CVS Health Corporation · NYSE:CVS
CVS Health — Investor Day (December 2015)
51 slides from CVS Health's investor day presentation, Dec 16, 2015
Slide 1: Changing the Face of Retail Pharmacy Through Innovation
Changing the Face of Retail Pharmacy Through Innovation Helena Foulkes Executive Vice President & President CVS/pharmacy President,
Slide 2: Agenda
Agenda Strong Core Performance Expanding Our Footprint Reinventing Retail Pharmacy to Drive Outcomes Evolution of CVS/minuteclinic Driving Growth in Front Store 2
Slide 3: Retail Pharmacy at a Glance
Retail Pharmacy at a Glance 2015E CVS/pharmacy Revenue 72% Pharmacy y Pharmacy is a significant portion of retail revenue 3
Slide 4: Strong Record of Share Growth in Both Pharmacy and Front Store
Strong Record of Share Growth in Both Pharmacy and Front Store CVS/pharmacy Share of Total U.S. Health & Beauty Share Retail Prescriptions +240 +50 bps bps 21.6% 11.5% 12.0% 19.2% 2010 2015E 2010 2015E Note: Note: 1. Compares 2015 90 day adjusted scripts from January through August to 1. Market = re
Slide 5: Continued Strength in Core Retail Pharmacy Business
Continued Strength in Core Retail Pharmacy Business Growth in Prescriptions (2010 – 2015) 38% ~2X Nearly 44% of Faster our growth 19% through non- CVS/caremark payors CVS/pharmacy All Other Market Notes: 1 Compares total CVS/pharmacy prescriptions for 90 day adjusted scripts January through August f
Slide 6: Continued Strength in Core Retail Pharmacy Business
Continued Strength in Core Retail Pharmacy Business Growth in Prescriptions (2010 – 2015) 38% ~2X 19% Faster ~13% reduction in labor cost to fill each Rx since 2010 CVS/pharmacy All Other Market Notes: 1 Compares total CVS/pharmacy prescriptions for 90 day adjusted scripts January through August for
Slide 7: Various Channels to Drive Growth in Pharmacy Volume
We Are Continuing to Use Various Channels to Drive Growth in Pharmacy Volume Retail (CVS/pharmacy & CVS/minuteclinic) CVS/caremark Target Partnership Omnicare Acquisition Leveraging our integrated model to drive pharmacy innovation 7
Slide 8: Success in High Margin Health & Beauty Businesses
Success in High Margin Health & Beauty Businesses Health & Beauty Sales Key Takeaways ($, billions) • These Th are categories i where h we +3.7% have a right to win, most CAGR 11.0 closely tied to pharmacy 92 9.2 • Projected P j t d tto grow 2X ffaster t than General Merchandise & Edibles over the n
Slide 9: Continued Success in Store Brands
Continued Success in Store Brands Store Brands Penetration Key Takeaways • Penetration increased ~300 bps 25% since 2014, with 150 bps ~22% attributable to tobacco exit ~17% • CVS Store Brands growing more than 2X faster than industry Store • Focus on Healthy Food Food, exclusive Beauty brands and c
Slide 10: Agenda
Agenda Strong Core Performance Expanding Our Footprint Reinventing Retail Pharmacy to Drive Outcomes Evolution of CVS/minuteclinic Driving Growth in Front Store 10
Slide 11: Growing Our Business Through Acquisition of Target Pharmacies and Clinics
Growing Our Business Through Acquisition of Target Pharmacies and Clinics TARGET PHARMACIES TARGET CLINICS • More than 1,660 pharmacies • ~80 clinics • ~4,000 ~4 000 pharmacists • ~380 380 clinical li i l providers and • ~10,000 technicians staff members • ~80 80 field fi ld lleaders d • 430,000 ann
Slide 12: Target Pharmacies Complement and Expand Our Existing Footprint
Target Pharmacies Complement and Expand Our Existing Footprint, Increasing Patient Access OR ID SD CO New regions AK include … • Seattle • Denver • Portland • Salt Lake City Current CVS/pharmacy states New states 12
Slide 13: Transitioning New Assets to Our Brand and Network
Transitioning New Assets to Our Brand and Network • Rebrand as CVS/pharmacy y and MinuteClinic • Introduce unique CVS clinical programs and capabilities • Focus on driving script growth and profitability 13
Slide 14: Acquisition Will Benefit New and Existing Patients
Acquisition Will Benefit New and Existing Patients Opportunity to Narrow the … and Help Patients on Their Prescription p Volume Gap… p Path to Better Health Average Prescriptions per • Target guests gain access to best- Pharmacy in-class health care services – Maintenance M i t Ch Choice i ~2X – Pha
Slide 15: Expanded Network Increases Options for Payor Partners – Example: Minnesota
Expanded Network Increases Options for Payor Partners – Example: Minnesota Number of Locations 132 72 51% increase in 57 CVS/caremark 26 members with 60 access to t 31 CVS/pharmacy Pharmacies Clinics CVS Target We are now better positioned to help Minnesota payors by reducing their costs and helping
Slide 16: Agenda
Agenda Strong Core Performance Expanding Our Footprint Reinventing Retail Pharmacy to Drive Outcomes Evolution of CVS/minuteclinic Driving Growth in Front Store 16
Slide 17: Unique Model Enables Deep Understanding of Both B2B and B2C Capabilities
Unique Model Enables Deep Understanding of Both B2B and B2C Capabilities I Integrated d B2B and d B2C C Capabilities bili i B2B Focus on Uniquely positioned payors and for the retailization of providers to drive outcomes B2C health care with the power of our face-to-face model 17
Slide 18: Five Key Innovations Are Delivering Value to Customers and Strategic Partners
Five Key Innovations Are Delivering Value to Customers and Strategic Partners 1 Next Generation Patient Care 2 ScriptSync Value to Customers 3 Specialty Connect and Partners 4 Strategic Partnerships 5 Digital Integration 18
Slide 19: Next Generation Patient Care: New Patient-centric Approach
Next Generation Patient Care: New Patient- 1 centric Approach to Drive Retail Pharmacy Growth Traditional Next Generation Patient Care Pharmacyy Model Customer insights enable patient-centric, targeted approach Demographics Broad- based service to all Geography Clinical inputs Customer preferences S
Slide 20: Example: Proactive Weather Campaign
Example: Proactive Weather Campaign – Partnering 1 with the U.S. Department of Health & Human Services Mobilized and Positive Responses Across Launched in 36 Hours Multiple p Channels ~185k~400k voice calls “ Thank you very much; you guys are automated awesome. I am so glad I have you for my calls d
Slide 21: ScriptSync: Making It Easier to Manage Multiple Medications
ScriptSync: Making It Easier for Our Patients to 2 Manage Multiple Medications Pre-ScriptSync Post-ScriptSync Post-ScriptSync JANUARY FEBRUARY Solution benefits patients, payors and CVS Consolidates to one pick-up date each month Provides improved patient adherence Creates efficiencies for pha
Slide 22: Specialty Connect: Seamless Customer Experience for Specialty Care
Specialty Connect: Seamless Customer Experience 3 for All Specialty Care Needs at CVS/pharmacy Patients Receive Support from Both Local Pharmacists and Specialty CareTeam Experts Local CVS pharmacist Specialty CareTeam can help onboard provides ongoing counseling specialty patients to support adhere
Slide 23: Strategic Partnerships: BCBSA Federal Employee Program
Strategic Partnerships: We Partner with BCBSA 4 Federal Employee Program to Provide Customer Care Encouraging FEP Members with Diabetes to Complete an A1c Test 1. Letter from plan 2. Face-to-face counseling 3. HealthTag message from pharmacist about A1c tests at CVS/minuteclinic An important message
Slide 24: Strategic Partnerships: A Resource for Health Plans
Strategic Partnerships: A Resource for Health Plans 4 as They Respond to the Retailization of Health Care Val e to Health Plans Value Cost-effective way to drive member acquisition, engagement and retention Value to Consumers Convenient access to health insurance resources for customers Value to CVS
Slide 25: Digital Drives Adherence, Pharmacy Growth and Loyalty
Digital Drives Adherence, Pharmacy Growth and 5 Loyalty Prescriptions Filled 1 in 3 patients enrolled in 2.4X text messaging More than 200 million text reminders sent to patients Added medication reminder and mobile Rx Non-Digital g Patients Digital g pick-up tools Patients Digital integration
Slide 26: Agenda
Agenda Strong Core Performance Expanding Our Footprint Reinventing Retail Pharmacy to Drive Outcomes Evolution of CVS/minuteclinic Driving Growth in Front Store 26
Slide 27: 2010: 454 MinuteClinic Locations
2010: 454 MinuteClinic Locations 454 Full-time clinics in 2010 27
Slide 28: 2015: 1,055 MinuteClinic Locations in 32 States and Washington, D.C.
2015: 1,055 MinuteClinic Locations in 32 States and Washington, D.C. 1,055+ Full-time clinics in 2015 28
Slide 29: 2016: 1,055 MinuteClinic Locations and Integrating ~80 Target Clinics
2016: 1,055 MinuteClinic Locations in 32 States (and D.C.) and Integrating ~80 80 Target Clinics 1,135 Full-time clinics in 2016 Legend: Clinic State MinuteClinic Target Clinic More than 50% of the U.S. population is within 10 miles of a MinuteClinic 29
Slide 30: MinuteClinic Expanding Scope of Care on Epic EHR Platform
CVS/minuteclinic Expanding Scope of Care on Epic Electronic Health Record Platform Primary Care Services: Epic Implementation 50 Most Common Diagnoses • National MinuteClinic roll-out of Epic EHR completed in 2015 • Epic EHR has extended connectivity to about ~56% 250 provider organizations of most
Slide 31: Looking Ahead: Expanding Digital Services and Partnering for TeleHealth
Looking Ahead: Expanding Digital Services and Partnering to Expand TeleHealth Digital Solutions Partnering for TeleHealth Online wait times Remote queuing Future scheduling Innovations will continue to evolve our model of convenient and affordable health care 31
Slide 32: Agenda
Agenda Strong Core Performance Expanding Our Footprint Reinventing Retail Pharmacy to Drive Outcomes Evolution of CVS/minuteclinic Driving Growth in Front Store 32
Slide 33: Continue to Expand Our Basket Despite Industry Headwinds
Continue to Expand Our Basket Despite Industry Headwinds U.S. Store Trips Growth in Sales per CVS Basket (trips per person per year) (2015 over 2014) -2% 4.0% 150 148 143 2.0% 2013 2014 2015 Overall Health & Beauty Focus on driving profitable front store growth, attracting new pharmacy patients Note
Slide 34: Front Store Strategy Launched in 2015 with Five Key Themes
We Launched Front Store Strategy in 2015 with Five Key Themes to Drive Growth Be a L B Leading di Health H lth and d Beauty Destination 1 2 3 4 5 Better Health Elevate MyCVS Customer- Digital Made Easy Beauty Store Driven Innovation Personalization Investing for the Future 34
Slide 35: Front Store Strategy Launched in 2015 with Five Key Themes
We Launched Front Store Strategy in 2015 with Five Key Themes to Drive Growth Be a L B Leading di Health H lth and d Beauty Destination 1 2 3 4 5 Better Health Elevate MyCVS Customer- Digital Made Easy Beauty Store Driven Innovation Personalization In-store enhancements in the chain 35
Slide 36: Executed Better Health Made Easy and Elevate Beauty Strategy
We Executed Key Elements of Our Better Health Made Easy and Elevate Beauty Strategy in 3 Different Ways In-store enhancements Store Remodel 1 2 Better Health Elevate Made Easy Beauty Light Touch Store Enhancement Assortment Expansion 36
Slide 37: Changes Have Enhanced Thousands of Stores and Improved Customer Experience
These Changes Have Enhanced Thousands of Stores and Improved Customer Experience In-store enhancements • Prioritized Health, Healthy Food Store and Beauty for ~450 stores Remodel • +250 bps sales lift in overall front 1 2 store performance Better Health Elevate Made Easy Beauty Light Touch • Focus o
Slide 38: Better Health Made Easy: Revolutionizing Healthy Food Industry
Better Health Made Easy: Revolutionizing Healthy 1 Food Industry “ I love the fact CVS added so much healthy food – CVS • Edibles up +8.5% overall in remodel stores is really putting their money where • 75% of shoppers indicate an intention of their mouth is! shopping more for on-the-go snacking at
Slide 39: Better Health Made Easy: Leading Change from Sick Care to Self Care
Better Health Made Easy: Leading Change from 1 Sick Care to Self Care Health Quadrant Hearing & Optical Center Pilots • Health up +1.9% in remodeled stores • 12 pilot stores launched in 2015 • Key categories such as Vitamin, Allergy, Cold have seen high • Expanding on innovative health- growth due t
Slide 40: Elevate Beauty: Multi-step Process (Before)
Elevate Beauty: Multi-step Process to Re-imagine 2 Beauty Segment Before (2014) 40
Slide 41: Elevate Beauty: Elevated Cosmetics Wall
Elevate Beauty: Multi-step Process to Re-imagine 2 Beauty Segment After1. Elevated Cosmetics Wall 4,500 stores 41
Slide 42: Elevate Beauty: Self Service Customer Units
Elevate Beauty: Multi-step Process to Re-imagine 2 Beauty Segment After 2. Self Service Customer Units 1 600 1,600 stores 42
Slide 43: Elevate Beauty: Elevated Facial
Elevate Beauty: Multi-step Process to Re-imagine 2 Beauty Segment 3. Elevated Facial After 2,000 , stores 43
Slide 44: Elevate Beauty: Remodel Store Results
Elevate Beauty: Multi-step Process to Re-imagine 2 Beauty Segment After Remodel Store Results Beauty y / Personal Care: +3.7% Note: 1. Store reset doors (n=85) at steady state (24+ weeks post-construction, through 9/26). 44
Slide 45: MyCVS Store: Poised to Capture High-growth Hispanic Cluster
MyCVS Store: Poised to Capture the High-growth 3 Hispanic Cluster • Sales up p +10% in 11 test stores • Strong results: Edibles +11% and Beauty +20% • 700 stores in chain with matching demographics Note: 1. Results are at steady state program to date thru 9/15 – excluding construction period. 45
Slide 46: Customer-driven Personalization: Leveraging ExtraCare
Customer-driven Personalization: The Future Is 4 Personalization by Leveraging ExtraCare More Efficient Promo Spending Accretive to Margin • De-emphasizing promotion that loses margin • Prioritizing promotion Certain Circular Promotion (e.g. Certain Circular Promotion (e.g. Soda) Drive Sales with lo
Slide 47: Customer-driven Personalization: Segmenting and Valuing Customers
Customer-driven Personalization: Using Shopping 4 Behavior to Segment and Value Our Customers 20% Lower FS Front Value Store Customers Value Customers 70% 80% Higher FS Front Value Store Value Customers Customers 30% FS Shoppers FS Revenue 47
Slide 48: Customer-driven Personalization: Leverage Data for Personalized Communications
Customer-driven Personalization: Leverage Data to 4 Produce Relevant and Personalized Communications Customer Level Data Used to Model and Predict Behavior Customer • Buys Hair Color Behavior • Increasing promo sensitivity • Establish routine Our Strategy • Create a reason to visit weekly • Personal
Slide 49: Digital Drives Front Store Sales and Loyalty
Digital Drives Front Store Sales and Loyalty 5 Spend per Customer Digitally engaged visiting stores 6X more per year 4.5X More than 12.2 million app downloads, 67% year- over-year growth Enhanced customer Non-digital Digital convenience Customers Customers Digital integration creating a better
Slide 50: The Right Strategy for an Evolving Health Care Market
The Right Strategy for an Evolving Health Care Market Demonstrating Value Delivering value through adherence to People, Payors and Providers Reducing cost of care for all stakeholders Growing g the Core,, Continuing Rx innovation to serve customer needs Broadening the Base Strengthening leadership i
Slide 51: Endnote
Endnote 1. , CVS/pharmacy, Omnicare, CVS/minuteclinic, CVS/caremark, Specialty Connect, ScriptSync, MinuteClinic, MyCVS are trademarks or registered trademarks of CVS Pharmacy, Inc. 51