The ratings on Woonsocket, R.I.-based CVS Caremark Corp. reflect Standard&Poor's Ratings Services' expectations that solid operating performance at the retail segment will largely offset weaknesses at the pharmacy benefit management (PBM) segment, and the company will maintain a moderate financial policy commensurate with the rating. We view CVS' business risk profile as "strong" (according to out criteria), supported by its solid position in the drugstore industry (which we regard favorably), leading position as a PBM company, diverse cash flow stream, and generally good operating performance. However, the company participates in the highly competitive retail pharmacy industry, the PBM segment has underperformed compared to its peers, and the practices of PBMs are subject to the uncertain effects of ongoing
