Ladies and gentlemen, good morning and welcome to the CVS Health Fourth Quarter and Full Year 2020 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 questions. As a reminder, today's conference is being recorded. I would now like to turn the call over to Valerie Haertel, 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 2020 earnings call. I'm Valerie Haertel, Senior Vice President of Investor Relations for CVS Health. I am joined this morning by Karen Lynch, President and CEO; and Eva Boratto, Executive Vice President and CFO. Following our prepared remarks we'll host a question and answer session that will include Jon Roberts, Chief Operating Officer and Alan Lotvin, President of Caremark. Our press release and slide presentation have been posted to our website along with our annual report on 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 and our financial projections. 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. 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. 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. Today's call is being broadcast on our website where it will be archived for one year. Now I would like to turn the call over to Karen.

Thank you Valerie and good morning everyone, and thank you for joining our call today. Before we begin, I'd like to acknowledge Larry Merlo's leadership. He set a bold path for CVS Health to change the healthcare industry in this country. Larry did an incredible job bringing together our unique assets and establishing the foundation for our future. Our transformation over the last decade has enabled us to become the nation's leading diversified health services company. As one of the most trusted brands in America, our presence in communities across the country allows us to meet consumers where they are and becoming bigger part of their everyday health. Our unparalleled capabilities, reach, and relationship with over a hundred million people uniquely positions us to support them for every meaningful moment of health throughout their lifetime. These are unprecedented times, and our purpose to help people on their path to better health has never been more important. CVS colleagues are on the front lines every day helping millions of Americans with COVID testing and vaccines in home and virtual care services and face-to-face care in our CVS locations. We understand our responsibility to support our customers, members, and communities during these difficult times and we are delivering. I am proud of the nearly 300,000 colleagues on the CVS Health team and all that we've achieved in this past year. Turning to performance, our strong results in 2020 show that both our strategy and business model are working. We exceeded our earnings commitments while delivering 6% year-over-year adjusted EPS growth. We grew revenue 4.5% to achieve adjusted revenues of $268 billion. We delivered continued strong growth in our PBM and government services business, once again achieving solid results in Medicare Advantage. We generated strong cash flow from operations of nearly $16 billion as we continue to delever while investing in our business for future growth. We served a prominent role in supporting our customers, providers, and communities during one of the biggest public health crisis in our nation's history. We continue to progress against our strategic roadmap, and we set 2021 adjusted EPS guidance of $7.39 to $7.55 with mid-single-digit growth from our baseline. Eva will go into much more detail about our performance and our outlook. Turning to our three business segments. We delivered strong results in 2020 in the Healthcare Benefits segment. We grew total revenue by 8% for the year with increases in our government businesses partially offset by declines in our commercial business. In the fourth quarter, we saw utilization of total healthcare services in the aggregate, return to more near-normal seasonal levels as higher COVID related costs were partially offset by somewhat lower levels of traditional services. Adjusted operating income was in line with expectations. As we head into 2021, we demonstrated growth within each of our Medicare product lines in January. Overall, we are on track for another very strong year of Medicare growth. For years, we've used our voice to advocate for policies, programs, and regulations at the local, state, and national levels that support access to affordable care for all Americans. After careful consideration, we have decided to re-enter the individual public exchange market as of January 1, 2022. As the ACA has evolved, there is evidence of market stabilization and remedies to earlier structural issues. It is now time for us to participate in these markets. We will show that we can bring great value to those who seek coverage. You can expect to hear more about our exchange re-entry plans and future updates. Turning to our PBM. Our pharmacy services segment has been resilient to the pandemic. We demonstrated the value we bring to our customers and our members. We achieved strong retention rates and positive momentum in winning new business in 2021. And finally, in our Retail Long-Term Care segment, we continued to advance our clinical programs which improved medication adherence and health outcomes. We increased the level of engagement with our loyalty and subscription customers, and we also achieved high customer satisfaction results. During the last year, we delivered new market solutions and we strengthened our role as a personal and trusted healthcare partner in response to COVID-19. We pivoted and rapidly innovated to meet customer needs for COVID testing in the community. We also advanced our digital capabilities to create a seamless experience across CVS Health touch points. Today, we remain the largest community testing organization in the U.S. We've administered approximately 15 million tests at our more than 4,800 testing locations nationwide. Over 50% of these tests have been administered in communities with significant need for support according to the CDC social vulnerability index. Additionally, we launched our return-ready solution to help employers and universities as they execute their return to work and school strategies. To-date, a hundred clients have enrolled representing over 1.5 million individuals with interest continuing to grow. Such leadership enabled us to establish new relationships with approximately 8 million consumers through our COVID testing efforts. These are people who are new to CVS Health. Turning to vaccines. We've been working with the federal government on vaccine distribution readiness for several months. We were selected as one of the partners for vaccine administration and long-term care facilities. We've administered more than 3 million vaccine doses to the patients and staff in over 40,000 long-term care facilities across the country. We completed the first doses of vaccine administration in all skilled nursing facilities and will complete the second doses by the end of the month as planned. We are on track to complete both doses of vaccine administration for assisted living facilities by mid-March. This will fulfill our commitment to administer vaccines in long-term care facilities. We've also been selected as one of the national partners for the Federal Pharmacy Partnership Program. This is the linchpin of the Biden administration's plan to vaccinate 300 million Americans by the end of the summer. As part of this program, we are administering approximately 250,000 COVID immunizations across 11 states and in over 350 CVS locations each week. Early feedback from customers has been very positive on their overall experience across both our in-person and digital channels. We will continue to add stores as the vaccine supply increases. With the commitment and hard work of our employees we have the capacity to administer 20 million to 25 million doses per month depending on supply availability. Millions of new customers will engage with CVS Health for the first time through testing and vaccine administration services. We will use this opportunity to shape a health experience that demonstrates the value we bring. It will create the opportunity to expand our customer base while deepening relationships with current customers. We have made measurable and important progress with our strategy as a health services company that utilizes all our assets that integrates them for superior consumer experience and firmly addresses the total cost of care. For example, we are creating health platforms that combine local points of care, remote biometric monitoring, and access to healthcare professionals all within a personalized consumer-centric model. Our new diabetes program is an example of this. We have approximately 1.4 million members in this new program with about 50% representing integrated Caremark Aetna plan members. We've had strong reception to our fully integrated plan, the Aetna connected plan and expect to add 15 markets in 2021. Key features include zero dollar copays at MinuteClinic locations, standard formulary and use of our quorum infusion services. We deepened our pharmacy penetration in the Healthcare Benefits segment to increased cross sale of medical and pharmacy plans. This is expected to result in approximately $350 million in incremental revenue in 2021. We are bringing dialysis services into the home to better manage chronic kidney disease. This program offers a simpler more patient-centered approach. It delays the onset of end-stage renal disease reduces hospital admissions and supports people with treatment options. Our kidney program will engage a targeted cohort across businesses currently available to over 7.5 million eligible members. And finally our oncology program helps patients start on the best treatment and matches eligible patients to clinical trials. Our goal is to improve patient outcomes and lower overall costs at every point of the cancer care journey. Our program has expanded to more than 125 provider systems across 28 states covering over 30% of Aetna's insured oncology population. As we engage consumers in addressing their most prevalent, costly and complex health conditions impacting their lives we are also concentrating on expanding access to affordable quality care. We’ve launched new medical benefit plans designed with low copay or no copay at MinuteClinics to offer broader access to care. We have approximately 6 million commercial and Medicare members enrolled today. In our small group product which was the first to adopt we achieved 25% greater use of MinuteClinics and CVS pharmacy retail scripts increased from 30% to 65%. This continues to strongly demonstrate the value of bringing CVS Assets together to support members across their healthcare needs. We continue to expand access through our integrated care delivery approach. We ended 2020 with just over 650 health hubs nationwide including locations in underserved communities. Health hubs are one of many channels we have to engage with consumers for their health that also complement the traditional healthcare system. We continue to expand our virtual care capabilities. We launched our E-clinic service in our MinuteClinic footprint across 33 states and in the District of Columbia. Consumers are now able to interact with nurse practitioners for comprehensive virtual care in a convenient way. Through this offering we can help customers with both episodic care and provide a longitudinal integrated care experience. We launched our virtual first primary care program. Members engage with providers virtually. They are then directed to lower cost high quality sites of care such as MinuteClinic or other face-to-face in-network provider care settings as needed. We are delivering value by creating a superior system that is centered around the consumer where they want and need healthcare. In closing, we are starting 2021 with strong momentum. We are accelerating our pace of progress to drive our consumer-centric strategy, a strategy built upon the fundamental belief that's solving consumer health needs will create value for all; our customers, our communities, our people and our shareholders. We will further develop and refine our strategy to leverage the rapid shift in healthcare underway in the U.S. trends that we are not only on top of but in many places driving. As we move forward with this work the touchstones of our strategy will remain focused in the following areas. We will demonstrate the integrated value of CVS Health's unique portfolio of products and assets. We'll enhance the consumer experience through the expansion of digital services and platforms that seamlessly connect to in-person channels. We will expand our portfolio with new innovative consumer-oriented solutions that improve health, lower medical costs while creating better health outcomes. We will continue to build a high performing organization that is passionate about our purpose that reflects the diverse populations we serve and is empowered to do the right thing the right way for consumers health and well-being. I am confident in our future in our ability to help people on their path to better health. CVS Health will lower costs, improve customer experience enhance access and be their trusted healthcare partner. Now I'll turn it over to our chief financial officer Eva Boratto.

Thanks Karen and good morning everyone. As Karen stated our strong performance across the enterprise continued in the fourth quarter as we executed on our strategy during this challenging time. For the full year we delivered $7.50 adjusted earnings per share and importantly achieved over $900 million of integration synergies above the high end of our expectations. We've hit the 2021 run rate and the synergies are fully embedded in the business. During the quarter we generated $3.6 billion of cash from operations bringing our full year to $15.9 billion which is above the high end of our expectations and we paid down $2.5 billion of net debt in the quarter exiting the year at a low four times leverage ratio. Since the close of the Aetna transaction we have paid down more than $12.2 billion in net debt and remain on track with our low three times leverage ratio goal in 2022. We maintained our dividend while we also invested in our enterprise to support our colleagues and customers during the pandemic and to accelerate future growth. Looking at our fourth quarter results by segment our Healthcare Benefits segment total adjusted revenues increased 9.6% year-over-year driven by membership growth in our government products and the reinstatement of the HIF. Adjusted revenues exclude the ACA risk quarter payment received during the fourth quarter. Adjusted operating income was $153 million in line with our expectations largely reflecting the planned COVID-19 related investments benefiting customers, testing and treatment costs and the divestitures of the Aetna PDP and our workers comp business. Total membership increased about 140,000 sequentially with Medicaid membership up about 90,000 as states continue to respond to the COVID-19 pandemic by suspending eligibility redeterminations. Additionally, our Medicare portfolio continues to show growth with strong Medicare Advantage and [Med sub-membership] growth increasing sequentially about 90,000 up over 2%. These increases were partially offset by a modest sequential decrease in commercial membership of about 35,000 members driven by additional membership attrition due to COVID-19. Our adjusted MBR for the quarter excluding the ACA payment was 88.3% and in line with our expectations representing an increase of 260 basis points compared to the prior year. The higher MBR was driven by COVID-19 related investments, testing and treatment costs, the divestiture of the PDP business partially offset by the reinstatement of the HIF. Overall fourth quarter utilization was generally in line with our baseline including higher COVID-19 related costs. Days claims payable were 48 days for Q4, 2020 consistent with our Q4, ‘19 and a day lower than Q3, 2020 largely driven by pharmacy payments. We remain confident in the adequacy of our reserves. Moving to Pharmacy Services, total revenues declined approximately 2% versus last year primarily driven by the previously disclosed client losses and continued price compression. The decline in revenue was partially offset by growth in specialty pharmacy of approximately 4% and brand drug price inflation. Total pharmacy claims grew 0.7% in Q4 compared to last year driven by net new business. Momentum in pharmacy services continues with adjusted operating income increasing 7.9% compared to the fourth quarter last year. Improvements in purchasing economics and the ongoing benefit to our clients and CVS Health from several generic launches and our continued success with customers in managing specialty pharmacy continues to fuel the growth. The quarter also reflected higher investments to support our successful 2021 welcome season. And finally retail long-term care total revenues grew 6.6% year-over-year driven by a 2% increase in prescription volume including strong flu immunizations as well as benefits from our diagnostic testing and brand inflation, partially offset by a 1.6% decline in front store sales. Our COVID-19 diagnostic testing program contributed nearly 400 million in the quarter. Prescription growth was driven in part by continued adoption of our patient care programs. Offsetting the growth was lower incidence of flu and flu-like illness which reduced flu related scripts nearly 40% and affected cough and cold sales in the front store by approximately 30%. Gross margins for the segment declined 140 basis points versus 2019 driven by continued reimbursement pressure and mix partially offset by testing. Adjusted operating income declined 12.6% year-over-year reflecting the items I've discussed as well as cost related to COVID-19. Moving to other items on the income statement we incurred lower interest expense as a result of our continued debt pay down and the adjusted tax rate was higher in Q4 compared to Q4, 19 primarily due to the return of the HIF. Transitioning to 2021 guidance full year adjusted EPS is expected to be in the range of $7.39 to $7.50, an increase of approximately 4% to 6% from our 2020 baseline of about $7.11 and in line with our mid single digit growth expectation. Consistent with our practice net realized capital gains or losses and prior years’ development are excluded from our outlook. We expect to generate between $12 billion and $12.5 billion of cash flow from operations in 2021. This includes the impact of timing of certain payables and receivables that contributed to our 2020 outperformance. Our gross capital expenditure expectations of $2.7 billion to $3 billion is above historical levels as we expand our investments in technology and digital enhancing our app and systems workflow and we continue to invest in our health hubs. As noted over the course of 2020 there were positive and negative impacts from COVID-19, many that offset across our segments stemming from changes in consumer behavior. We are pleased with our ability to pivot to deliver the products and services in demand to drive continued growth at our enterprise as we create a better way to deliver healthcare. In 2021 COVID-19 is expected to have an immaterial impact on our adjusted earnings per share. As we have highlighted in our slides COVID-19 is expected to have a benefit to the retail long-term care segment and have an unfavorable temporal impact to the healthcare benefits segment. Importantly, we will continue to drive our enterprise cost savings initiatives which we expect to deliver between $900 billion and $1.1 billion and will ramp as we move throughout the year. Key drivers of savings include ongoing digitization of our businesses along with system technology improvements in our operations such as our call centers, real estate changes including our decision to reduce office space by about 30% resulting from COVID-19 and workforce management changes in how we are working as well as productivity and operational efficiency initiatives within each segment. We expect consolidated full-year adjusted operating income to be in the range of $15.5 billion to $15.7 billion with consolidated total revenues in the range of $276.1 billion to $280.6 billion up 3% to 4.5%. We are maintaining our shareholder dividend of $2 per share. Moving on to our segments as a result of continued strength in Medicare products we expect HCB total revenues to be in the range of $79.4 billion to $80.7 billion. Medical membership is expected to be between $23.2 million and $23.6 million medical members at the end of 2021 fueled by growth in each of our Medicare lines of business. Partially offsetting the growth in Medicare is the transition of two large Medicaid contracts. Our guidance includes an expectation that state redeterminations do not return in 2021. We believe the strength of our unmatched benefit plan designs that utilize our enterprise assets positions us well for 2021 and beyond. Within healthcare benefits we expect adjusted operating income in the range of $5.1 billion to $5.2 billion. Our outlook reflects the negative impact of COVID-19 of approximately $450 million to $550 million largely attributable to the Medicare risk adjuster impacts and the recent regulatory changes from the Consolidated Appropriations Act, the removal of the HIF insurance fee which we expect to decrease 2021 adjusted operating income by approximately $175 million and strong growth in Medicare membership. Our full-year MBR is expected to be approximately 84.7% plus or minus 60 basis points which reflects the return to more normal levels of utilization. The removal of the HIF, lower risk adjusted revenue and mixed shifts in our business. In Pharmacy Services, we expect total revenue to be in the range of $144.5 billion to $147 billion driven by strong net new business of $3.3 billion, continued growth in specialty pharmacy and brand drug inflation in the mid single digit range. The 2021 selling season is largely complete and we maintained a strong 98% retention rate with gross wins of$ 4.9 billion. Adjusted operating income is expected to be within the range of $6 billion to $6.1 billion driven by continued growth in specialty and our ability to drive further improvements to purchasing economics partially offset by industry-wide price compression. Turning to retail long-term care we expect revenue of $93.8 billion to $95.1 billion. We expect strong adjusted script growth in the range of $7.25 to $9.25 driven by the continued successful execution of our Patient Care Programs, expected return of provider visits and COVID-19 vaccinations. We expect front store traffic will increase as we move throughout the year. We expect adjusted operating income to be in the range of $6.6 billion to $6.7 billion benefiting from continued pharmacy volume growth and approximately $400 million to $500 million from COVID-19. The benefit from COVID-19 reflects the positive impact of vaccines and testing related revenues, net cost associated with these programs partially offset by the adverse impacts of front store and pharmacy and our continued investments in COVID-19 related protocols. Operating income growth also continues to be unfavorably affected by reimbursement pressure. Moving to other income statement items, we expect interest expense of about $2.6 billion benefiting from the pay down of our debt and our liability management actions and our effective tax rate is expected to be approximately 25% reflecting the repeal of the HIF. Finally we expect quarterly earnings cadence to be fluid over the course of the year but let me share some perspectives on Q1. Q1 is expected to be the lowest earnings quarter for the year. In Retail Long Term Care lower traffic in the front store and lower script volume has persisted into January in part due to the weaker flu season. Q1 is also impacted by investments to advance our vaccine program. Healthcare Benefits is expected to have higher earnings in the first half of the year and the lowest in the fourth quarter. Cost savings initiatives across our segments are expected to ramp over the course of the year. In summary, we continue to deliver on our financial expectations and our confidence and our ability to achieve the 2021 guidance we outlined today. We are making progress toward driving sustainable long-term growth. As Karen mentioned we are accelerating aspects of our consumer-focused strategy to meet the consumers health needs of the future. Before opening it up it for questions, I would like to take a moment to thank Valerie for our work here in investor relations. I am disappointed to see Valerie leave over the next month but am grateful for the advancements that Valerie made during the time she was with CVS Health. I wish Valerie the best of luck in her next venture. Now let's open it up to questions.

[Operator Instructions] And we will take our first question from Lisa Gill with JPMorgan. Please go ahead.

We will take our next question from Robert Jones with Goldman. Please go ahead.

And we will move next with Ricky Goldwasser with Morgan Stanley. Please go ahead.

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

We will move next with Matt Borsch with BMO. Please go ahead.

And we'll take our next question from Michael Cherny of Bank of America. Please go ahead.

We will move next with Lance Wilkes with Bernstein. Please go ahead.

And we will take our last question from A.J. Rice with Credit Suisse. Please go ahead.

[indiscernible]. I would like to thank everyone for our call this morning. As you can see we've made measurable and important progress on our strategy as a health services company, we're starting 2021 with strong momentum and we are accelerating our pace of progress to drive our consumer-centric approach and I do again want to thank all of our employees for their strong performance. With that I'll say thank you for joining us today.

Thanks everyone.

This concludes today's CVS Health fourth quarter and full year 2020 Earnings Call and Webcast. You may disconnect your line at this time. Have a wonderful day.