This summary is based on the fourth quarter fiscal 2007 earnings call conducted by CVS Caremark Corporation (CVS: chart) on January 31, 2008.

Management:

Chairman, President, CEO: Thomas M. Ryan
Executive Vice President, CFO: David B. Rickard
Senior Vice President, Investor Relations: Nancy Christal
President of Caremark Pharmacy Services: Howard A. McLure

Key Investors Issues

- EPS were 55 cents per share compared to 49 cents per share last year.
- Net earnings increased 95.3% to $815 million compared to $417.2 million in the comparable 2006 period.
- Net revenues increased $9.8 billion to $21.9 billion, up from $12.1 billion.

Fourth Quarter Highlights

Net revenues increased $9.8 billion to $21.9 billion, up from $12.1 billion.

- Gross margins improved in PBM and retail segments, both in front and pharmacy.
- Excluding merger costs, operating expense reflected disciplined cost control.
- Operating margins expanded by 71 basis points.
- Adjusted EPS grew 20%, and the company generated $2 billion in free cash flow.

Pharmacy comparable store sales were up 3.6%.

- In addition to light flu sales, the company was cycling up against 10%, which was achieved in the fourth quarter from the last year from the growth of Med D signups.
- In addition, pharmacy comparison growth rate included 450 basis point negative impact from new generics. Adjusting for new generics, the company would have reported 8.1% comparable store sales.
- So 3.6% comparable store sales, butting up against touch flu sales comparisons from last year and high Med D signups.
- On the front end of business, the company continues to demonstrate strong growth and increased customer traffic. Front store comparable store sales increased 2.9%, and the company had a slow start to cough and cold and flu which impacts, obviously, both front and pharmacy.

The company continued to grow share in categories that make up the vast majority of sales, front end sales - OTC, beauty, private label and digital photo.

- In fact, the company experienced share gains versus food, drug en masse in categories representing 95% of sales volume.
- Private label business, which is a high-growth, high-margin business, represents about 14.5% of front store sales. The company remains comfortable that it will grow private label and proprietary brand sales to represent 18% to 20% of front end sales in the next three to five years.
- In both the front store and pharmacy, comparable store sales in the former Osco and Savon stores acquired in 2006 outpaced core stores for the fourth quarter.

In January comparable store sales the company is off to a solid start with the preliminary numbers of about 3%, and that was up against 8% last year.

- So the company had a two-year stack of 11%.
- Results reflect broad-based growth in core categories, even with a modest cough and cold in January. The company saw a return to solid trends in customer traffic, so it is off to a strong start in the retail side both in front and pharmacy.

The company opened 60 stores, including 45 new and 15 relos.

The company closed six others and added 39 net new stores. The company achieved plan for the full year. With closings, the company achieved net unit growth of about 3% square footage or 95 net new stores. For 2008, plan is to open up 300 to 325 new stores. About 175 to 185 will be new and the rest will be relos. The company expects to achieve the same 3% to 3.5% retail square footage growth.

On a consolidated basis, revenues increased 82% over 2006 to $21.9 billion.

This includes $1.3 billion of intersegment eliminations produced as a result of PBM clients filling their prescriptions at CVS Pharmacy stores.

In PBM segment, adjusting to put Caremark and CVS'' legacy PBM, PharmaCare, into both years to make the results comparable, net revenues of $11.6 billion increased 12.7%.

- Adjusting that growth rate for the impact of new generics, net revenues would have grown 19.8% for the PBM.
- That number, is helped by the change in PharmaCare''s revenue recognition, but the company changed to the gross method from the net method for recognizing service revenue at PharmaCare. That was due to the conversion of PharmaCare retail contracts to the Caremark contract structure effective September 1 of last year. The impact on the fourth quarter was the addition of approximately $775 million in reported revenues before intercompany eliminations, or about $600 million after eliminations.