'd like to turn the call over to Karen. Thank you, Suzy. Good morning everyone and thank you for joining our call today.

Today's call is being broadcast on our website, where it will be archived for one year now I'd like to turn the call over to Karen. Thank you Susie good morning, everyone and thank you for joining our call today.

2021 was an important year for Cvs health, we exceeded our financial goals, we advanced our strategy and we brought greater value to the people we serve playing a critical role in the nation's pandemic response.

Speaker 3: 2021 was an important year for CVS Health. We exceeded our financial goals. We advanced our strategy, and we brought greater value to the people we serve, playing a critical role in the nation's pandemic response.

Speaker 3: We ended a strong 2021 with another strong quarter. We exceeded our adjusted EPS expectations for the fourth quarter in a row, delivering $1.98 adjusted EPS in the final quarter of 2021 and $8.40 adjusted EPS for the full year.

We ended a strong 2021 with another strong quarter, we exceeded our adjusted EPS expectations for the fourth quarter in a row delivering $1.98 cents adjusted EPS in the final quarter of 2021 and $8 40, adjusted EPS for the full year we are.

Speaker 3: We are entering 2022 with powerful momentum. We are delivering healthcare solutions that are personalized, connected, and increasingly digital. We are engaging millions of consumers across our businesses and in our community health destinations across America. CVS Health is becoming a bigger part of their everyday health.

Entering 2022 with powerful momentum we are delivering health care solutions that are personalized connected and increasingly digital we are engaging millions of consumers across our businesses and in our community health destinations across America.

<unk> is becoming a bigger part of their everyday health.

Turning now to our performance for the full year 2021, Cvs Health grew adjusted revenue by eight 8% to $292 billion. We delivered adjusted operating income of $17 3 billion up eight 1% year over year.

Speaker 3: Turning now to our performance. For the full year 2021, CVS Health grew adjusted revenue by 8.8% to $292 billion. We delivered adjusted operating income of $17.3 billion of 8.1% year over year. And we increased adjusted earnings per share by 12%.

And we increased adjusted earnings per share by 12%.

Speaker 3: We generated strong cash flow from operations of nearly $18.3 billion for the full year exceeding our most recent guidance of at least $13.5 billion.

Generated strong cash flow from operations of nearly $18 $3 billion for the full year exceeding our most recent guidance of at least $13 $5 billion.

Speaker 3: This strong performance positions us well for 2022. At this early stage of the year, we are maintaining our full year 2022 adjusted earnings per share guidance of $8.10 to $8.30.

This strong performance positions us well for 2022 at this early stage of the year, we are maintaining our full year 2022 adjusted earnings per share guidance of $8 10 to $8 30.

Speaker 3: Our forecast reflects increased volume from COVID testing and front store sales in our retail business relative to our forecast at Investor Day.

Our forecast reflects increase volume from Covid testing and front store sales in our retail business relative to our forecast at Investor day.

Speaker 3: Offset by the accelerated timing of vaccine boosters pulled into the fourth quarter of 2021.

<unk> by the accelerated timing of vaccine booster pulled into the fourth quarter of 2021, Sean will provide more details on our results and guidance shortly.

Speaker 3: Sean will provide more details on our results and guidance shortly.

Our 2021 performance demonstrates our ability to anticipate deliver and exceed consumers' expectations for health care.

Speaker 3: Our 2021 performance demonstrates our ability to anticipate, deliver, and exceed consumers' expectations for healthcare. Consumers are a major force driving change in healthcare, and we continue to engage successfully with individuals in more places and on their terms, virtually in the home and in their local community.

Consumers are a major force driving change in health care and we continue to engage successfully with individuals in more places and on their terms virtually in the home and in their local community.

Speaker 3: Customers and clients continue to realize the superior value we are providing with our integrated health solutions, particularly those that address the most prevalent, costly, and complex health conditions, such as diabetes, cancer, and chronic kidney disease.

Customers and clients continue to realize the superior value, we are providing with our integrated health solutions, particularly those that address the most prevalent costly and complex health conditions, such as diabetes cancer and chronic kidney disease.

Turning to the segment highlights.

Speaker 3: In healthcare benefits, we delivered 9.4% adjusted revenue growth for the full year 2021 driven by our performance in government services.

And health care benefits, we delivered nine 4% adjusted revenue growth for the full year 2021, driven by our performance in government services.

We had another strong year of Medicare growth with increases across all product lines total Medicare advantage membership grew at nine 8% on a year over year basis as we added over 265000, new members in 2021 and exceeded our initial growth expectations.

Speaker 3: We had another strong year of Medicare growth with increases across all product lines.

Speaker 3: Total Medicare Advantage membership grew at 9.8% on a year-over-year basis. As we added over 265,000 new members in 2021 and exceeded our initial growth expectation.

As a result of our strategic focus on dual eligible special needs plan enrollment nearly doubled in 2021.

Speaker 3: As a result of our strategic focus on dual eligible special needs plans, enrollment nearly doubled in 2021.

Speaker 3: Our full year medical benefit ratio of 85% was in line with our guidance expectation.

Our full year medical benefit ratio of 85% was in line with our guidance expectations.

For the full year 2021, the utilization of total health care services in aggregate was in line with normalized historical baseline level.

Speaker 3: For the full year 2021, the utilization of total healthcare services in aggregate was in line with normalized historical baseline level.

Turning to 2022.

Speaker 3: We had an impressive annual enrollment period in our Medicare business. For the second consecutive year, we grew all Medicare product lines, and our growth rates this year exceed the industry averages in all categories. We grew total Medicare Advantage membership by 11.6% versus the prior year, reflecting increases in individual and group Medicare Advantage of over 15% and 6% respectively year over year.

We had an impressive annual enrollment period in our Medicare business for the second consecutive year, we grew all Medicare product lines and our growth rates this year exceed the industry averages in all categories.

We grew total Medicare advantage membership by 11, 6% versus the prior year, reflecting increases in individual and group Medicare advantage of over 15% and 6% respectively year over year.

Speaker 3: We also led the industry an absolute Medicare PDP net membership growth. This added nearly 295,000 net new members, while the overall PDP market continues to decline.

We also led the industry in absolute Medicare PDP net membership growth. This added nearly 295000 net new members, while the overall PDP market continues to decline.

We had a solid 2022 selling season and our national accounts commercial business, we expect to grow membership in the low single digits for the full year and maintain strong client retention of 96%.

Speaker 3: We had a solid 2022 selling season in our national accounts commercial business. We expect to grow membership in the low single digits for the full year and maintain strong client retention of 96%. Our success is driven by the combination of our competitive cost structure, our integrated benefit designs, including medical and pharmacy.

Our success is driven by the combination of our competitive cost structure, our integrated benefit designs, including medical and pharmacy.

Speaker 3: and products and services that utilize CVS health capabilities, such as transform care diabetes and virtual primary care programs.

And products and services that utilize Cvs health capabilities, such as transform care diabetes and virtual primary care program.

Speaker 3: Membership enrollment was lower than expected in the eight ACA individual exchanges we entered this year. We continue to build this business gradually with select geographic expansion, a focus price discipline, and the appeal of co-branded at NACBS Health offerings. Consistent with our prior guidance, we do not expect this offering to contribute materially to our financial result in 2022.

Membership enrolment was lower than expected and the eight AC a individual exchanges. We entered this year. We continue to build this business gradually with select geographic expansion, a focused price discipline and the appeal of co branded Aetna Cvs health offerings.

Distant with our prior guidance, we do not expect this offering to contribute materially to our financial results in 2022.

Overall, our deep understanding of consumer needs and innovative product portfolio and our service excellence will drive growth in our health care benefits segment.

Speaker 3: Overall, our deep understanding of consumer needs, innovative product portfolio, and our service excellence will drive growth in our healthcare benefits segment.

Speaker 3: Our comprehensive range of products and benefit design that address consumers' whole health needs remains a key differentiator and fueled a strong selling seat.

Our comprehensive range of products and benefit design that address consumers whole health needs.

<unk> is a key differentiator and fueled a strong selling season.

Speaker 3: For 2022, we forecast seven to nine percent revenue growth and 15 to 17 percent adjusted operating income growth.

For 2022, we forecast, 7% to 9% revenue growth and 15% to 17% adjusted operating income growth.

Turning to pharmacy services, we delivered seven 8% revenue.

Speaker 3: Turning to Pharmacy Services, we delivered 7.8% revenue.

And 26% adjusted operating income growth in 2021 week.

Speaker 3: and 20.6% adjusted operating income growth in 2021. We continue to be a consultative partner to our clients and members. We're delivering industry-leading cost trends and savings, service excellence, and a broad product portfolio, and a commitment to transparent.

We continue to be a consultative partner to our clients and members.

We're delivering industry, leading cost trends in savings service excellence, and a broad product portfolio and a commitment to transparency.

We consistently create value for our customers and clients with our better than market drug trend, we continue to enhance our utilization programs to ensure access to the therapeutics that are the most clinically appropriate.

Speaker 3: We consistently create value for our customers and clients with our better than market drug trend. We continue to enhance our utilization programs to ensure access to therapeutics that are the most clinically appropriate.

Speaker 3: For 2022, we achieved a client retention rate of over 98 percent and drove $8.8 billion of net new business revenue.

For 2022, we achieved a client retention rate of over 98% and drove $8.8 billion of net new business revenue.

We are a leader in specialty pharmacy, delivering revenue growth of 12, 3% for the fourth quarter and nine 3% for the full year versus prior period or specialty pharmacy programs drive value in the marketplace and they differentiate us.

Speaker 3: We are a leader in specialty pharmacy, delivering revenue growth of 12.3% for the fourth quarter and 9.3% for the full year versus prior period. Our specialty pharmacy programs drive value in the marketplace and they differentiate us as we pair programs with digital capabilities to deliver a convenient and connected experience.

As we pair programs with digital capabilities to deliver a convenient and connected experience.

For pharmacy services in 2022 we expect 6% to 8% revenue growth and 7% to 9% adjusted operating income growth as we create long term value for our clients and our members.

Speaker 3: For pharmacy services in 2022, we expect 6 to 8% revenue growth and 7 to 9% adjusted operating income growth as we create long-term value for our clients and our members.

Our retail segment plays a critical role as a community health destination for millions of Americans.

Speaker 3: Our retail segment plays a critical role as a community health destination for millions of Americans.

Speaker 3: This segment outperformed the industry and our expectations in 2021. We grew revenue 9.8% year over year to just over $100 billion, marking an important milestone in the history of this CVF Health business. We delivered an exceptional 24% adjusted operating income growth in 2021.

This segment outperformed the industry and our expectations in 2021.

We grew revenue nine 8% year over year to just over $100 billion.

Marking an important milestone in the history of this Cvs health business we.

We delivered an exceptional 24% adjusted operating income growth in 2021.

Pharmacy sales and prescription filled both increased by nearly 9% year over year. This.

Speaker 3: Pharmacy sales and prescriptions filled both increased by nearly 9% year over year. This was notably driven by consumer who came to CVS Health for COVID-19 vaccine administration.

This was notably driven by consumers, who came to Cvs health for COVID-19 vaccine administration.

For the full year 2021, Cvs health administered more than 32 million COVID-19 tests and.

Speaker 3: For the full year 2021, CBS Health administered more than 32 million COVID-19 tests and more than 59 million vaccines.

And more than 59 million vaccines.

Speaker 3: Over 35% of COVID-19 vaccines in 2021 were administered during the fourth quarter.

Over 35% of COVID-19 vaccines in 2021 were administered during the fourth quarter.

Speaker 3: Our work to test and vaccinate America for COVID is a powerful example of the relationships we are building with consumers, which leads to new customers seeking a range of other health services at CVSL.

Our work to test and Vaccinate America for Covid is a powerful example of the relationships we're building with consumers, which leads to new customers seeking a range of other health services at C. B S L.

Speaker 3: Front-store sales growth was strong throughout 2021, up 8.4% versus the prior year.

Front store sales growth was strong throughout 2021 up eight 4% versus the prior year.

Speaker 3: They were led by consumer demand for the over-the-counter COVID-19 tests, as well as cost and cold, beauty, and personal care products.

They were led by consumer demand for the over the counter COVID-19 tests as well as cough and cold beauty and personal care products.

Speaker 3: We sold over 22 million OTC COVID-19 tests with approximately 70% of sales in the-

We sold over $22 million OTC, COVID-19 tests with approximately 70% of sale.

In the fourth quarter.

Speaker 3: We are progressing on optimizing our retail portfolio and pivoting our stores into three formats, primary care clinics, enhanced health hubs, and traditional CVS pharmacy locations.

We're progressing on optimizing our retail portfolio and pivoting our stores into three formats.

Mary care clinics enhanced health hubs and traditional Cvs pharmacy location.

Speaker 3: We are executing our plan to de-densify stores based on consumer health and buying needs, omnichannel preferences, and shifts in the U.S. population.

We are executing our plan to deep densify stores based on consumer health and buying needs omni channel preferences and shifts in the U S population.

Speaker 3: For 2022, as I mentioned, given the earnings out performance and pull forward of vaccine boosters in 2021, we are maintaining our 2022 guidance.

For 2022, as I mentioned, given the earnings outperformance and pull forward of vaccine boosters in 2020 . One we are maintaining our 2022 guidance.

Speaker 3: This now implies retail revenue to the plus or minus 1% versus prior year and a low 20% decline in adjusted operating income growth. Sean will provide more details.

This now implies retail revenue to be plus or minus 1% versus prior year.

And a low 20% decline in adjusted operating income growth, Sean will provide more detail.

Speaker 3: Our digital approach is focused on delivering a superior experience for consumers by creating a more connected and seamless health journey. We are making progress towards setting a new standard for digital health care for consumers.

Our digital approach is focused on delivering a superior experience for consumers by creating a more connected and seamless health journey.

We are making progress towards setting a new standard for digital health care for consumers.

Speaker 3: CVS.com is one of the top health websites with over two billion visits in 2021, up nearly 55% over the prior year. Our digital capabilities for health interactions such as COVID testing and vaccines, prescription services, and sales of health and wellness products have dramatically increased consumer engagement across all CVS health businesses.

C. B S. Dot com is one of the top health websites with over 2 billion visits in 2021 up nearly 55% over the prior year, our digital capabilities for health interactions such as Covid testing and vaccines prescription services and sales of health and wellness products have dramatically.

Increased consumer engagement across all Cvs health businesses.

Speaker 3: We now serve 40 million customers digitally, up approximately 10% in the last six months alone.

We now serve 40 million customers digitally.

Approximately 10% in the last six months alone.

Speaker 3: In 2021, we launched several new digital health services powered by advanced analytics to personalize the experience. We made it easier to join our CarePass program reaching 5.6 million subscribers in the quarter. Up more than 40% year over year. We integrated CarePass for our ethnic commercial members and are excited about the adoption we are seeing.

2021 .

We launched several new digital health services powered by advanced analytics to personalize the experience we made it easier to join our care path program, reaching $5 6 million subscribers in the quarter.

Up more than 40% year over year.

We integrated care path for Aetna commercial members and are excited about the adoption we are seeing.

We also simplifies the care pass enrollment for all consumers, which is driving more growth in subscribers.

Speaker 3: We also simplify the care pass enrollment for all consumers, which is driving more growth in subscribers. For our health hub and minute clinic patients, we simplified and digitized the check-in process for patients. Our self-service digital tool enables individuals to complete traditional paperwork in advance of their appointment. Almost 80% of patients are already utilizing this capability.

For our health hub and minute clinic patient, we simplified and digitized the check in process for patients our self service digital tool enables individuals to complete traditional paperwork in advance of their appointment.

80% of patients are already utilizing this capability.

At our Investor Day, we promised a superior health care experience for consumers that will improve health outcomes lower costs and provide broader access to care.

Speaker 3: At our investor day, we promised a superior healthcare experience for consumers that will improve health outcomes, lower costs, and provide broader access to care. We are making several moves to realize our vision for healthcare. We're advancing our care delivery capabilities, optimizing our retail portfolio, and further diversifying the health products and services that we offer.

We are making several moves to realize our vision for health care, we are advancing our care delivery capabilities optimizing our retail portfolio and further diversifying the health products and services that we offer.

We're driving this evolution, both through internal initiatives and by seeking to execute capability focused M&A for complementary health services.

Speaker 3: We're driving this evolution both through internal initiatives and by seeking to execute capability-focused M&A for complimentary health services. We will connect consumers in more places, in more ways, and on their terms with our digital first technology forward approach, as well as an enhanced omnichannel health experience. These strategic moves will accelerate the growth of our foundational business.

We will connect consumers and more places in more ways and on and on their terms with our digital first technology forward approach as well as an enhanced omni channel health experience.

These strategic moves will accelerate the growth of our foundational businesses.

Speaker 3: In all this work, we will place the consumer at the center of all that we do.

All of this work we will place the consumer at the center of all that we do.

We remain focused on delivering on our commitment to sustainability for our shareholders our customers and our communities. We recently launched Cvs Health zone aimed to advanced health equity and to address social determinants of health and high risk communities, we are collaborating with trusted national and local.

Speaker 3: We remain focused on delivering on our commitment to sustainability for our shareholders, our customers and our communities.

Speaker 3: We recently launched CVS health zones aimed to advance health equity and to address social determinants of health in high risk communities. We are collaborating with trusted national and local organizations to confront the sixth key social determinants of health through local investments. Our goal is to equip communities with the resources needed to close gaps in care for specific health conditions such as diabetes and heart disease.

Stations to confront the six key social determinants of health through local investments.

Our goal is to equip communities with the resources needed to close gaps in care for specific health conditions, such as diabetes and heart disease telephones is now active in five geographies with additional markets planned in 2022.

Speaker 3: Health zones is now active in five geographies with additional markets planned in 2022.

We remain committed to the environment and have pledged to reduce our overall impact cutting greenhouse gas emissions across our operations and supply chain and decreasing resource consumption, especially paper and plastic.

Speaker 3: We remain committed to the environment and have pledged to reduce our overall impact, cutting greenhouse gas emissions across our operations and supply chain, and decreasing resource consumption, especially paper and pet plants.

Speaker 3: In December , CVS Health was named to the 2021 S&P Dow Jones Sustainability North American Index for the ninth consecutive year, and the Dow Jones Sustainability World Index for the third consecutive year.

In December Cvs health was named to the 2021 S&P Dow Jones sustainability, North American index for the ninth consecutive year and the Dow Jones sustainability World Index.

Third consecutive year.

Speaker 3: Our financial performance, execution, portfolio of assets, and differentiated strategy all create strong momentum into 2022 and a clear pathway to achieve low double digit adjusted EPS growth over time.

Our financial performance.

Execution portfolio of assets and differentiate the strategy all create strong momentum into 2022 and.

And a clear pathway to achieve low double digit adjusted EPS growth over time.

I would also like to take a moment to recognize the continued contribution of our colleagues.

Speaker 3: I would also like to take a moment to recognize the continued contribution of our colleagues.

Speaker 3: who have played a vital role in helping our nation prevail over the pandemic.

Who have played a vital role in helping our nation prevail over the pandemic.

Speaker 3: I am proud of what we have done and are doing every day to make a difference. With that, let me turn it over to Sean.

I am proud of what we have done and are doing every day to make a difference with that let me turn it over to Sean.

Speaker 4: Thank you, Karen, and good morning, everyone. Our fourth quarter results reflect the continuation of the strong performance delivered in the first three quarters of the year. As we once again exceeded our expectations for revenue, cash flow, and adjusted earnings per share.

Thank you Karen and good morning, everyone.

Our fourth quarter results reflect the continuation of the strong performance delivered in the first three quarters of the year as we once again exceeded our expectations for revenue cash flow and adjusted earnings per share.

Speaker 4: We maintained our focus on growth, operational execution, and supporting the communities we serve as the effects of the pandemic persists. This continues with equal 220-800 survey

We maintained our focus on growth operational execution.

Supporting the communities, we serve as the effects of the pandemic persists.

Starting with the enterprise as a whole.

Speaker 4: Total fourth quarter adjusted revenues of $76.6 billion increased by 10.6% year-over-year.

Total fourth quarter adjusted revenues of $76 6 billion increased by 10, 6% year over year.

We reported adjusted operating income of $4 1 billion.

Speaker 4: We reported adjusted operating income of 4.1 billion and adjusted EPS for the dollar and 98 cents.

Adjusted EPS of $1.98 representing.

Speaker 4: representing an increase of 40.8% in 52.3% versus prior year respect.

Representing an increase of 48% and 52, 3% versus prior year respectively.

For full year 2021, we reported total adjusted revenues of $293 1 billion.

Speaker 4: For full year 2021, we reported total adjusted revenues of 292.1 billion, an increase of 8.8% versus prior year, reflecting robust growth across all businesses.

An increase of eight 8% versus prior year, reflecting robust growth across all business segments.

We delivered adjusted operating income of $17 3 billion and adjusted earnings per share of eight boarded.

Speaker 4: We delivered adjusted operating income of 17.3 billion and adjusted earnings per share of 840.

Speaker 4: approximately 8.1% in 12% year-over-year respect.

Approximately eight 1% and 12% year over year, respectively.

Speaker 4: and we generated significant cash flow from operations of nearly 18.3 billion.

And we generated significant cash flow from operations of nearly $18 3 billion.

Speaker 4: This marks a record year of cash flow from operations for CBS Health and reflects the strength of our financial results, accelerated collections, and focused improvements in our working capital position.

This marks a record year of cash flow from operations for Cvs health and.

The strength of our financial results accelerated collections and focused improvements in our working capital position.

Turning to the health care benefits segment.

Fourth quarter adjusted revenue of $20 7 billion increased by 10, 1% year over year.

Speaker 4: Fourth quarter adjusted revenue of 20.7 billion increased by 10.1% year over year driven by membership growth and our government services business and lower COVID-19 related investments slightly offset by the repeal of the health insurance.

By membership growth in our government services business and lower COVID-19 related investments slightly offset by the repeal of the health insurer fee.

Adjusted operating income of $510 million grew by over 230% year over year.

Speaker 4: adjusted operating income of 510 million grew by over 230% year over year.

Speaker 4: driven by lower COVID-19 related investments and improved underlying performance.

Driven by lower COVID-19 related investments.

The improved underlying performance, partially offset by higher COVID-19 related medical costs compared to prior year.

Speaker 4: partially offset by higher COVID-related medical costs compared to prior year.

Our adjusted medical benefit ratio of 87% improved 130 basis points year over year, driven by lower COVID-19 related investments.

Speaker 4: Our adjusted medical benefit ratio of 87% improved 130 basis points year over year driven by lower COVID-19 related investments. Partially offset by the.

Partially offset by the repeal of the health insurer fee.

As a result of the omicron Varian, we experienced higher COVID-19 testing and treatment costs in the fourth quarter, but this was largely offset by lower non COVID-19 costs, particularly in Medicare and Medicaid.

Speaker 4: As a result of the Omicron variant, we experienced higher COVID testing and treatment costs than the fourth quarter, but this was largely offset by lower non-COVID costs, particularly in Medicare and Medicare.

Days claims payable at the end of the quarter was 49.

Speaker 4: Dave claims payable at the end of the quarter was 49. And was, as expected, lower than the third quarter and consistent with normal seasonal trends and historic levels.

As expected lower than the third quarter, and consistent with normal seasonal trends and historic levels.

Speaker 4: Overall, we remain confident in the adequacy of our research.

Overall, we remain confident in the adequacy of our reserves.

Speaker 4: In the pharmacy services segment, fourth quarter revenues of 39.3 billion increased by 8.2% year over year, driven by increased pharmacy claims volume, growth and specialty pharmacy, and brand inflation.

In the pharmacy services segment fourth quarter revenues of $39 3 billion increased by eight 2% year over year.

Driven by increased pharmacy claims volume.

Growth in specialty pharmacy and brand inflation.

Partially offset by the impact of continued client price improvements.

Speaker 4: partially offset by the impact of continued client price.

Speaker 4: Total pharmacy membership increased by approximately 400,000 lives sequentially. Reflecting sustained growth.

Total pharmacy membership increased by approximately 400000 lives sequentially.

Reflecting sustained growth and government programs.

Speaker 4: Total pharmacy claims process increased by 8.2% above prior year.

Total pharmacy claims processed increased by eight 2% above prior year.

Speaker 4: Approximately half of this growth was attributable to net new business in 21. With COVID-19 vaccine administration and new therapy for descriptions also contributing to the year over year growth.

Approximately half of this growth was attributable to net new business in 'twenty one.

The COVID-19 vaccine administration, a new therapy prescriptions also contributing to the year over year growth.

Speaker 4: Adjusted operating income of 1.8 billion grew 16.8% year over year.

Adjusted operating income of $1 8 billion grew 16, 8% year over year.

Speaker 4: given by improved purchasing economics, reflecting the products and services of our group purchasing organization, and growth in specialty pharmacies.

Driven by improved purchasing economics, reflecting the products and services of our group purchasing organization and growth in specialty pharmacy.

The quarter also reflected additional investments to support the successful welcome season.

Speaker 4: The report also reflected additional investments to support a successful welcome.

And our retail long term care segment, we delivered exceptional revenue and adjusted operating income growth versus prior year and once again exceeded our expectations.

Speaker 4: In our retail long-term care segment, we delivered exceptional revenue and adjusted operating income growth versus prior year. And once again, exceeded our expectations.

Speaker 4: Fourth quarter revenue of 27.1 billion was up by 12.7% year over year, representing an increase.

Fourth quarter revenue of $27 1 billion was up by 12, 7% year over year.

Representing an increase of 3 billion.

There are two main components to this increase one.

Speaker 4: There are two main components to this increase. One, approximately 60% was driven by the administration of COVID-19 vaccine testing.

Proximately, 60% was driven by the administration of COVID-19 vaccines and testing.

Speaker 4: on store sales, including demand for over-the-counter COVID test kits and related treatment categories, as well as strong COVID-related prescription bites.

Comp store sales, including demand for over the counter Covid test kits and related treatment categories as well as strong COVID-19 related prescription volume.

The remaining 40% was attributable to a combination of underlying sustained pharmacy growth and broad strength in front store sales trends.

Speaker 4: The remaining 40% was attributable to a combination of underlying sustained pharmacy growth in broad strength and front-store sales trends, partially offset by continued pharmacy reimbursement pressure.

Actually offset by continued pharmacy reimbursement pressure.

Speaker 4: This strong revenue growth helped produce adjusted operating income of 2.5

This strong revenue growth helped produce adjusted operating income of $2 5 billion.

Speaker 4: This quarterly result was 38% above prior year, and significantly exceeded our forecast.

This quarterly result was 38% above prior year and significantly exceeded our forecast.

Speaker 4: increase in adjusted operating income was driven by a few key components. The administration of COVID.

The increase in adjusted operating income was driven by a few key components.

The administration of COVID-19 vaccines.

Speaker 4: Underlying strength and pharmacy and front store sales.

Underlying strength in pharmacy and front store sales.

Speaker 4: and a $106 million game from an antitrust legal settlement.

And a $106 million gain from an antitrust legal settlement.

Which were partially offset by the combined impacts.

Speaker 4: which were partially offset by the combined impacts of ongoing but stable reimbursement pressure and business investments, including the minimum wage increase and store improvement.

Ongoing but stable reimbursement pressure.

And business investments, including the minimum wage increase and store improvements.

In terms of the improved performance in the quarter versus our expectations. There are two primary components.

Speaker 4: In terms of the improved performance in the quarter versus our expectations, there are two primary components.

Speaker 4: Approximately 75% was driven by vaccine.

Approximately 75% was driven by vaccines.

Speaker 4: largely third dose boosters, which we previously expected to impact the first quarter of 2022.

Largely third dose boosters, which we previously expected to impact the first quarter of 2022.

Speaker 4: And the remaining 25% was driven by the nationwide surge in demand for over the counter in diagnostic COVID-19 tests.

And.

The remaining 25% was driven by the nationwide surge in demand for over the counter and diagnostic COVID-19 testing.

Speaker 4: Combined with stronger underlying front-store sales performance.

Bind with stronger underlying front store sales performance.

Looking at cash flow and the balance sheet.

Speaker 4: Are the quidities in capital position remain strong at the end of the fourth quarter?

Our liquidity and capital position remains strong at the end of the fourth quarter.

Speaker 4: with full year cash flow from operations of nearly 18.3 billion and non-restricted cash of over 3.8 billion.

With full year cash flow from operations of nearly $18 3 billion.

And nonrestricted cash of over $3 8 billion.

Through our proactive liability management transaction in December we paid down $2 3 billion in long term debt in the quarter.

Speaker 4: Through our proactive liability management transaction in December , we paid down 2.3 billion in long-term debt in the quarter.

Speaker 4: Bringing the total long-term debt we have repaid since the close of the ethnic transaction to a net total of $21 billion.

The total long term debt, we have repaid since the close of the Aetna transaction to a net total of $21 billion.

In addition, we returned over $2 6 billion to shareholders through our quarterly dividends in 2021.

Speaker 4: In addition, we returned over 2.6 billion to shareholders through our quarterly dividends in 2021.

Speaker 4: Our consistent outperformance during 2021 provides solid momentum as we head into this.

Our consistent outperformance during 2021 provides solid momentum as we head into this year.

Speaker 4: Setting the stage for our continued strong outlook in 2022, despite multiple COVID unknowns that remain challenging to predict, such as additional variant.

I think the stage for our continued strong outlook in 2022.

<unk> multiple COVID-19 unknowns that remains challenging to predict.

Such as additional variance.

Speaker 4: vaccine and testing protocols and government testing.

<unk> seen in testing protocols and government testing initiatives.

Speaker 4: As Karen noted earlier, we are maintaining our full year adjusted earnings for share guidance range of $8.10 to $8.30.

As Karen noted earlier, we are maintaining our full year adjusted earnings per share guidance range of $8 10 to $8 30.

We feel this is an appropriate stance at this early point in the year, especially given the earnings outperformance of retail in Q4 was due largely to the pull forward a third dose vaccine administration from 2022 into 2021.

Speaker 4: We feel this is an appropriate stance at this early point in the year, especially given the earnings outperformance of retail in Q4, which do largely to the pull forward of third dose vaccine administration from 2022 into 2021.

Speaker 4: This represents 2 to 5% growth versus a revised 2021 adjusted earnings per share baseline of $7.92.

This represents 2% to 5% growth versus our revised 2021 adjusted earnings per share baseline of $7 92.

As you think about the adjusted earnings per share baseline and year over year growth I'd like to encourage you to keep a few things in mind.

Speaker 4: As you think about the adjusted earnings for share baseline and year over year growth, I'd like to encourage you to keep a few things in mind.

Speaker 4: First, recall that our 2021 baseline of $7.92 removes items we do not forecast.

First recall that our 2021 baseline of $7 92.

Removes items, we do not forecast.

Speaker 4: Prior years development, net of profits returned to customers and net realized capital gains.

Prior year's development net of profits returned to customers.

Net realized capital gains.

It also includes the annualized impact of our investment and our colleagues through an increase in minimum wage.

Speaker 4: It also includes the annualized impact of our investment and our colleagues through an increase in minimum wage.

Second it is also important to note that the baseline now includes a net favorable component attributable to COVID-19, driven by vaccines and testing of approximately <unk> 30 per share.

Speaker 4: Second, it is also important to note that the baseline now includes a net favorable component attributable to COVID-19 driven by vaccines and testing of approximately 30 cents per share.

Cvs Health continues to help lead the nation's COVID-19 pandemic response.

Speaker 4: The VDS Health continues to help lead the nation's COVID-19 pandemic response.

Speaker 4: clearly demonstrating the power of our integrated business model, consumer engagement, and local community health destination.

Clearly demonstrating the power of our integrated business model consumer engagement.

And local community health destinations.

While there is no change to our retail segment guidance I would like to provide more detail on our COVID-19 retail volume assumptions for 2022.

Speaker 4: While there is no change to our retail segment guidance, I would like to provide more detail on our COVID-19 retail volume assumptions for 2022.

We expect that COVID-19 testing.

Speaker 4: We expect that COVID-19 testing both in-store diagnostic and over the counter will continue at higher volumes and anticipate it at investor day offset by a reduced outlook on back.

In store diagnostic and over the counter will continue at higher volumes than anticipated at Investor day.

Offset by a reduced outlook on vaccines.

In 2022, we expect the vaccine volumes to decline approximately 70% to 80%.

Speaker 4: In 2022, we expect vaccine volumes to decline approximately 70 to 80 percent.

Speaker 4: and in-store diagnoses testing volumes to decline 40 to 50% compared to 2021.

And in store diagnostic testing volumes declined 40% to 50% compared to 2021.

Speaker 4: But over the counter test kits, we expect modest full year volume growth versus 2021.

For over the counter test kits, we expect modest full year volume growth versus 2021.

Relative to vaccines, our outlook does not assume any impact from the administration of a fourth COVID-19 booster.

Speaker 4: Relative vaccines are out looked does not assume any impact from the administration of a fourth COVID-19 boost.

Speaker 4: As such, we expect the contribution of COVID-19 vaccines to be more heavily weighted to the first half of the year.

As such we expect the contribution of COVID-19 vaccines to be more heavily weighted to the first half of the year.

Speaker 4: As I mentioned, the impact of COVID-19 remains one of the most challenging aspects of developing our guidance due to many factors, including the risk of additional surges, potential new testing or vaccine protocols, legislative changes, and OTC test kit dynamics, such as supply challenges, coverage mandates, and government initiatives.

As I mentioned the impact of COVID-19 remains one of the most challenging aspects of developing our guidance due to many factors, including the risk of additional surges.

Potential new testing our vaccine protocols.

Just latest changes.

OTC test kit dynamics, such as supply challenges coverage mandates and government initiatives.

Speaker 4: You will find additional details regarding our updated guidance in the slide presentation. We posted to our website this morning.

You will find additional details regarding our updated guidance in the slide presentation, we posted to our website. This morning.

Speaker 4: Turning to items that are below adjusted operating income on our income statement, we expect our interest expense for 2022 to be approximately $2.3 billion.

Turning to items that are below adjusted operating income on our income statement, we expect our interest expense for 2020 to be approximately $2 3 billion.

We are purchasing shares to offset dilution and as a result, we expect that diluted share count to be approximately flat versus 2021.

Speaker 4: We are purchasing shares to offset delusion. And as a result, we expect that deluded share count to be approximately flat versus 2021.

Speaker 4: Our expectation for the effective income tax rate is approximately 25.6% consistent with 2021.

Our expectation for the effective income tax rate is approximately 25, 6% consistent with 2021.

In terms of cash flow and capital deployment, we anticipate continued strong cash flow from operations in 2022.

Speaker 4: In terms of cash flow and capital deployment, we anticipate continued strong cash flow from operations in 2022.

Speaker 4: And we are updating our guidance range to 12 to 13 billion, reflecting the improved cash flow results for 2021.

And we are updating our guidance range to 12% to $13 billion, reflecting the improved cash flow results for 2021.

Capital expenditures are expected to be in the range of $2 $8 billion to $3 billion as we invest in technology and digital enhancements to improve the consumer experience as well as our community locations.

Speaker 4: Capital expenditures are expected to be in the range of 2.8 to 3 billion as we invest in technology in digital enhancements to improve the consumer experience as well as our community location.

As we detailed in December we remain committed to maintaining our investment grade ratings, while also having the flexibility to deploy capital strategically for capability focused M&A.

Speaker 4: As we detailed in December , we remain committed to maintaining our investment grade ratings, while also having the flexibility to deploy capital strategically for capability-focused M&M.

To conclude.

Speaker 4: The strong 2021 performance of CVSL is expected to carry into 2022 as we continue to execute our strategy.

Our strong 2021 performance of Cvs health is expected to carry into 2022 as we continue to execute our strategy.

Speaker 4: We have solidified our leadership role in healthcare delivery as a trusted partner to our consumers and their community.

We have solidified our leadership role in health care delivery as a trusted partner to our consumers and their communities.

As we build upon this trust, we will continue to drive meaningful improvements.

Speaker 4: As we build upon this trust, we will continue to drive meaningful improvements that lower the cost of care, improve access, and build engagement and convenience, ultimately enabling people to live healthier lives. We will now open the call.

Lower the cost of care improve.

To improve access and building engagement and convenience ultimately enabling people to live healthier lives.

We will now open the call to your questions.

The writer.

And at this time, if you wish to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue by pressing the pound key in the interest of time, we ask that you. Please limit yourself to one question and one quick follow up we'll take our first question from Lisa Gill with Jpmorgan. Please go ahead.

Speaker 2: And at this time, if you wish to ask a question, please press star one on your telephone keypad. You may remove yourself from the key by pressing the pound key. In the interest of time, we ask you please limit yourself to one question and one quick follow-up. We'll take our first question from Lisa Gill with JP Morgan. Please go ahead.

Speaker 5: Thanks very much. Good morning and thanks for all the detail. Karen, I just want to go back to the comment that you made about how to think about the stores in the future. Primary care, health hub and hands and traditional. How do I think about the breakdown between each of those? And then secondly, you talked about making incremental acquisitions around healthcare services.

Very much good morning, and thanks for all the detail I am Karen I just wanted to go back to the comment that you made about.

How to think about the stores in the future primary care health hub enhanced and traditional how do we think about the breakdown between each of those and then secondly, you talked about making incremental acquisitions around health care services.

Speaker 5: Do you need to buy physicians to make the primary care clinics work? And how do I think about the other enhanced services that you'll bring to the overall CVS offering?

Do you need to by physicians to make the primary care clinics work and how do we think about the other enhanced services that you bring to the overall CBS offering.

Speaker 3: Good morning Lisa. So let me just start with the three you

Hi, Good morning, Lisa So let me just start with the three.

Speaker 3: parts of the retail portfolio. As we said, we'll have primary care clinics, which would serve as a quarterback and serve as the patient's primary care medical home.

Parts of the retail portfolio as we said, we'll have primary care clinics, which would serve as a quarterback and serve as the patient's primary care medical home.

Speaker 3: And our health hubs, the way you should think about health hubs is they'll extend kind of the primary care for specific lower risk use cases, which will allow us to extend, you know, the patient panel size with the primary care and obviously lower cost. The health hubs will also serve as that extender in virtual care. And our pharmacies will leverage kind of the existing touch points to provide the ancillary and complementary services like next best actions and medication and here it's programs.

And our health hubs. The way you should think about health hub is they'll extend kind of the primary care for specific lower risk use cases, which will allow us to expand the patient panel size with the with the primary care and obviously lower cost the health hubs will also serve as that extender in verge.

<unk> care and our pharmacies will leverage kind of the existing touch points to provide the ancillary and complementary services like next best actions, then medication adherence programs and then you'd have the third ring, which would just be your typical Cvs pharmacy. So if you think about we will have differ.

Speaker 3: and then you'd have the third ring, which would just be your typical CVS pharmacy. So if you think about, you know, we'll have a differentiated experience where we have the primary care clinics, we'll have coordinated assets, we'll bring the breadth of services, we'll connect.

<unk> experience, where we have the primary care clinics will have coordinated assets will bring the breath of services will connect through a single digital ecosystem and then we will have kind of and we'll invest in making sure that we're connecting the patient data the provider workflows.

Speaker 3: through a single digital ecosystem. And then we'll have kind of, and we'll invest in making sure that we're connecting the patient data, the provider workflows that digital front end, so that we'll have a, you know, seamless patient and provider experience. That's the goal. Now, you mentioned, we meant it on a yesterday, Lisa, that, you know, we would look at M&A activity to supplement our primary care services. You know, we will, we are, you know, continuing to evaluate our options there. And when we have more to talk about on that front, we'll be sure to share that with you.

That digital front end, so that will have a.

Seamless patient and provider experience. That's the goal now you mentioned, we mentioned at Investor Day, Lisa that we would look at M&A activity to supplement our primary care services. Yeah. We will we are continuing to evaluate our options there and when we have more to talk about on that front will be.

Sure to share that with you.

Speaker 5: Karen, can you just when we think about the three, and you think about the number of pharmacies, is there a way to put a number around them as far as like a third of them be primary care clinics, half of them? Is there any number that you've put around the number of these in each bucket?

Kevin can you just when we think about the three and you think about the number of pharmacies is there a way to put a number around them as far as like a third of them be primary care clinics half of them.

Is there any number that you put around the number of beef in each bucket.

Speaker 3: Yeah, I wouldn't specifically focus on a number. What we're really focusing on is, you know, how do we have coverage? And if you think about our health hubs and minute clinics today, we actually have coverage of 45% of the US, a little bit over 45% of the US population. So we would want, and we'd want to have good, strong coverage for our Etna and our Care Mark Health Plan customers as well. So I look at it as coverage, not necessarily number.

Yeah, I wouldn't specifically focus on a number what we're really focusing in on is how do we have coverage and if you think about our health hubs a minute clinics today, we actually have coverage of 45% of the you a little bit over 45% of the U S. Population. So we would want and we'd want to have good strong coverage for our aetna.

And our Caremark health plan customers as well so I look at it as coverage not necessarily numbers.

Okay, great. Thank you.

Speaker 2: We'll take our next questions from Lance Wilkes with burnt team. Please go ahead. Your line is open.

We will take our next question from Lance Wilkes with Bernstein. Please go ahead. Your line is open.

Speaker 6: Yeah, good morning. Kind of a related question on the primary care strategy and overall how you integrate that in with Aetna. What's interested in what sorts of patient types, and I'm thinking about like segments such as Medicare, Medicaid and employer, you'd be more focused on for the primary care, and if that helps you to define what sorts of capabilities you're looking to add and or targets. Thanks.

Hey, good morning.

Kind of a related question on the primary care strategy and overall, how you integrate that in with Aetna was interested in what sorts of patient types. So I'm thinking about like segments, such as Medicare Medicaid and employer you'd be more focused on for the primary care and if that helps you to define what sorts of capable.

<unk> you are looking to add or targets. Thanks.

Speaker 3: Hi Lance, good morning. I'll start now, Sean, to supplement here. You know, what we said was we would look, you know, obviously Medicare is our largest growth driver. We've been very successful, as I mentioned, to you with our growth. That is a, you know, a growth engine for the company. So we would be focused on that, but not, you know, primarily obviously these clinics would serve a variety of different patients and we would build them out. So we would have the opportunity to support other members with our, with those primary care clinics. And let me ask Sean to add here.

Hi, Lance good morning, I'll start and I'll ask Sean to supplement here.

What we said was we would look obviously Medicare is our largest growth driver we've been very successful as I mentioned.

With our growth that is.

A growth engine for the company. So we would be focused on that but not primarily obviously these clinics would serve a variety of different patients and we would build them out so.

We would have the opportunity to support other members with our with those primary care clinics, and let me ask Sean to adhere.

Yes, no no Lance I would agree with that I mean, I think that our.

Speaker 4: Yeah, no, Lance, I would agree with that. I mean, I think that our long term aspiration, especially given the size of the company right, is to have sort of broad cross-section.

Our long term aspiration ROE, especially given the size of the company right is to have sort of a broad cross section of customer types, but clearly Medicare is an important business for aetna.

Speaker 4: of customer types. Clearly, Medicare is an important business for Edna. Frankly, the preponderance of chronic conditions in that population, I think, make it a population that would benefit tremendously from the strategy. And obviously, today there's also an economic model that works there. So Medicare is important for a variety of reasons.

Frankly the.

The preponderance of chronic conditions in that population I think make it a population that would benefit tremendously from the strategy and obviously.

Today. There is also an economic model that works there. So Medicare is important for a variety of reasons, but ultimately we would look to serve.

Speaker 4: But ultimately we would look to serve the local communities and the populations that exist. And I think the footprint and the nature of our community assets will flex to serve the local populations. But Medicare is key, but the ultimate aspiration is a broad cross section.

Our local communities and the populations that exist and I think so.

The footprint and the nature of sort of our community assets will flex to serve the local populations, but Medicare is key but the set the ultimate exploration as a broad cross section of customers.

Speaker 6: Should we think of the additional health services if you'd be looking at as also being kind of focused maybe initially more on Medicare like home care and those sorts of areas as potential expansion targets?

Should we think of the <unk>.

Additional health services that you'd be looking at is also being kind of focus maybe initially more on Medicare like home care and those sorts of areas as potential expansion targets.

Speaker 4: Yeah, it's hard to predict the exact order with which things will potentially show. If this is something you decide that you'd rather require than build, but yes, absolutely things that make sense to sort of extend sort of the care continuum, again, particularly to a Medicare population would make a lot of sense. And they'd be high on the list.

Yes, it's hard to predict the exact order with which things will potentially show up if you're if this is something you decide that you would rather acquire the build but yes, absolutely things that makes sense.

So sort of extend sort of the care continuum again, particularly to a Medicare population would make a lot of sense. So that would be high on the list.

Thanks.

Speaker 2: And our next question will come from Matthew Borsch with the MO Capital Markets. Please go ahead.

And our next question will come from Matthew Borsch with BMO capital markets. Please go ahead.

Matt are you there.

Oh, I'm sorry, Mike.

Speaker 7: Oh, I'm sorry, my mute button. I clicked it, but it didn't click. Medicare or Dan, has there been a lot of chaggers you well know about increased competition being an issue for some of the other companies?

I clicked, it but it didn't click.

Medicare advantage has been a lot of chatter as you as you well know about increased competition.

Being an issue for some of the other companies.

Speaker 7: Are you confident in your growth strategy coming into this year, given all that sort of backlash from competitors, and the very impressive growth numbers that you're pointing to to achieve from the open enrollment?

Are you confident in your growth strategy coming into this year.

Given all of that.

Sort of backwash from competitors and the very.

Very impressive growth numbers that you're pointing to the to achieve from the open enrollment.

Speaker 3: Matt, you know, we've had a longstanding growth strategy for Medicare. And I just remind everyone that we have a broad portfolio of Medicare products that isn't just focused on individual. We have group Medicare, our PDP business and MedSup. You know, I, you know, we had a very strong open enrollment period. You know, we attribute that obviously to our strength in our product designs, our stars performance, our products and services, our connections with the broader portfolio of assets that we have. You know, as we look to 2023, clearly, the rate notice is, you know, it was positive. It looked like CMS was, you know, keeping with the stability that will allow us to have, you know, continued flexible benefit designs. So, you know, we're confident, you know, in our strategy, obviously there is a competitive marketplace and we'll continue to play to our strengths and let me ask the NFS, anything you want to add here.

Matt We've had a long standing growth strategy for Medicare and I'd, just remind everyone that we have a broad portfolio of Medicare products that isn't just focus on individually or group Medicare our PDP business and that's.

We had a very strong open enrollment period, we attribute that obviously.

To our strength in our product designs, our stars performance, our products and services our connections with the broader portfolio of assets that we have you know as we look to 2023 clearly the rate notice is you know it was positive it looked like CMS was keeping.

Keeping with the stability that will allow us to have you know continued flexible benefit design. So we're confident in.

In our strategy, obviously, there is a competitive marketplace and will continue to play to our strengths and let me ask Dan if he has anything he wants to add here.

Speaker 8: Thanks, Karen. I think you said it really well. Look, we've been really deliberate around our growth strategy here across the entire portfolio, making sure that we can provide really solid benefits to the senior population, really focused on our footprint coverage, inclusive of our our D-SNIP, and that played out during AEP. And so, like you said, we feel really confident in our growth expectations for 2022.

Thanks, Karen I think you said it really well look we've been really deliberate around our growth strategy here across the entire portfolio, making sure that we can provide really solid benefits for the senior population really focused on our footprint coverage inclusive of our D. SNP and that played out during AEP and so like you said, we feel really confident in our growth expectations for 2022.

Okay. Thank you.

Speaker 2: And we'll take our next question from Steven's Alicate with Barclays. Please go ahead.

And we will take our next question from Steven Valiquette with Barclays. Please go ahead.

Speaker 4: Thanks, good morning. I was also going to ask a question on Medicare. Part of it was the answer, but I guess at a, you know, investor conference last month, you guys touched on your internal distribution capabilities for individual MA. So I'm curious if you're able to provide more color on the mix of how much of your, either the total MA book or just the membership growth in the MA book is driven by the internal sales distribution in marketing capabilities versus the external.

Hi, Thanks. Good morning, I was also going to ask a question on Medicare.

So part of it was answered, but I guess.

Investor Conference last month, you guys touched on your internal distribution capabilities for individual Ma.

I'm curious if you're able just to provide more color on the mix of how much of your total MA book or just the membership growth in the MA book is driven by the internal sales distribution and marketing capabilities versus the external channels. Thanks.

Speaker 3: Yeah, so see we have a number of distribution channels that we rely on for Medicare growth. We have the national distribution, the tele, the tele.

Yeah. So Steve we have a number of distribution channels that we rely on for our Medicare growth clearly.

The national distribution the tail of the Taylor.

Speaker 3: service and our own internal proprietary channel.

Service and our own internal proprietary channel.

We've had we've had pretty good strength across all those channels. Obviously, we continue the other thing we did this year too as we added.

Speaker 3: Obviously, we continue. The other thing we did this year too, is we added resource centers in the CVS health location so that people could get educated on Medicare more broadly. I think what's important to look at is the distribution of the book in Medicare, not necessarily where the current sales are going, because that gives you a sense for the future, the future persistency. We had very strong retention across all of our distribution channels and feel good that we have the right focus on the distribution channels. Coupled with that is our marketing capabilities and what we've done, we continue to do is really gear our marketing capabilities towards growth areas in the markets. And that has served us well, that generated solid growth for us. But let me see if Dan has anything to add here as well. Okay, and I think you said it really well. Look, our strategy is to really use our diversified distribution channels for growth. Digital, our personnel, our partners. We do have a robust internal sales force. And I think that the results really speak to our ability to optimize success across all of those channels. Okay, great. Thanks.

Resource centers in the Cvs health location, so that people could get educated on.

Medicare more broadly I think what's important to look at is the distribution of the book and Medicare not necessarily where the current sales are going because that gives you a sense for kind of the future.

The future persistency, we had very strong retention across all of our distribution channels and feel good that we have the right.

<unk> focus on on the distribution channels, coupled with that is you know our marketing capabilities and what we've done we continue to do is really gear, our marketing capabilities towards growth areas in the in the markets and that has served us well and that generated solid growth for us, but let me see if Dan has anything to add.

Add here as well, Okay, and I think you said it really well look our strategy is to really use our diversified distribution channels for growth digital our personnel. Our partners. We do have a robust internal sales force and I think that the results really speak to our ability to optimize success across all of those channels.

Speaker 4: Okay, great, thanks for that.

Okay, great. Thanks.

Yeah.

Speaker 2: And we'll take our next question from Michael Cherny with Bank of America. Please go ahead. Good morning.

We will take our next question from Michael Cherny with Bank of America. Please go ahead.

Okay.

Good morning, Thanks for all the details so far.

Speaker 9: Sean, I think you said something. I just want to clarify regarding the baseline and that there's roughly 30 cents of COVID related impact that's now in the baseline. A is to make sure you got that right. I got that right. And then B, regarding that and how factors into the store performance.

Sean I think you said something I just want to clarify regarding the baseline that theres roughly 30 cents of Covid related impact because it's now in the baseline as well make sure you got that right.

I got that right and then b regarding that and how that factors into the store performance clearly I don't think anyone is expecting double digit same store growth or.

Speaker 9: Clearly, I would think aiming to expecting double digit same-store growth forever with this business, but as you get further towards, but hopefully, from far side of the pandemic, what are the signs you're seeing relative to the new customers you've run to the stores, and how you can continue to make them customers in a post-testing post-vexing world?

Forever with this business, but as you get further towards but hopefully at the far side of the pandemic.

And are the signs youre seeing relative to the new customers you brought into the stores and how you can continue to make them customers and a close testing post vaccine world.

Yes, let me start on the first and I'll give you. Some insight then I'll have michele or Karen talk a little bit about sort of the customer acquisition, but but going back to the 30 you are correct.

Speaker 9: Yeah, yeah, and I'll let me start on that the first and I'll give you some insight and I'll have Michelle or or Karen talk a little bit about through the customer acquisition but but going back to the 30 cents you are correct.

Speaker 4: So we're most of this year when we've looked at the effect of COVID for the organization, it's been, you know, neutral plus or minus between the pressure and HCB.

So most of this year when we've looked at the effect of Covid for the organization.

Then neutral plus or minus between the pressure on HCV.

Speaker 9: and the, you know, the revenue we're getting on the retail side.

Yes.

The revenue, we're getting on the retail side.

Speaker 9: In the fourth quarter, one way to think about it is we had about a 40 cent B and almost 30 cents of that was sort of sitting in the vaccine and testing, including the OTC line. NHCB came in relatively consistent with expectations.

The fourth quarter.

One way to think about it is we had about a 40 D and almost 30 cents of that was sort of sitting in the vaccine and testing, including the OTC line and HCV came in relatively consistent with expectations. So we.

Speaker 9: We've gone from having this be a neutral item to being about a 30% contributor during the year, all really manifesting itself in the fourth quarter.

We've gone from having this be a neutral items being about 30% contributor.

During the year, all really kind of manifesting itself in the fourth quarter.

And you're right I mean, obviously in 2022, the revenue from the stream of vaccine and diagnostic testing and OTC testing will will decrease significantly.

Speaker 4: And you're right, I mean, obviously in 2022, the revenue from this stream of vaccine and diagnostic testing and OTC testing will decrease significantly. But we have seen what I call new customer acquisition. We have seen a lot more traffic in the stores and that's manifesting itself.

But we have so we have seen kind of in what I'll call new customer acquisition, we have seen a lot more traffic in the stores and that's manifesting itself.

Speaker 4: in more prescriptions and increased basket sizes and some instances. So it's an excellent question that I think we're going to continue to work on, which is how do we maintain that momentum, but we definitely have built some momentum beyond sort of the direct COVID kind of product line here.

And more prescriptions and increased basket sizes in some instances so.

It's an excellent question that I get I think we're going to continue to work on it which is how do we maintain that momentum, but we definitely have built some momentum beyond sort of the direct COVID-19 .

Kind of a product line here.

And Todd I would just add from a loyalty perspective, three things first most important thing we've been working on is making sure that everybody who come through the door has a great experience and we've seen overall satisfaction for vaccines and testing is extremely strong secondly, using this to drive digital adoption. We see many of these customers come back to get their QR code there.

Speaker 3: And Tanau just add from a loyalty perspective, three things. First, the most important thing we've been working on is making sure that everybody who comes to the door has a great experience. And we've seen overall satisfaction for vaccines and testing is extremely strong.

Speaker 3: Secondly, using this to drive digital adoption, we see many of these customers come back to get their QR code, their vaccine record, and then do things like next best actions, potentially other vaccines that they need to take and like so we're seeing strong digital adoption from these customers. And finally, our loyalty programs are critical. You heard Karen mentioned care passes up over 40% year over year. When people become care pass members, we see incremental engagement. And so it's critical to build loyalty retention amongst our many new customers. Getting a zoom similar flu sniff

<unk> seen record and then things like next best actions potentially other vaccines that they need to take and the like so we're seeing strong digital adoption from these customers and finally, our loyalty programs are critical you heard Karen mentioned care passes up over 40% year over year when people become care past members, we see incremental engagement and so it's.

Critical to build loyalty and retention amongst our many new customers.

Yeah.

Yes, Michael.

Speaker 4: Yeah, and Michael's been familiar with this clarify. I might have said 30% that I meant 30% so I think that was clear, but just to be abundantly clear, was 30% so I was talking.

If I might I might have said, 30% 30 <unk> I.

Thanks that was clear, but just to be abundantly clear was 30 I was talking about.

And we'll take our next question from Charles <unk> with Cowen. Please go ahead.

Speaker 2: And we'll pick our next question from Charles Ree with Cohen. Please go ahead.

Thanks for taking my question.

Speaker 10: Thanks for taking a question. You know, just wanted to touch on, you know, in the 10K, it was just closed about the CID. And I know you've been working with the DOJ, but maybe you could just kind of give sort of your broad thoughts on opioids and sort of the company stands here currently.

Just wanted to touch on in the 10-K disclosed about the CIB and I know you've been working with the Doj, but maybe if you could just kind of give sort of your broad thoughts on on opioids.

And sort of the company's stance here currently.

John you want to grab that one.

Speaker 9: Oh, yeah, of course. So I think our stance here is very similar to where it's been all along. Our fundamental position is that these prescriptions were written by doctors, not pharmacists.

Oh, yes, yes of course.

I think our stance here is very similar to where it's been all along.

Our fundamental position is that these prescriptions were written by doctors not pharmacists.

Speaker 9: We did not manufacture or market fees, and the healthcare system does rely on pharmacist to fill legitimate prescriptions that doctors are deemed necessary. So based on that, we strongly disagree with the recent court decision in Ohio, and we look forward to the appellate court review of that case. And I'll remind you there that that was a ruling on liability only not on damages.

We did not manufacturer market.

And the health care system does rely on pharmacists to fill legitimate prescriptions that doctors are gaining necessary. So.

Based on that we strongly disagree with the recent court decision.

The Ohio, and we look forward to the appellate Court review of that case.

Remind you there that.

That was a ruling on liability only not on damages.

Okay.

Speaker 9: And like any litigation, we will, you know, if we think it's in our interest in the company's interest to sort of resolve matters, we will, but at this point, it's still very early and there's a lot to play out. And we remain pretty firmly convicted in our position.

And like any litigation we will.

We think its in our in our interests in the company's interest to sort of resolve matters we will.

But at this point, it's still very early and Theres a lot to play out and we remain pretty.

Pretty firmly convicted in our position.

Okay.

Next question Ashley.

Speaker 2: Next question, Ashley. We'll pick our next question from Kevin Calliendo. Would you be asked, please go ahead.

We will take our next question from Kevin Caliendo with UBS. Please go ahead.

Great. Thanks for taking my question.

Speaker 8: All right, thanks for taking my question. You said earlier you weren't expecting your guidance doesn't assume a fourth booster shot, but are you contemplating another a different or later COVID surge this year? And...

You said earlier, you Werent expecting your guidance doesn't assume a fourth booster shot but are you contemplating another a different or later COVID-19 surge this year end.

Speaker 8: How would that, how do you think a new COVID surge might impact the cadence for the year or the healthcare benefits business given we have a potential drug that keeps people out of the hospital and or if there's no vaccine how it would impact the retail part of the business?

How would that how do you think a new COVID-19 surge might impact the cadence for the year or the health care benefits business, given we have a potential drug that keeps people out of the hospital and or if there is no vaccine how it would impact the retail.

Part of the business.

Speaker 9: Yes, so we are not Kevin forecasting a surge later in the year, a lot, whether it be Delta or Omicron. And again, all of these have been a little bit different, but I'd remind everybody that we have had two business, large businesses that have tended to move in opposite directions.

Yes, so we are not Kevin forecasting.

<unk> later in the year.

Whether it be delta or omicron.

And.

Again, all of these have been a little bit different but I would remind everybody that we have had we have two businesses large businesses that have tended to move in opposite directions.

Speaker 9: in the surges, and which have largely allowed us to sort of navigate them successful.

And the circus and whichever largely allowed us to sort of navigate them.

Access fully.

Speaker 9: So, you know, I would say our overall cadence of earnings right now with that assumption is actually very similar to 21, a little bit more of then half the earnings during the front of the year.

So.

I'd say, our overall cadence of earnings right now with that assumption is actually very similar to <unk> 21, a little bit more than half of the earnings are in the front of the year.

Speaker 9: You know, it's all hypothetical, but you know, if we did, we don't have a lot of vaccine volume, for example, right now in the second half of the year. So if that did pick up, or if there was a fourth booster, or if there was, you know, even more testing activity, you know, that would be certainly something that would sort of lift that on the retail side, but obviously we'd have some of the offset on the HCB side. So.

It's all hypothetical but.

If we don't have a lot of vaccine volume for example, right now in the second half of the year.

So if that did pick up or if there was a fourth booster or if there was even more testing activity.

That would be certainly something that that would sort of lift that on the retail side, but obviously, we have some of the offset.

On the HCP side so.

Speaker 9: You know, there are a lot of moving parts, but we've been fortunate to sort of navigate, frankly, both the surges because of the kind of the opposite performances of these two businesses in the face of the surge.

There are a lot of moving parts.

But but we've been fortunate to sort of navigate frankly, both the surgery because of the kind of the opposite performances of these two businesses in the face of the search.

Okay. Thanks.

We will take our next question from a J Rice with credit Suisse. Please go ahead.

Speaker 2: What's going to be a question from AJ Rice with Credit Tweets? Please go ahead.

Hi, everybody I thought I might ask you about the at home.

Speaker 11: Hi everybody. I thought I might ask about the at-home Testing obviously there's been a lot of discussion about the mandate for commercial insurers to cover that and so forth You're saying in your guidance, I guess you've got modest year-to-year growth

Testing, obviously theres been a lot of discussion about the mandate for commercial insurers to cover that and so forth you are seeing in your guidance I guess, you've got modest year to year growth.

Speaker 11: I'm assuming that a lot of that would be what you're seeing in January . Can you comment on sort of...

Im assuming that a lot of that would be what youre seeing in January can you comment on sort of.

Speaker 11: Beyond the first quarter, you really have much continued at home testing and maybe give a little bit of flavor for your strategy on the retail side as well as on the benefit side, network, out-of-net work, how you're dealing with the different ways that you can potentially cover that on the benefit side and then participate on the retail side.

On the first quarter.

Do you really have much.

Continued at home testing and maybe give a little bit of flavor or your strategy on the retail side as well as on the benefit side network.

No work.

How youre dealing with the different ways that you could potentially cover that on the benefit side and then participate on the retail side.

Okay.

Speaker 9: Yeah, I'm happy to start on the forecast and I can, you know, have Karen and Andorra Michelle sort of talk about the other side, but most of the OTC test volume.

Yes, I'm happy to start on the forecast.

Karen Indoor Michel So, let's talk about the other side, but most of the OTC test volume.

Speaker 9: is in the first quarter right now and the first, certainly, the first half of the year in our forecast. The year over year comparisons are a little funny here because we really didn't have any meaningful volume until the third quarter and almost all the volume is in the fourth quarter. So that was pretty back-end loaded in 21 and conversely our forecast, I think, is it's pretty front-end loaded right now.

As in the first quarter right now and the first certainly the first half of the year in our forecast the year over year comparisons are a little a little funny here, because we really didn't have any meaningful volume until the third quarter and almost all the volume was in the fourth quarter. So.

That was pretty backend loaded in 'twenty, one and Conversely, our forecast I think it's pretty front end loaded right. Now obviously, there's a lot of dynamics here that are that are moving around whether it be the insurance coverage of the benefit the free tests from the government supply chain issues.

Speaker 9: Obviously, there's a lot of dynamics here that are moving around whether it be the insurance coverage of the benefit, the free tests from the government, you know, supply chain issues.

Speaker 9: You know, this is a great example of an area where there's an awful lot of moving pieces that make the forecasting challenges, but You know, I think this is a this is also a good example of something that I think you know, we will largely see play out

This is a great example of an area, where there is an awful lot of moving pieces that make the forecasting challenges.

I think this is also a good example of something that I think we will largely see play out.

Speaker 9: in Q1 and hopefully have a more informed view on this for the full year.

In Q1.

And hopefully have a more informed view on this for the full year.

Speaker 3: And AJ, the kind of way we think about it is more testing could lead to earlier diagnosis. And when it's necessary, you could see COVID therapeutics and help minimize the spread of the disease and drive fewer hospitalizations relative to the benefits. Let me ask Dan to just comment on how we're thinking about coverage and actually what we're doing today.

Yeah, a J the kind of.

The way, we think about it is more testing could lead to earlier diagnosis and when it's necessary you could see COVID-19 therapeutics and help minimize the spread of the disease and drive fewer hospitalizations relative to the benefits. Let me ask Dan to just comment on how we're thinking about coverage and actually what we're doing today, yes.

Speaker 8: Yeah, thanks Karen. I mean, our top priority has really been to ensure that our members have access to the tests in a really convenient way. Obviously supply plays into this. And so early on as we're looking at making sure that our members have access, we're using our broad network opportunities. But we are working very closely with our-

Karen.

Our top priority has really been to ensure that our members have access to the test in a really convenient way obviously supply plays into this and so early on.

As we're looking at making sure that our members have access we are using our broad network opportunities, but we are working very closely with our retail partners to bring more convenient digital solution into play that can be even more convenient for our members and maybe I'll have Michele comment on we are.

Speaker 3: retail partners to bring a more convenient digital solution in the play that can be even more convenient for our members. Yeah, and maybe I'll have Michelle comment on we are. We have, you know, part of our strategy to become digitally oriented. And we're working on a new digital strategy. So Michelle, maybe share what we're doing there. Sure. Sure. Thanks, Karen. Just like we did with vaccine and testing, our aim is to provide the best experience for consumers and next week.

Part of our strategy is to become digitally oriented and we're working on a new digital strategy. So Michelle may be sure sure. Thanks, Karen just like we did with vaccine and testing. Our aim is to provide the best experience for consumers and next week.

Speaker 3: We will be a really great solution where consumers can come online and try their information and immediately be adjudicated and figure out the stores near them, pick up the stores, pick up the Teskits in that store for free. So it'll be an incredibly smooth digital experience for our customers, so we're excited to launch that next week. Okay.

He will be a really great solution, where consumers can come online enter their information and immediately.

Adjudicated and figure out the stores near them pick up the stores pick up the test kits in that store for free so it'll be an incredibly smooth digital experience.

For our customers who are excited to launch that next week.

Okay.

Okay, great. Thanks, a lot.

And we will take our next question from Stephen Baxter with Wells Fargo. Please go ahead. Your line is open.

Speaker 2: And we'll pick our next question from Stephen Baxter with Wells Fargo. Please go ahead. Your line is open.

Hi, Thanks, I wanted to ask about the labor market and your latest thinking there obviously some headlines during the quarter for challenges on the staffing side and in the release you mentioned that you hired 45000 associates through virtual credit it seems like a pretty big number relative to the size of your workforce. Hopefully you can give us an update on where that puts you for staffing today, how many open positions you have.

Speaker 8: Hi, thanks. The one to ask about the labor market and your latest thinking there. Obviously some headlines are in the quarter for challenges on the staffing side. And then the release you mentioned that you hired 45,000 associates, the virtual career dad seems like a pretty big number of relatives that size your workforce. Hopefully you can give us an update on where that puts you for staffing today. You know, how many open positions you have, how turnovers trend in, and how you're thinking, you're strategy on labor will play out in there.

Turnover is trending and how youre thinking strategy on labor will play out from here. Thanks.

Speaker 3: As you know, town is always our top priority. And as you mentioned, we have been strengthening our workforce despite a very tight labor market. We did have significant hiring throughout the year. And as you might imagine, we weren't immune to some of the Omicron issues and some of our colleagues did get sick. But we were able to maintain strong stores, store hours and pharmacy hours across the country. This is, you know, big focus. I think the minimum wage that we mentioned, that we put in place, has helped us keep in mind that I continue to evaluate that minimum wage to see if there's more that we could or should be doing as we, you know, continue to address labor shortages in the country.

Well as you know talent is always our top priority and as you mentioned, we have been strengthening our.

Workforce, despite a very tight labor market, we did have significant hiring throughout the year.

And as you might imagine we weren't immune to some of the omicron issues in some of our.

Neil colleagues did get sick, but we were able to maintain strong.

Stores.

Store hours and pharmacy hours across the country. This is a big focus so I think the minimum wage that we mentioned that we put in place has helped us.

In mind that I continue to evaluate that minimum wage to see if there is more that we could or should be doing as we continue to address labor labor shortages in the country.

Speaker 2: Next question. So take our next question from Justin Lake with Wolf. Please go ahead, your line is open.

Next question.

We'll take our next question from Justin Lake with Wolfe. Please go ahead. Your line is open.

Thanks, Good morning.

Speaker 6: Thanks, good morning. Just wanted to see if I can follow up with a little bit more detail on the membership side. Hope you can run us through maybe what you're expecting on the commercial wristbook, how you're thinking Medicaid, redeterminations, play out, and how that impacts your Medicaid membership. And I'm not sure if you gave a specific Medicare advantage membership number that I might invest. Thanks.

Just wanted to see if I can follow up with a little bit more detail on the membership side.

Hoping you could walk us through maybe what youre expecting on the commercial risk book, how Youre thinking Medicaid Redetermination is play out and how that impacts your Medicaid membership and I'm not sure. If you gave a specific Medicare advantage membership number that I'm not the best.

Yes.

Speaker 8: Thanks, Dan, do I grab that? Yeah, sure, so let me take those in part. I mean, first of all, Karen mentioned the commercial book. We've seen some really strong retention in the fourth quarter, certainly related to national accounts.

Thanks, Dan when I grab that yes sure. So let me take those in part I mean first of all Karen mentioned the commercial book, we've seen some really strong retention.

Fourth quarter, certainly related to national accounts in the fourth quarter. We also saw continuing strong retention and strong sales. We also saw a little bit of shift in that change in force dynamics due to the pandemic that we were expecting which is good and that's leading to our.

Speaker 12: In the fourth quarter, we also saw continuance, strong retention and strong sales.

Speaker 12: We also saw a little bit of shift in that change in force dynamics due to the pandemic that we were expecting, which is good. And that's leading to our lower single digit growth overall there.

Our lower.

Single digit growth overall there.

Speaker 12: As far as Medicare, we had mentioned really strong AEP season, the team is really focused on OEP and making sure that we sustain that momentum. And so we're really confident in our ability to deliver on that double digit individual growth in 2022.

As far as Medicare, We had mentioned really strong AEP season. The team is really focused on OAP and making sure that we sustained that momentum and so we're really confident in our ability to deliver on that double digit individual growth in 2022, and then the last.

Speaker 12: And then the last piece is the Medicaid piece. Look, we're following the PhD really, really closely. Redeterminations are obviously something that we're watching as it relates to that. I think it's reasonable to expect that the suspension of redeterminations will continue through the second quarter and then we'll be monitoring closely and of course working with our state partners to make sure that when that does occur.

Pieces, the Medicaid piece look we're following the phe really really closely.

Redetermination are obviously something that we're watching as it relates to that.

Think it's reasonable to expect that the <unk> suspension of Redetermination will continue through the second quarter and then we will be monitoring that closely and of course working with our state partners to make sure that when that does occur.

Speaker 12: that's timely and appropriate. We don't consider that to be a sort of a day one event. It will be a gradual process, but we'll work closely with the state around that.

That's timely and appropriate we don't consider that to be a.

Sort of a day one event it will be a gradual process, but we'll work closely with the states around that.

Speaker 6: So just to be clear, if your membership guidance, I think it's flat-top slightly for the year and Medicare advantage is gonna grow, do you ever take?

So just to be clear if your membership guidance I think is flat to up slightly for the year in Medicare advantage is going to grow give or take.

Speaker 6: In maybe 300,000 members, most of that decline going to be in Medicaid to kind of offset the growth of Medicare of Anage or his commercial also going to decline year-of-year.

Maybe 300000 members is most of that decline going to be in Medicaid to kind of offset the growth in Medicare advantage or commercial also given a decline year over year.

Speaker 12: Yeah, it'll be mostly focused on Medicaid. That component of the redetermination is that play, but recall, we also had a large known group that's coming off the books and Medicaid as well.

Yes, it'll be mostly focus on Medicaid that component of the Redetermination as that play but recall. We also had a large known group that's coming off the books and Medicaid as well.

Great.

Well take our next question from Eric Percher with Nephron Research. Please go ahead.

Speaker 2: We'll bring our next question from Eric Purcher with Nefron Research. Please go ahead.

Speaker 13: Thank you, Eric Purture and Josh Raskin here. A question related to labor maybe in the back of the store.

Thank you, Eric Percher and Josh Raskin here, a question related to labor maybe in the back of the store.

Speaker 13: In Fort Huda and Omicron require you to change either ramp up or stop a ramp down relative to what expectations of needs in the back of the store are. And how do you view the flexibility of labor in the back of the store as you see decline in vaccine tests? And as some of that offset by the desire to have a pharmacist providing more services.

It <unk> require you to change either a ramp to ramp up or stop a ramp down.

Relative to what expectations of needs in the back of the store or and how do you view the flexibility of labor in the back of the store as you see a decline in vacs and test and some of that offset by the desire to have the pharmacist, providing more services from the store.

Go ahead, Brian .

Speaker 11: Yeah, thanks, Eric. This is a great question. So we are obviously doing three things. One is if you think about how

Yes. Thanks, Erik this from it's a great question. So we are.

Obviously, you're doing three things one is if you think about how we're thinking about our pharmacy assets in what I would say is consumer led digitally focused really tried taking out a lot of work that would be.

Speaker 11: Think about our pharmacy assets and what I would say is consumer led.

Speaker 11: digitally focused really trying taking out a lot of work that would be duplicative or challenging so creating efficiencies in the back of the store the the part of your question around obricorn it absolutely led

Duplicative or challenging so creating efficiencies in the back of the store. The part of your question around <unk>. It absolutely led to a little bit of what I would say is distressed vaccination volumes grow very quickly and then come down. So that also we were able to.

Speaker 11: to a little bit of what I would say is stress, where we saw vaccination volumes grow very quickly and then come down. So that also, we were able to absorb that and be able to deliver that care in a very, you know, what I'd say is high customer value way in the back of the store in December and in January . And we're definitely continuing to look at our back of the store and creating what I'd say is a digital first experience for consumers, but also creating efficiencies across stores. When you look at our pharmacy assets that can have you can leverage.

All of that and be able to deliver that care in a very what I would say, it's high customer value way.

On the back of the store in December and in January and we are definitely continuing to look at our.

Our back of the store and creating what I would say as a digital first experience for consumers, but also creating efficiencies across stores. When you look at our pharmacy assets and how we can leverage those efficiencies across stores in the back of the store. So absolutely looking at that Theres more to come and we see a tremendous opportunity there with our large fleet of stores to really maximize our.

Speaker 11: those efficiencies across stores in the back of the store. So, absolutely looking at that, there's more to come and we see a tremendous opportunity there with our large fleet of stores to really maximize our efficiencies.

Our efficiencies.

Thank you.

One last question please Ashley.

Speaker 2: One last question please Ashley. Oh certainly we'll take a round of question from Nathan Ridge with Goldman Sachs. Please go ahead.

Certainly we will take our final question from Nathan Rich with Goldman Sachs. Please go ahead.

Speaker 3: Great, thank you. Karen, if I can maybe go back to your comments on the primary care strategy, you talked about the need to have a digital platform to connect the physical assets that you have. Is that starting point for this strategy as you think about kind of integrating primary care into the CVS health business? And do you see this as something that you'd look to develop internally or could you look externally for these capabilities as we think about the best way to scale this strategy? Thank you. Well, thanks for that question. I think digital is a part of the strategy. It's not necessarily the driver. I think it's important when you think about the connectivity of care, the continuity of care, the seamless experience. You have to have those digital connections. So that would be part of our overall strategy. And we will continue to look at what we can do internally versus what opportunities there are externally as we think about text and things like that and in target companies that we're looking at today.

Great. Thank you Karen if I could maybe go back to your comments on the primary care strategy you talked about the need to have a digital platform to connect the physical assets that you have.

The starting point for this strategy as you think about kind of integrating primary care into the Cvs health business.

Do you see this as something that you'd look to develop internally or could you look externally for these capabilities as we think about the best way to.

<unk>.

To scale this strategy. Thank you.

Thanks for that question Nathan I think digital is a part of the strategy, it's not necessarily the <unk>.

Driver I think it's important when you think about the connectivity of care the continuity of care. The seamless experience you have to have those digital connections so that.

That'll be part of our overall strategy.

We will continue to look at what we can do internally versus what what opportunities. There are externally as we think about tech stacks and things like that and in target companies that we're looking at today.

Speaker 3: So I'm going to wrap up the call. So first of all, thank you all for joining us today. As we said, 2021 was really marked by strong financial performance across all of our businesses and very good progress on our strategy. And we are entering into 2022 with very powerful momentum and strong growth across all our businesses. So thank you for joining our call today.

So I'm going to wrap up the call. So first of all thank you all for joining US today. As we said 2021 was really marked by strong financial performance across all of our businesses and very good progress.

Our strategy and we are entering into 2022 with very powerful momentum and strong growth across all our businesses. So thank you for joining our call today.

Speaker 2: Thank you and this does conclude today's CVS Health 4 Quarter and 4 Year 2021 earnings calling Webcast. You may disconnect your line at this time and have a wonderful day.

Thank you and this does conclude today's Cvs health fourth quarter and full year 2021 earnings call and webcast. You may disconnect. Your lines at this time and have a wonderful day.

[music].

Speaker 1: We stru P.