 1 Howard McLure Senior Executive Vice President & COO Credit Suisse Healthcare Conference November 16, 2006 Creating the Premier Pharmacy Services Provider Filed by Caremark Rx, Inc. Pursuant to Rule 425 under the Securities Act of 1933 and Deemed Filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Caremark Rx, Inc. Commission File No.: 001-14200 |
 2 Cautionary Statement Regarding Forward-Looking Statements This document contains certain forward-looking statements about CVS and
Caremark. When used in this document, the words
“anticipates”, “may”, “can”, “believes”, “expects”, “projects”, “intends”, “likely”, “will”, “to be” and any similar expressions and any other statements that are not historical facts, in
each case as they relate to CVS or Caremark, the management of either such
company or the transaction are intended to identify those assertions as forward-looking statements. In making any of those
statements, the person making them believes that its expectations are based
on reasonable assumptions. However, any such statement may be influenced by factors that could cause actual outcomes and results to be materially
different from those projected or anticipated. These
forward-looking statements are subject to numerous risks and uncertainties. There are various important factors that could cause actual results to differ
materially from those in any such forward-looking statements, many of
which are beyond the control of CVS and Caremark, including macroeconomic
condition and general industry conditions such as the competitive environment for retail pharmacy and pharmacy benefit management companies, regulatory and litigation matters
and risks, legislative developments, changes in tax and other laws and the
effect of changes in general economic conditions, the risk that a condition
to closing of the transaction may not be satisfied, the risk that a regulatory approval that may be required for the transaction is not obtained or is obtained
subject to conditions that are not anticipated and other risks to
consummation of the transaction. The actual results or performance by CVS
or Caremark, and issues relating to the transaction, could differ
materially from those expressed in, or implied by, any forward-looking
statements relating to those matters. Accordingly, no assurances can
be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the
results of operations or financial condition of CVS or Caremark, the
combined company or the transaction. This presentation includes certain
non-GAAP financial measures as defined under SEC rules. A reconciliation to the most directly comparable GAAP measures can be found in the footnotes to the
tables attached to Caremark’s latest quarterly earnings press release
and certain supplemental information is provided on caremarkrx.com
(applicable slides are footnoted). |
 3 CVS/Caremark Merger Overview Stock-for-stock merger of equals – CVS will issue 1.67 shares for each CMX share Management team: – Mac Crawford – Chairman – Tom Ryan – President and CEO – Dave Rickard – CFO – Howard McLure – President of PBM Board Composition: 50/50 split Corporate HQ: Woonsocket, RI PBM HQ: Nashville, TN Expected closing: Within 6-12 months |
 4 Changing U.S. Healthcare Landscape U.S. drug spend projected to continue to grow – Aging population driving higher drug utilization – Increased diagnosis and treatment of chronic disease – Increased use of high cost specialty drugs – Lack of adherence to therapy is costly Payers asking consumers to make more decisions – Medicare Part D – Consumer-directed plans – Cost-shift to consumer in traditional plans CVS/Caremark will be positioned to deliver high-quality, cost- effective pharmacy services in a convenient, flexible manner
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 5 Merger Creates Premier Pharmacy Services Provider Brings Caremark’s capabilities closer to the consumer Creates platform to deliver innovative new services Expected to yield better outcomes – More effective cost management for payers – Differentiated services for consumers and payers – Greater choice and convenience for consumers Expected to accelerate growth for combined company – Accretive to EPS and cash flow |
 6 Caremark Strengths & Capabilities Experienced management team Integrated pharmacy services – PBM – Specialty – Disease Management – Analytics and Outcomes – Connectivity Attractive, balanced customer mix – Fortune 1000 employers – Health plans – Medicare Part D Financials – Highest EBITDA/Adj Rx – Strong cash flow & balance sheet |
 7 Caremark Q3 2006 Results Expect 2006 EPS of $2.40 to 2.41*, +22% *Guidance range excludes gain from settlement and treasury-lock +31% $0.67 Diluted EPS** $855 M YTD Cash Flow from Ops +21% $3.19 EBITDA / Adjusted Rx +13% $9.1 B Revenue ** Q3 EPS includes $0.02 per share gain on treasury-lock Slide contains Non-GAAP financial measures |
 8 CVS Strengths & Capabilities #1 drugstore chain in America – Largest retail base - 6,200 stores – Leading presence in over 70% of Top 100 U.S. regions Growing pharmacy business Acquisition upside – revenue, shrink, operating margin MinuteClinic – largest U.S. provider of retail-based health care Strong front store business – ExtraCare, exclusive brands, CVS brand, strong same store sales
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 9 Value for Employers & Health Plans Bringing Caremark programs & capabilities closer to the consumer will… Enable participants & payers to make better decisions – Pharmacist will be able to discuss plan design alternatives – Economics of mail vs. retail dispensing will be clear – Provides participants with more choice and access Enable more effective trend management – Higher disease management enrollment / adherence – Better formulary compliance – Improved generic substitution – Higher mail penetration |
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Value for Employers & Health Plans Combining Caremark and CVS capabilities will… Allow CVS/Caremark to offer differentiated services – Access to in-store or client-site MinuteClinics – Health assessments for participants – Real-time compliance & persistency programs – In-store consultation for injectable therapies Enhance Specialty business – Caremark has 30 years experience as clinical leader – CVS has 50+ specialty retail apothecaries – Better compliance and adherence – Better identification of patients for Accordant programs Create purchasing synergies |
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Benefits to Consumers Choice – Access to information about their plan designs at the pharmacy counter will enable consumers to make cost-effective decisions Services – Pharmacist can help maximize benefits – Pharmacist can better monitor patient safety – Improved compliance and outcomes – Access to MinuteClinics Convenience – Pharmacist can make real-time changes at point of sale – Mail to home or local store – Rxs can be filled anywhere in 55,000+ retail store network
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Benefits to Consumers Services – Pharmacist can help maximize benefits Help choose the right branded medication Highlight generic alternatives Offer OTC step therapies Consultation by phone or at local CVS store – Pharmacist can better monitor patient safety CVS will now have full view of patient Rx history – Improved compliance and outcomes On-site assistance with injectable therapies Recommend & enroll in disease management programs – Access to MinuteClinics |
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Benefits to Shareholders Approximately $400 million in annual synergies – Purchasing – Overhead – Exit 2008 at annualized rate of over $400 million in synergies Accretive first full year after close Significant free cash flow generation Platform to develop new / differentiated services |
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Important Information for Investors and Stockholders Caremark and CVS will file a joint proxy statement/prospectus with the SEC in
connection with the proposed merger. Caremark and CVS urge investors
and stockholders to read the joint proxy statement/prospectus when it
becomes available and any other relevant documents filed by either party with the SEC because they will contain important information. Investors and stockholders will be able to obtain the joint proxy statement/prospectus
and other documents filed with the SEC free of charge at the website
maintained by the SEC at www.sec.gov. In addition, documents filed
with the SEC by Caremark will be available free of charge on the investor relations portion of the Caremark website at www.caremark.com. Documents filed with the SEC by CVS
will be available free of charge on the investor relations portion of the
CVS website at http://investor.cvs.com. Investors and stockholders
may obtain a detailed list of names, affiliations and interests of participants in the solicitation of proxies of Caremark stockholders to approve the merger at the following address: Georgeson Shareholder Communications, Inc., 17 State Street, New York, New York, 10004. Caremark, and certain of its directors and executive officers may be deemed to be
participants in the solicitation of proxies from its stockholders in
connection with the merger. A description of the interests of
Caremark’s directors and executive officers in Caremark is set forth in the
proxy statement for Caremark’s 2006 annual meeting of stockholders,
which was filed with the SEC on April 7, 2006. CVS, and certain of its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of CVS in connection with the
merger. A description of the interests of CVS’s directors and
executive officers in CVS is set forth in the proxy statement for
CVS’s 2006 annual meeting of stockholders, which was filed with the SEC on March 24, 2006. If and to the extent that any of the Caremark or CVS participants will receive any
additional benefits in connection with the merger that are unknown as of
the date of this filing, the details of those benefits will be described in
the definitive joint proxy statement/prospectus relating to the merger. Investors and stockholders can obtain more detailed information regarding the direct and indirect
interests of Caremark’s and CVS’s directors and executive officers in the merger by reading the definitive joint proxy
statement/prospectus when it becomes available.
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Howard McLure Senior Executive Vice President & COO Credit Suisse Healthcare Conference November 16, 2006 Creating the Premier Pharmacy Services Provider |