Cvs Health Corporation · NYSE:CVS
Cvs Health — Investor Day (December 2014)
38 slides from Cvs Health's investor day presentation, Dec 16, 2014
Slide 1: Driving Growth Across the CVS Health Enterprise
Driving Growth Across the CVS Health Enterprise Larry y Merlo President & Chief Executive Officer
Slide 2: Agenda
Agenda We Made the Right Moves Positioned for Today, Today Preparing for Tomorrow Enterprise Growth Strategy Capitalizes on Unique Competitive Advantages ©2014 CVS Health 2
Slide 3: We Made the Right Moves and Capitalized on Market Trends
We Made the Right Moves and Capitalized on Market Trends Cost-Quality- CVS and Caremark merged and evolved into unique, integrated company Access Conundrum Introduced I t d d diff differentiated ti t d pharmacy h solutions l ti tto marketplace k t l Significant Influx Broadened capabilities wi
Slide 4: Built One-of-a-kind Health Care Company with Unmatched Integrated Assets
Built One-of-a-kind Health Care Company with Unmatched Integrated Assets Only O l company withith th the ability bilit tto iimpactt consumers, payors, and providers with innovative, channel-agnostic solutions Broadest capabilities to holistically manage patient in fast growing specialty market fast-
Slide 5: Results: Captured More Than One Third of Total Market Growth
Results: Captured More Than One Third of Total Market Growth Total U.S. Rx Market (Rx dispensed, billions) 5.4 ~860 million new Rx 4.5 2008 2014E Note: 1. All prescriptions dispensed on a 30-day equivalent basis. Source: IMS data, CVS Health Internal Analysis ©2014 CVS Health 5
Slide 6: Results: Captured More Than One Third of Total Market Growth
Results: Captured More Than One Third of Total Market Growth Total U.S. Rx Market (Rx dispensed, billions) 5.4 One CVS Health share Third ~300M 300M RRx 4.5 2008 2014E Gaining share in a growing Rx market Note: 1. All prescriptions dispensed on a 30-day equivalent basis. Source: IMS data, CVS Health
Slide 7: Results: CVS/pharmacy Capturing Increasing Share of Growing CVS/caremark Volume
Results: CVS/pharmacy Capturing Increasing Share of Growing CVS/caremark Volume CVS/caremark Retail Network Claims (Rx, millions) ~930 Share growth validates our channel-agnostic 575 approach and the power of our unique model CVS/pharmacy 31% 19% Share 2008 2014E Notes: 1. CVS/pharmacy share of CVS/
Slide 8: Results: Enterprise Capturing Increasing Share of Growing CVS/caremark Book
Results: Enterprise Capturing Increasing Share of Growing CVS/caremark Book Total CVS/caremark Claims (Rx, millions) ~1,075 740 155 million incremental scripts filled through one of our enterprise channels 430 CVS Health 275 2008 2014E Notes: 1 CVS/caremark claims processed in Enterprise Channels (C
Slide 9: Agenda
Agenda We Made the Right Moves Positioned for Today, Today Preparing for Tomorrow Enterprise Growth Strategy Capitalizes on Unique Competitive Advantages ©2014 CVS Health 9
Slide 10: CVS Health is Positioned to Meet Evolving Priorities of Marketplace
CVS Health is Positioned to Meet Evolving Priorities of Marketplace Demographics g p and reform continue to transform market Plan sponsors looking Pl l ki for f innovative i ti ways to control spend Consumers playing a more active role in health care Providers partnering to drive outcomes ©2014 CVS
Slide 11: Health Reform and Demographics Expanding Insured Population
Health Reform and Demographics Expanding Insured Population Growth in U.S. Insured Lives (lives, millions) +36M 300 264 34 Individuals/Exchanges 14 53 65 Medicaid 49 69 Medicare 148 132 Employer-sponsored 2013 2019E Newly-insured lives will drive utilization Source: CVS Health Internal Analysis; Med
Slide 12: Medicare Population Growing and Utilizing 3X as Many Scripts
Medicare Population Growing … and Utilizing 3X as Many Scripts as Patients Under 65 Growth in Medicare Lives CVS Health Advantages (lives in million) • SilverScript is 2nd largest PDP 69 • Support Medicare Part D offerings of 40 health plans 49 • CVS/pharmacy: preferred provider with ~7,800 7,800 dr
Slide 13: Dramatic Increase in Medicaid Lives Will Also Drive Growth
Dramatic Increase in Medicaid Lives Will Also Drive Growth Growth in Medicaid Lives CVS Health Advantages (lives in million) 65 • CVS/caremark: A leader with 19% share of Managed Medicaid 53 • Adoption of restricted networks drives share to CVS/pharmacy • CVS/pharmacy: Medicaid represents 14% of Rx
Slide 14: Well Positioned to Gain Share on Exchanges
Well Positioned to Gain Share on Exchanges PBM: • Participate through health plan clients on a Public carve-in basis Exchanges • Participate on a carve-in basis through PBM: health plan clients Private • Participate on a carve-out basis as a standalone PBM Exchanges g • Provide coverage to retirees
Slide 15: CVS Health Brings Value to Health Plans Whether or Not We Are the PBM
CVS Health Brings Value to Health Plans Whether or Not We Are the PBM PBM Client Non-PBM Partner • State-of-the-art pharmacy platforms • Preferred Medicare Part D network • Procurement, Procurement fulfillment, fulfillment contracting • Restricted R t i t d network t k on exchanges h • Preferred Med
Slide 16: CVS Health is Positioned to Meet Evolving Priorities of Marketplace
CVS Health is Positioned to Meet Evolving p Priorities of Marketplace Demographics g p and reform continue to transform market Plan sponsors looking Pl l ki for f innovative i ti ways to control spend Consumers playing a more active role in health care Providers partnering to drive outcomes ©2014 CV
Slide 17: Largest Specialty Pharmacy in the U.S.
Largest Specialty Pharmacy in the U.S. … CVS Health Dispensing Share of Specialty Revenues Addressable Specialty Market ($ billi ($, billions)) ($ billi ($, billions)) 37 86 CVS Health 31 25% 22 19 All Other Specialty 12 Pharmacies 75% 2011 2012 2013 2014E 2015E 2014E Dispensed Managed Note: 1. Addr
Slide 18: With Expanding Opportunity in This Fast-growing Market
… With Expanding Opportunity in This Fast-growing Fast growing Market Addressable Specialty Market (($, billions)) 16% CAGR 153 118 86 2014E 2016E 2018E Medical Pharmacy Note: 1. Addressable specialty market currently excludes infused oncology. Source: NHE, Artemetrx, CVS Health Internal Analysis, 2
Slide 19: Only CVS/specialty Can Manage the Patient, Not Just the Drug
Only CVS/specialty Can Manage the Patient, Not Just the Drug Specialty as Percentage of CVS Health Advantages Total Client Drug Spend • 35+ year history in specialty 50% • Ability to manage across both 38% medical di l and d pharmacy h b benefit fit • Infusion services • Medical claims management •
Slide 20: Supporting Plan Sponsors with Programs that Meet Their Individual Needs
Supporting Plan Sponsors with Programs that Meet Their Individual Needs Clinical Medicare Site-of-care Leadership Performance Network Management • Industry-leading • 40 health plan clients • Infusion at home vs. adherence with Medicare Part D clinic, doctor, or offerings ff hospital • Disease Manage
Slide 21: Plan Sponsors Continue to Shift to More Narrow Physician/Hospital Networks
Plan Sponsors Continue to Shift to More Narrow Physician/Hospital Networks Physician/Hospital Network Plan CVS Health Advantages Design for Exchange Beneficiaries • Expect greater movement towards narrow Rx networks • Medicare M di P Partt D D: preferred f d provider id 30% for 20 regional/national
Slide 22: CVS Health is Positioned to Meet Evolving Priorities of Marketplace
CVS Health is Positioned to Meet Evolving Priorities of Marketplace Demographics g p and reform continue to transform market Plan sponsors looking Pl l ki for f innovative i ti ways to control spend Consumers playing a more active role in health care Providers partnering to drive outcomes ©2014 CVS
Slide 23: Retailization of Health Care Leads to More Consumer Accountability
Retailization of Health Care Leads to More Consumer Accountability Availability of CDHPs Among CVS Health Advantages Large Employers • Convenient CVS/pharmacy and CVS/minuteclinic locations 49% • CVS/minuteclinic CVS/ i t li i offers ff high hi h quality, low cost site of care with 53% transparent p
Slide 24: Example: Role of Plan Design in Avoiding Unintended Consequences with CDHPs
Example: Role of Plan Design in Avoiding Unintended Consequences with CDHPs Improve Good Trend: Reduce Bad Trend: Drive Adherence Lower Costs Utilization Utilization Class Name Class Name Trend Trend Antidiabetics 13.7% Dermatologics -36.5% Antihypertensives 11.6% Ophthalmic Agents -29.2% Antidepres
Slide 25: CVS Health is Positioned to Meet Evolving Priorities of Marketplace
CVS Health is Positioned to Meet Evolving Priorities of Marketplace Demographics g p and reform continue to transform market Plan sponsors looking Pl l ki for f innovative i ti ways to control spend Consumers playing a more active role in health care Providers partnering to drive outcomes ©2014 CVS
Slide 26: ACO Growth Continues as Providers Seek to Increase Coordination of Care
ACO Growth Continues as Providers Seek to Increase Coordination of Care Total Number of ACOs CVS Health Advantages 522 • Unique products: CVS/minuteclinic and Pharmacy Advisor • Ability to seamlessly integrate with providers’ EHRs • Tobacco exit more closely aligns 30 us with p provider g goals 2010
Slide 27: Health Engagement Engine Enables More Effective Interventions
Health Engagement Engine Enables More Effective Interventions to Support Patient Care Goals Health Engagement Engine ©2014 CVS Health 27
Slide 28: Agenda
Agenda We Made the Right Moves Positioned for Today, Today Preparing for Tomorrow Enterprise Growth Strategy Capitalizes on Unique Competitive Advantages ©2014 CVS Health 28
Slide 29: Enterprise Growth Strategy Capitalizes on Unique Competitive Advantages
Enterprise Growth Strategy Capitalizes on Unique Competitive Advantages 1 2 3 4 Winning Greater Operational Innovating lives share of Rx efficiency Whether or not Across all To better meet Excellence in we’re the PBM channels evolving customer execution needs CVS Health best-positioned to meet evolv
Slide 30: Examples of How We Are Enabling Innovation
Examples of How We Are Enabling Innovation Integrated Partnering with Digital Offerings Health Plans Expanding Role in Specialty Transforming Differentiating Unlocking with ith P Providers id Primary Care Adherence ©2014 CVS Health 30
Slide 31: Positioned for Today, Preparing for Tomorrow
Today’s Key Takeaways Positioned for Today, Preparing for Tomorrow Foresaw changes in the healthcare landscape and Made the Right Moves b ilt one-of-a-kind built f ki d company to t drive d i continued ti d growth th Winning g in the marketplace p with integrated g model and Still … Onl Only CVS uni
Slide 32: Appendix
Appendix ¥CVvSHealth
Slide 33: CVS Health: Preparing for Tomorrow - Partnering with Health Plans
CVS Health: Preparing for Tomorrow • Health plans offer largest opportunity to gain new lives and grow enterprise share • Ability to partner with health plans Partnering with when we are not the PBM through Health Plans narrow networks and other value- added services • Potential for health plan rela
Slide 34: CVS Health: Preparing for Tomorrow - Expanding Role in Specialty
CVS Health: Preparing for Tomorrow • Specialty drug market expected to grow at 16% over next several years • Clients have become increasingly Expanding Role focused on managing Specialty trend in Specialty p • CVS/specialtyy well p positioned to win in both patient-choice and payor-directed marketpl
Slide 35: CVS Health: Preparing for Tomorrow - Integrated Digital Offerings
CVS Health: Preparing for Tomorrow • Enterprise vision to create a “Connected” Connected Health Experience Integrated • First-in-class tools to help patients seamlessly manage retail, mail, and Digital Offerings specialty prescriptions • Enhanced front store personalization tools drive value for cus
Slide 36: CVS Health: Preparing for Tomorrow - Unlocking Adherence
CVS Health: Preparing for Tomorrow • 50% of patients do not adhere to medications as p prescribed costingg heath care system ~$300B annually Unlocking • Developing best-in-class, enterprise Adherence solutions to help patients stay adherent • Improving adherence creates value for patients, clients,
Slide 37: CVS Health: Preparing for Tomorrow - Transforming Primary Care
CVS Health: Preparing for Tomorrow • Primary care shortage and continued retailization of health care put emphasis on cost, cost quality quality, and access Transforming • CVS/minuteclinic offers national footprint Primary Care of high-quality, low-cost retail clinics • Expanding services and establ
Slide 38: CVS Health: Preparing for Tomorrow - Differentiating with Providers
CVS Health: Preparing for Tomorrow • Health care providers are forming groups to improve outcomes and better manage overall health care costs • Providers see value in increasing Differentiating coordination with patients’ pharmacists with Providers • Support providers with adherence, adherence dispe