CVS Caremark Corporation (CVS), today announced record revenues, operating profit, and earnings for the third quarter ended September 27, 2008.

Revenues:

Net revenues for the third quarter ended September 27, 2008, increased $368.2 million to $20.9 billion, up from $20.5 billion during the third quarter ended September 29, 2007.

Revenues in the retail drugstore segment increased 5.3% to $11.5 billion in the third quarter, while same store sales (sales from stores open more than one year) in the Company’s CVS/pharmacy division for the third quarter rose 3.7% over the prior year period. Pharmacy same store sales rose 3.8% and were negatively impacted by approximately 280 basis points due to recent generic introductions, while front-end same store sales increased 3.3%.

Revenues in the pharmacy services segment decreased 0.9% to $10.6 billion in the third quarter ended September 27, 2008. Retail network claims processed during the third quarter ended September 27, 2008, increased 2.7% to 134.4 million compared to 130.9 million in the prior year period. The increase in retail network claims was driven primarily by increased enrollment in the Medicare Part D business. Mail service claims processed during the third quarter ended September 27, 2008 decreased 19.6% to 14.7 million compared to 18.3 million in the prior year period primarily due to the termination of the Federal Employees Health Benefit Plan mail contract effective December 31, 2007.

Earnings from continuing operations:

Earnings from continuing operations for the third quarter ended September 27, 2008, increased 18.8% to $818.8 million compared with earnings from continuing operations of $689.5 million in the comparable 2007 period. Adjusted earnings per share from continuing operations, which excludes $98.2 million in amortization of intangible assets primarily related to acquisition activity, for the third quarter were $0.60, compared with $0.50 in the comparable 2007 period. GAAP earnings per diluted share from continuing operations for the third quarter were $0.56 compared with $0.45 in the comparable 2007 period. Earnings from continuing operations for the nine months ended September 27, 2008, increased 31.2% to $2,390.8 million compared with earnings from continuing operations of $1,822.0 million in the comparable 2007 period. Adjusted earnings per share from continuing operations, which excludes $293.9 million in amortization of intangible assets primarily related to acquisition activity, for the nine months were $1.75, compared with $1.48 in the comparable 2007 period. GAAP earnings per diluted share from continuing operations for the nine months were $1.63 compared with $1.36 in the comparable 2007 period.

Tom Ryan, Chairman, President and Chief Executive Officer of CVS Caremark said, “I’m pleased to report strong third quarter results, which were right in line with our expectations despite the uncertain economic environment. We achieved record sales, operating profits, net earnings, and free cash flow. I’m also pleased to report that we expect to close the acquisition of Longs Drug Stores today, having successfully completed the tender offer. The Longs transaction provides significant upside for both our retail and PBM businesses over time.”

Loss from discontinued operations:

In connection with certain business dispositions completed between 1991 and 1997, we continue to guarantee approximately 220 store lease obligations for a number of former subsidiaries, including Linens ‘n Things. On May 2, 2008, Linens Holding Co., which operates Linens ‘n Things, filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, leading the Company to correspondingly record an initial estimate of its potential obligations for lease guarantees based on Linens ‘n Things plan of reorganization. On October 14, 2008, it was reported that an auction of Linens ‘n Things was canceled due to lack of qualified bidders and that Linens ‘n Things expected to be liquidated. The loss from discontinued operations includes $131.5 million of lease-related costs ($213.6 million net of a $82.1 million income tax benefit), which the Company believes it will likely be required to satisfy pursuant to the lease guarantees.

Real estate program

For the quarter, CVS Caremark opened 46 new retail pharmacy stores, closed 7 retail pharmacy stores, and relocated 30 others. As of September 27, 2008, the Company operated 6,347 retail pharmacy stores, 57 specialty pharmacy stores, 20 specialty mail order pharmacies and 7 mail order pharmacies in 44 states, the District of Columbia and Puerto Rico.

Teleconference and webcast

The Company will be holding a conference call today for the investment community at 8:30 am (EDT) to discuss its quarterly results. An audio webcast of the conference call will be broadcast simultaneously through the Investor Relations portion of the CVS website for all interested parties. To access the webcast, visit http://investor.CVS.com. This webcast will be archived and available on the web site for a one-month period following the conference call.

About the Company

CVS Caremark is the largest provider of prescriptions in the nation. The Company fills or manages more than 1 billion prescriptions annually. Through its unmatched breadth of service offerings, CVS Caremark is transforming the delivery of healthcare services in the U.S. The Company is uniquely positioned to effectively manage costs and improve healthcare outcomes through its more than 6,300 CVS/pharmacy stores; its pharmacy benefit management, mail order and specialty pharmacy division, Caremark Pharmacy Services; its retail-based health clinic subsidiary, MinuteClinic; and its online pharmacy, CVS.com. General information about CVS Caremark is available through the Investor Relations portion of the Company’s website, at http://investor.CVS.com, as well as through the press room portion of the Company’s website, at www.cvs.com/pressroom.

Forward-looking statement

This press release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company strongly recommends that you become familiar with the specific risks and uncertainties outlined under the caption “Cautionary Statement Concerning Forward-Looking Statements” in its Quarterly Report on Form 10-Q for the quarter ended June 28, 2008.

(1) On March 22, 2007, pursuant to the Agreement and Plan of Merger dated as of November 1, 2006, as amended (the “Merger Agreement”), Caremark Rx, Inc. (“Caremark”) was merged with and into a newly formed subsidiary of CVS Corporation, with the CVS subsidiary continuing as the surviving entity. Under the terms of the Merger Agreement, Caremark shareholders received 1.67 shares of common stock, par value $0.01 per share of the Corporation for each share of common stock of Caremark, par value $0.001 per share, issued and outstanding immediately prior to the effective time of the merger. Further, the results of operations for the thirty-nine weeks ended September 29, 2007 include 192 days of Caremark’s results of operations.

(2) In connection with certain business dispositions completed between 1991 and 1997, the Company continues to guarantee approximately 220 store lease obligations for a number of former subsidiaries, including Linens ‘n Things. On May 2, 2008, Linens Holding Co., which operates Linens ‘n Things, filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, leading the Company to correspondingly record an initial estimate of its potential obligations for lease guarantees based on Linens ‘n Things plan of reorganization. On October 14, 2008, it was reported that an auction of Linens ‘n Things was canceled due to lack of qualified bidders and that Linens ‘n Things expected to be liquidated. The loss from discontinued operations includes $131.5 million of lease-related costs ($213.6 million net of a $82.1 million income tax benefit), which the Company believes it will likely be required to satisfy pursuant to the lease guarantees.

(3) Diluted earnings per common share is computed by dividing (i) net earnings, after accounting for the difference between the dividends on the ESOP preference stock and common stock and after making adjustments for the incentive compensation plans by (ii) Basic shares plus the additional shares that would be issued assuming that all dilutive stock awards are exercised and the ESOP preference stock is converted into common stock. The dilutive earnings adjustment was $0.8 million and $0.9 million for the thirteen weeks ended September 27, 2008 and September 29, 2007, respectively. The dilutive earnings adjustment was $2.7 million and $2.8 million for the thirty-nine weeks ended September 27, 2008 and September 29, 2007, respectively.

Adjusted Earnings Per Share

For internal comparisons, management finds it useful to assess year-to-year performance adjusting diluted earnings per share for amortization, which primarily relates to acquisition activities.

The Company defines adjusted earnings per share as earnings from continuing operations before income taxes plus amortization, less income tax provision and dilutive earnings adjustment, divided by the weighted average diluted common shares outstanding.

Following is a reconciliation of earnings from continuing operations before income tax provision to adjusted earnings per share:

Free Cash Flow

The Company defines free cash flow as net cash provided by operating activities less net additions to properties and equipment (additions to property and equipment plus proceeds from sale-leaseback transactions).

Following is a reconciliation of net cash provided by operating activities to free cash flow:

Supplemental Unaudited Information

The Company evaluates segment performance based on net revenue, gross profit and operating profit before the effect of discontinued operations and certain intersegment activities and charges. Following is a reconciliation of the Company’s business segments to the accompanying consolidated financial statements:

(1) Net revenues of the Pharmacy Services Segment include approximately $1,499.5 million and $1,454.6 million of Retail Co-payments for the thirteen weeks ended September 27, 2008 and September 29, 2007, respectively. Net revenues of the Pharmacy Services Segment include approximately $4,704.6 million and $3,022.7 million of Retail Co-payments for the thirty-nine weeks ended September 27, 2008 and September 29, 2007, respectively.

(2) Intersegment eliminations relate to intersegment revenues and accounts receivables that occur when a Pharmacy Services Segment customer uses a Retail Pharmacy Segment store to purchase covered products. When this occurs, both segments record the revenue on a standalone basis.

(1) Operating expenses include merger and integration costs associated with the Caremark Merger of $10.0 million for the thirteen weeks ended September 29, 2007. Operating expenses include merger and integration costs associated with the Caremark Merger of $1.0 million and $20.7 million for the thirty-nine weeks ended September 27, 2008 and September 29, 2007, respectively.

(2) On June 2, 2006, we acquired certain assets and assumed certain liabilities from Albertson’s, Inc. for $4.0 billion. The assets acquired and the liabilities assumed included approximately 700 standalone drugstores and a distribution center located in La Habra, California (collectively, the “Standalone Drug Business”). The sales results of the Standalone Drug Business were included in same store sales revenue beginning July 1, 2007.

(1) Effective September 1, 2007, we converted a number of the PharmaCare retail pharmacy network contracts to the Caremark contract structure, which resulted in those contracts being accounted for using the gross method. This change caused total net revenues to increase by approximately $429.6 million and $1.8 billion during the thirteen and thirty-nine weeks ended September 27, 2008, respectively.

(2) The Comparable Financial Information combines the historical Pharmacy Services Segment results of CVS and Caremark assuming the Caremark Merger and any adjustments to the estimated assets acquired and liabilities assumed as of March 22, 2007 occurred at the beginning the thirty-nine week period ended September 29, 2007. Accordingly, the comparable results include incremental depreciation and amortization resulting from the fixed and intangible assets recorded in connection with the Caremark Merger and exclude merger-related expenses and integration costs. The comparable financial information has been provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by the combined business segment for the periods presented or that will be achieved by the combined business segment in the future.

(3) Merger and integration costs for the thirteen and thirty-nine weeks ended September 27, 2008 primarily consist of system integration and facility consolidation costs. Merger and integration costs for the thirteen weeks ended September 29, 2007 primarily consist of severance and retention, system integration and facility consolidation costs. Merger and integration costs for the thirty-nine weeks ended September 29, 2007, additionally include $80.3 million of stock option expense associated with the accelerated vesting of certain Caremark stock options, which vested upon consummation of the merger due to change in control provisions of the underlying Caremark stock option plans, $42.9 million of change in control payments due upon the consummation of the merger due to change in control provisions in certain Caremark employment agreements and merger-related costs of $128.0 million.

EBITDA and EBITDA per Adjusted Claim

The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization (and excluding merger and integration related costs). We define EBITDA per adjusted claim as EBITDA divided by adjusted pharmacy claims. Adjusted pharmacy claims normalize the claims volume statistic for the difference in average days’ supply for mail and retail claims. Adjusted pharmacy claims are calculated by multiplying 90-day claims (the majority of total mail claims) by 3 and adding the 30-day claims. EBITDA can be reconciled to operating profit, which we believe to be the most directly comparable GAAP financial measure.

Following is a reconciliation of operating profit to EBITDA:

(1) The Comparable Financial Information combines the historical Pharmacy Services Segment results of CVS and Caremark assuming the Caremark Merger and any adjustments to the estimated assets acquired and liabilities assumed as of March 22, 2007 occurred at the beginning of the thirty-nine week period ended September 29, 2007. The comparable results include incremental depreciation and amortization resulting from the fixed and intangible assets recorded in connection with the Caremark Merger and exclude merger-related expenses and integration costs. The comparable financial information, which is used by management to assess year-to-year performance, has been provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by the combined business segment for the periods presented or that will be achieved by the combined business segment in the future.

(2) Merger and integration costs for the thirteen weeks ended September 27, 2008 primarily consist of system integration costs. Merger and integration costs for the thirteen weeks ended September 29, 2007 primarily consist of severance and retention costs.