CVS Health Corporation · NYSE:CVS
CVS Health — Investor Presentation (December 2014)
32 slides from CVS Health's investor presentation, Dec 16, 2014
Slide 1: Gaining Lives With Our Unique PBM Capabilities
Gaining Lives With Our Unique PBM Capabilities Jon Roberts Executive Vice President & President, CVS/caremark
Slide 2: Agenda
Agenda Performance Highlights Pharmacy Trends and Cost Management Programs Well Positioned to Grow in Evolving Health Care Environment ©2014 CVS Health 2
Slide 3: Delivering on Our Promises with Strong PBM Performance
Delivering on Our Promises with Strong PBM Performance Net Revenue Operating Profit ($, billions) ($, billions) 13.6% 98.2 14.6% CAGR CAGR 3.8 76.2 3.1 58.9 2.2 2011 2013 2015E 2011 2013 2015E Notes: 1. 2013 excludes Provigil. 2. 2015 reflects midpoint of guidance ranges. ©2014 CVS Health 3
Slide 4: 2015 Gross New Business of $6.6 Billion
2015 Gross New Business of $6.6 Billion $1.3 billion $6.6$3.2 billion billion $2.1 billion State of Florida Health Plan Government & Union Employer Notes: 1. As of 12/4/14. 2. Gross Wins excludes Medicare Part D SilverScript individual products. ©2014 CVS Health 4
Slide 5: Net New Client Business of $3.2 Billion with 96% Retention
Net New Client Business of $3.2 Billion with 96% Retention Revenues ($, billions) 75% of client non- renewals due to 6.6 1.8 acquisition and retirees 0.8 0.8 3.2 Business Not Renewed Gross New Acquired Moved to Exchange Other Net New Business Business (Primarily Retirees) 4 million members implement
Slide 6: How We Win: Compete on Price, Differentiate with Service and Capabilities
How We Win: Compete on Price, Differentiate with Service and Capabilities Network Strategies Advanced Exclusive Preferred Network, Adherence Formularyy Specialty Maintenance Programs Strategies Choice® ©2014 CVS Health 6
Slide 7: Aetna: Continuing to Expand Our Partnership
Aetna: Continuing to Expand Our Partnership Aetna Medicare Coventry Commercial us ess Business and a d Medicaid ed ca d Q1 2015 Q1 2016 2017 Coventry M di Medicare Maintenance Choice® and Pharmacy Advisor® continue to expand Note: 1. Aetna Medicare Business lives are moving to the CVS/caremark platf
Slide 8: Maintenance Choice: Client and Member Value Drive Continued Adoption
Maintenance Choice®: Client and Member Value Drive Continued Adoption Maintenance Choice Adoption (members, millions) ~34 20 to 21 10.8 2.9 2009 2012 2015E Runway Maintenance Choice 1.0 Maintenance Choice 2.0 Note: 1. Maintenance Choice 1.0 includes Mandatory, Mandatory Opt-Out and Incentive based.
Slide 9: Specialty Connect: Like Maintenance Choice, Only CVS Health Can Offer
Specialty ConnectTM: Like Maintenance Choice®, Only CVS Health Can Offer Counseling From Choose Where to Choose Preferred Therapy-specific g Prescription Send / Bring p Delivery Location CareTeams CVS/specialty Home / Location of Choice Full Integration With CVS/pharmacy CVS/specialty CVS/pharmacy ~
Slide 10: Pharmacy Advisor Serves All Our Lines of Business
Pharmacy Advisor® Serves All Our Lines of Business Cumulative Counseling Interventions (millions) • Successfully 99 9.9 d l deployed d across Commercial, 7.2 Medicare and Medicaid 3.8 • Delivering value in Medicare on 1.3 Clinical Star Measures Q4'11 Q4 11 Q4'12 Q4 12 Q4'13 Q4 13 Q3'14 Q3 14 Retail
Slide 11: CVS/minuteclinic Savings Strategy Continues to Grow
CVS/minuteclinic Savings Strategy Continues to Grow Client Adoption (members, thousands) • ~14 fold increase in member 14,500 lives enrolled in three years 1,200 • Launched capability to adjudicate CVS/minuteclinic ~14X services through PBM benefit 239 • Significant opportunity to grow 88 108 lives
Slide 12: Enterprise Share: ~40% of PBM Prescriptions Through CVS Health Channels
Enterprise Share: ~40% of PBM Prescriptions Through CVS Health Channels CVS Health Share of CVS/caremark Prescriptions 58% 40% 28% Book of Business Employer Health Plan Opportunity to drive additional enterprise share with health plans Note: 1. Enterprise share (includes mail) for the nine months en
Slide 13: Agenda
Agenda Performance Highlights Pharmacy Trends and Cost Management Programs Well Positioned to Grow in Evolving Health Care Environment ©2014 CVS Health 13
Slide 14: Fewer New Generics to Mitigate Trend: Spend Management Programs Increase in Importance
Fewer New Generics to Mitigate Trend: Spend Management Programs Increase in Importance Total Brand Market Sales of Expected Generic Launches ($, billions) 35.0 24.4 16.5 14.7 12.3 5.8 2012 2013 2014E 2015E 2016E 2017E Note: 1 2013 and 1. d prior i iincludes l d allll actual t l llaunches. h 2. 2014E
Slide 15: Specialty is Growing in Absolute Dollars and Percent of Total Spend
Specialty is Growing in Absolute Dollars and Percent of Total Spend Total Industry Specialty Spend ($, billions) 235 179 127 17% CAGR 92 2012 2014E 2016E 2018E Specialty Percent 30% 38% 45% 50% of Total Drug Spend Pharmacy spend Medical spend Infused oncology Source: NHE, Artemetrix, CVS/caremark in
Slide 16: Return of Double-digit Trend Requires Tighter Cost Controls
Return of Double-digit Trend Requires Tighter Cost Controls Payor Trend 10 3% 10.3% 3.8% 0.1% 2012 2013 2014E Source: 2014 - Enterprise Analytics as of Q314; excludes compounds due to client-specific strategies. ©2014 CVS Health 16
Slide 17: Our Unique Set of Tools to Manage Trend
Our Unique Set of Tools to Manage Trend Traditional / Specialty Drugs Specialty Drugs Non-specialty Drugs In Pharmacy In Medical Managed Managed, F Formulary l Advanced, Value Ad Advanced d Specialty S i lt 30- and 90-day Retail, Networks Mail,, Maintenance Choice Preferred, Exclusive and Infusion N
Slide 18: A Closer Look: Our Formulary Options Save Clients Money
A Closer Look: Our Formulary Options Save Clients Money and Drive Increased Use of Generics Managed CVS/caremark led industry with Formulary introduction of strategy to exclude certain branded drugs from formulary • Approach delivers savings to clients and their members • Improved rebates on formula
Slide 19: A Closer Look: Our Formulary Options Save Clients Money
A Closer Look: Our Formulary Options Save Clients Money and Drive Increased Use of Generics Less Savings More Managed Advanced Value Formulary Formulary Formulary Client 1% to 2% 3% to 5% 10% to 12% S i Savings GDR Increase 0 5% 0.5% 1 0% 1.0% 8% tto 10% Incremental savings of over $3 $3.5 5 billion
Slide 20: A Closer Look: Our Network Options Offer Savings and Choice
A Closer Look: Our Network Options Offer Savings and Choice Less Savings More Maintenance Choice® Maintenance Choice® Retail 90 2.0 1.0 90-day Network National Advanced ChoiceTM Exclusive Choice 68,000 50,000 19,000 30-day 30 day pharmacies h i pharmacies h i pharmacies h i Network ©2014 CVS Health
Slide 21: Agenda
Agenda Performance Highlights Pharmacy Trends and Cost Management Programs Well Positioned to Grow in Evolving Health Care Environment ©2014 CVS Health 21
Slide 22: Evolving Health Care Environment: Consumer is at the Center
Evolving Health Care Environment: Consumer is at the Center 150% % 3X growth in expected CDH covered lives enrollment by 2018 CONSUMERS 10K 40+% projected people per increase day turning in lives from 65 2013 Source: CDH - Employer Health Benefits Survey 2014; Exchanges - CBO 2014 beginning with 201
Slide 23: Five Factors Positioning Us for Solid Growth
Five Factors Positioning Us for Solid Growth Positioned To Grow With Our O Integrated I t t d Assets A t and Deep Expertise 1 2 3 4 5 Only CVS – Growth in Winning With Supporting Exceptional Differentiated Government Health Plans Providers in Service Member Programs: New Experience Medicare and Reim
Slide 24: Only CVS – Differentiated Member Experience
1 Only CVS – Differentiated Member Experience: Helps Members Better Manage Health and Costs CVS Retail CVS/minuteclinic Pharmacist Nurse Call Center CVS/specialty Care Pharmacist Team Benefit Opportunity Specialist Infusion Nurse Digital Tools ©2014 CVS Health 24
Slide 25: Growth in Government Programs: Medicare Growth Through SilverScript and Health Plan Partners
2 Growth in Government Programs: Medicare Growth Through SilverScript and Our Health Plan Partners SilverScript Choice Medicare Members By PBM and SilverScript Plus (millions) • Competitively priced OptumRx 8.4 Express Scripts 7.2 • Zero deductible and CVS Health 69 6.9 low premium Humana 6.3 • Pers
Slide 26: Growth in Government Programs: Medicare Membership Projected to be ~7.5 Million
2 Growth in Government Programs: Medicare Membership Projected to be ~7.5 7.5 Million January 2015 CVS/caremark Projected Medicare Members (millions) 0.2 7.5 0.4 6.9 2014 Individual Health Plan 2015E Medicare PDP & EGWPs Medicare Members Members Note: Preliminary projections on 12/8/14 after the clo
Slide 27: Growth in Government Programs: Increased Medicaid Enrollment
2 Growth in Government Programs: Increased Medicaid Enrollment with Lives Growth Managed Medicaid Enrollment 2015 Managed Medicaid PBM (lives, millions) (estimated % of lives) 40+% 9.9 44.4 Express Scripts Other 21% 2.8 8 34% 31 31.7 MedImpact 2013 MCO Increased New 2016 MCO 8% 19% Utili ti off Enro
Slide 28: Winning with Health Plans: $3.2 Billion Gross New Business and 30 Total Exchange Clients
3 Winning with Health Plans: $3.2 Billion Gross New Business and 30 Total Exchange Clients in 2015 Unique q PBM Comprehensive p services that meet needs for cost Model control, quality, enhanced capabilities Comprehensive p Holistic approach to manage specialty pharmacy Specialty across both pharmac
Slide 29: Supporting Providers in New Reimbursement Models: Patient-centered Medical Home Example
4 Supporting Providers in New Reimbusement Models: Patient-centered Patient centered Medical Home Example CVS/pharmacy CVS/caremark Adherence counseling Pharmacists provide and Electronic Health counseling on adherence Record notification of and comprehensive patient non-adherence medication review
Slide 30: Supporting Providers in New Reimbursement Models: Patient-centered Medical Home Example
4 Supporting Providers in New Reimbusement Models: Patient-centered Patient centered Medical Home Example CVS/pharmacy CVS/caremark Adherence counseling Pharmacists provide and Electronic Health counseling on adherence Record notification of and comprehensive patient non-adherence medication review
Slide 31: Exceptional Service: We're Raising the Bar to Ensure Continued Success
5 Exceptional Service: We’re Raising the Bar to Ensure Continued Success Monitor Continue to Evolve Invest in Performance Service Culture Infrastructure Metrics • Define success • Integrated delivery • Holistic view of channels operational • Make the metrics • Automated benefit performance visible b
Slide 32: Positioned for Today, Preparing for Tomorrow
Positioned for Today, Preparing for Tomorrow Investments and Innovations address payor needs Made the Right Moves Effectively engaging members and providers Winning in the marketplace with integrated model Still … Onl Only CVS S l and Scale d expertise ti ensure competitive titi pricing i i Differen