In 2016, we benefited from our ongoing focus on the three key financial pillars that we consider essential to maximizing shareholder value:
- Driving productive, long-term growth;
- Generating significant levels of free cash flow; and
- Optimizing capital allocation.
Net revenues for the year increased nearly 16 percent to a record $177 billion, while adjusted earnings per share (EPS) rose 13 percent to $5.84. The compound annual growth rate in operating profit and adjusted EPS puts us at the high end of the steady state growth targets we introduced in 2013.
We experienced strong organic prescription growth across the enterprise in 2016, augmented by the Omnicare and Target acquisitions. Moreover, the successful CVS Caremark® PBM selling season of 2015 led to growth in our membership base and claims in 2016.
That said, we do expect to experience some headwinds in the near term that will slow earnings growth in 2017, driven primarily by pharmacy network changes announced late in 2016 that are causing some retail prescriptions to migrate out of our pharmacies. Additionally, our entire industry is facing uncertainty surrounding health care reform. All of these factors contributed to a 19 percent decline in CVS Health’s stock price in 2016, although we have still outperformed both the S&P 500 Index and the Dow Jones Industrial Average on a five- and 10-year basis.
We have already developed a four-point plan that will help us generate more robust levels of earnings growth in the years ahead. First, we will leverage our enterprise capabilities and CVS Pharmacy’s compelling retail value proposition to partner more broadly with other PBMs and health plans. Our recent announcement that OptumRx members now have the option to fill their 90-day prescriptions at a CVS Pharmacy is just one example.
Second, we will continue to innovate to bring new, integrated PBM products to market that capitalize on the benefits inherent in our integrated model. Take Maintenance Choice, which gives plan members the option of receiving their 90-day prescriptions in the mail or through in-store pickup. Its latest iteration, now in the pilot phase, brings convenience to the next level by offering same-day delivery within two to three hours to a member’s home or workplace.
Third, we have launched an enterprise streamlining initiative that we expect to result in nearly $3 billion in cumulative savings by 2021. It includes enhancing the efficiency of our shared services functions, optimizing our pharmacy delivery platform, and rationalizing our store footprint. As part of the latter, we expect to close approximately 70 stores in 2017. Many are located close to our CVS Pharmacy locations within Target stores.
Finally, we have significant cash generation capabilities that provide us with a variety of ways to grow and return value to shareholders. Free cash flow totaled $8.1 billion in 2016, and we returned $6.3 billion to shareholders through dividends and share repurchases during the year. After increasing our quarterly dividend by 21 percent for 2016, our board of directors has approved an additional 18 percent increase for 2017. That marks our 14th consecutive year of increasing the dividend. We will also continue to repurchase shares, taking advantage of the recent decline in our stock price. Through dividends and share repurchases, we expect to allocate more than $7 billion in 2017 to enhancing total returns for shareholders.
As exemplified by Omnicare and Target, we also use our cash flow for strategic acquisitions and other ventures that supplement our existing asset base and provide a platform for long-term growth. We will continue to identify such opportunities in the future, always taking a disciplined approach to deploying capital. With well-laddered debt maturities and a high triple-B credit rating, we have a healthy balance sheet that provides flexibility and allows us to maximize shareholder value for the long term. In fact, we took advantage of the favorable interest rate environment in 2016 to reduce long-term debt levels and the associated interest expense.