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CVS Health lifts dividend 18%, will employ 360 in Missouri

Staff Writer |
CVS Health held its annual Analyst Day in New York City, outlining strategies for how the company will drive long-term growth and shareholder value.

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President and CEO Larry Merlo stated, “By making care more affordable, accessible and effective, we can deliver value to all health care stakeholders, allowing us to be a partner of choice as they look to achieve their health care goals.

"Despite all the changes happening in health care, success will ultimately be determined by how effective you are at executing on these three objectives. And we remain confident that CVS Health is well-positioned to deliver on all three.”

GAAP diluted EPS from continuing operations for 2016 and 2017 has been updated to reflect an estimated $35 million asset impairment charge and an estimated $230 million lease obligation charge, respectively, for store rationalization related to the enterprise streamlining initiative.

GAAP diluted EPS is now expected to be in the range of $4.82 to $4.88 in 2016 and $5.02 to $5.18 in 2017. The company reaffirmed its previous Adjusted EPS outlook for both 2016 and 2017.

The company expects to deliver Adjusted EPS of $5.77 to $5.83 in 2016 and $5.77 to $5.93 in 2017. The Adjusted EPS guidance assumes the completion of $5 billion in share repurchases during 2017.

The company reaffirmed its previous cash flow outlook for 2016, and expects to deliver cash flow from operations of $9.1 billion to $9.3 billion and free cash flow of $6.8 billion to $7.0 billion this year.

In 2017, the company expects to deliver cash flow from operations of $7.7 billion to $8.6 billion and free cash flow of $6.0 billion to $6.4 billion.

The board has approved an 18 percent increase in the annual dividend in 2017, an increase that translates to $2.00 per share, up 30 cents per share over 2016. This is the company’s fourteenth consecutive year with a dividend increase.

In addition, as stated on the company’s third quarter earnings call, with a new $15 billion share repurchase authorization, the company now has more than $18 billion authorized to be used for share repurchases over the next few years.

The company will build a new 762,000 sq. ft. distribution center in Kansas City, Mo, at the Skyport Industrial Park. The company’s expansion is expected to create more than 360 new jobs in the region.

With access to key road systems in the region, the planned distribution center will support the service and fulfillment needs of more than 370 CVS Pharmacy stores throughout the Midwest. CVS Pharmacy expects to break ground on the 71-acre property in January 2017 and immediately start construction on the facility.

The new distribution center is expected to begin operations in 2018.

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