How does this affect the company's operational performance?

The company emphasizes that its operational performance, as reflected by Adjusted EPS and cash flow from operations, remains on track. Adjusted EPS guidance is maintained, and cash flow from operations guidance is also reaffirmed, suggesting that the core business operations are not negatively impacted by this debt extinguishment.

What is the difference between GAAP EPS and Adjusted EPS?

GAAP EPS is the standard earnings per share calculated according to Generally Accepted Accounting Principles, including all expenses and income. Adjusted EPS, as defined by CVS Health, excludes certain items that are not considered reflective of the company's underlying business performance, such as amortization of intangible assets, acquisition-related costs, and losses on early extinguishment of debt. CVS Health provides Adjusted EPS to offer investors a view of performance that may be more comparable period-over-period.

What is the financial impact of the early debt extinguishment?

The early extinguishment of debt is estimated to result in a loss of $0.58 per share, which is a component of the Non-GAAP adjustments provided in the filing. This loss is the direct reason for the reduction in the projected GAAP diluted EPS.

CVS 8-K: Regulation FD — Sep 15, 2020

Q: Why is CVS Health lowering its GAAP EPS guidance?

CVS Health is lowering its GAAP EPS guidance due to an estimated loss incurred from the early extinguishment of debt during the third quarter of 2020. This is a one-time or non-recurring event that impacts the reported GAAP earnings.

Summary

CVS Health Corporation (CVS) announced a downward revision to its full-year 2020 GAAP diluted Earnings Per Share (EPS) guidance, lowering the range to $5.16 - $5.29 from the previously issued $5.59 - $5.72. This adjustment is primarily attributed to an estimated loss on the early extinguishment of debt during the third quarter of 2020. Despite the change in GAAP EPS, CVS Health is maintaining its previously announced full-year 2020 Adjusted EPS guidance of $7.14 - $7.27 and its cash flow from operations guidance of $11.0 billion to $11.5 billion. The company utilizes non-GAAP measures to provide a clearer view of underlying business performance and trends, believing it aids investors in comparing current performance against historical results. This disclosure was made in connection with investor meetings scheduled for the remainder of September 2020.

Key Highlights

1CVS Health revised its full-year 2020 GAAP diluted EPS guidance downwards to a range of $5.16 - $5.29.
2The primary reason for the GAAP EPS revision is an estimated loss on early extinguishment of debt in Q3 2020.
3The company reaffirmed its full-year 2020 Adjusted EPS guidance of $7.14 - $7.27.
4Full-year 2020 cash flow from operations guidance remains unchanged at $11.0 billion - $11.5 billion.
5The company continues to provide non-GAAP financial measures to enhance comparability of performance trends.
6The disclosure acknowledges the ongoing uncertainty related to the COVID-19 pandemic.

CVS HEALTH Corp 8-K Report, Regulation FD Disclosure (Sep 15, 2020)

Summary

Key Highlights

Frequently Asked Questions