CVS Health Corporation · NYSE:CVS
CVS Health — CVS Caremark — Investor Day (December 2013)
34 slides from CVS Health's investor day presentation, Dec 18, 2013
Slide 1: Driving Retail Growth Through Personalization
Driving Retail Growth Through Personalization Helena Foulkes Incoming President, CVS/pharmacy Analyst Day December 18, 2013
Slide 2: Agenda
Agenda ! Retail pharmacy business performing well ! Capitalizing on the changing health care landscape ! Driving growth through personalization and enterprise assets 2
Slide 3: Strong History Of Market Share Gains
Strong History Of Market Share Gains CVS Front Store Share Of Total CVS Share Of Total U.S. U.S Drug Store Channel Prescription Market WAG / ESRX 37.0% Growth 0.6% 21.3% 21.2% 36.6% Organic Growth 0.9% 19.7% 35.0% 35.1% 19.2% 2010 2011 2012 YTD 2010 2011 2012 YTD 2013 2013 Strong underlying share gr
Slide 4: Powerful Two-year Growth Story
Powerful Two-year Growth Story Comp Script Performance Front Store Comp Performance Represents Represents 9.6% $3.9 billion in $600 million in annualized sales annualized sales 3.8% 3.2% 2.4% 0.5% -5.6% CVS Peer A Peer B CVS Peer A Peer B Notes: 1. Comp scripts do not include the adjustment to conve
Slide 5: Agenda
Agenda ! Retail pharmacy business performing well ! Capitalizing on the changing health care landscape ! Driving growth through personalization and enterprise assets 5
Slide 6: Our Brand Is A Source Of Trust As Health Care Evolves
Our Brand Is A Source Of Trust As Health Care Evolves ! Consumers trust pharmacists – 75% of people rated pharmacist very high or high on honesty and ethical standards ! Our brand is strong – More than four out of five consumers considering CVS/pharmacy as a shopping destination We serve five millio
Slide 7: Our Strategic Opportunity Is To Ensure That Our Stores Are Positioned For Growth
Our Strategic Opportunity Is To Ensure That Our Stores Are Positioned For Growth Top 10 States Based On Expected Growth In Insurance Coverage # Of Expected New Lives By State 2020 CA 3.7m TX 2.0m FL 1.7m NY 1.5m IL 1.0m MI 0.8m NC 0.7m GA 0.7m OH 0.7m NJ 0.7m Notes: 1. New lives projected by CVS Car
Slide 8: We Are Well-positioned In These States
We Are Well-positioned In These States Top 10 States Based On Expected Growth In Insurance Coverage # Of Expected New Lives By Our Current State 2020 Rx Share CA 3.7m 27.5% TX 2.0m 21.0% FL 1.7m 28.3% NY 1.5m 18.4% IL 1.0m 15.0% MI 0.8m 16.3% NC 0.7m 26.8% GA 0.7m 26.3% OH 0.7m 20.2% NJ 0.7m 28.1% F
Slide 9: Focus On Driving Pharmacy Growth And Enabling Enterprise Offerings
Focus On Driving Pharmacy Growth And Enabling Enterprise Offerings ! Best-in-class clinical and adherence programs ! Partner of choice for health plans and payors – Exchange offerings – Narrow networks – MinuteClinic ! Ability to drive cost savings and improve health outcomes for PBM clients and mem
Slide 10: Agenda
Agenda ! Retail pharmacy business performing well ! Capitalizing on the changing health care landscape ! Driving growth through personalization and enterprise assets 10
Slide 11: Driving Growth Through Personalization
Driving Growth Through Personalization 1 ExtraCare 2 Customer Service Initiatives 3 Store Brands Growth 4 Store Clustering Initiative 5 Integrated Digital Offering 11
Slide 12: ExtraCare Is The Industry's #1 Loyalty Program
1 ExtraCare Is The Industry’s #1 Loyalty Program 16 year history 343 million unique cards issued 70 million active cardholders 69% of front store transactions We have a 15-year head start on our competitors Note: Active cardholders are defined as having an ExtraCare card scanned one or more times du
Slide 13: Investing In ExtraCare To Stay On Leading Edge
1 Investing In ExtraCare To Stay On Leading Edge ! Focus on top customers and significant share of wallet opportunity ! Ensure the program is simple and highly engaging ! Leverage insights to convert customers to categories they are buying elsewhere ! Use the lessons learned to impact core product d
Slide 14: Ensure The Program Is Simple And Highly Engaging
1 Ensure The Program Is Simple And Highly Engaging ! Other programs perceived as complicated (points accumulation) ! 2% back every day – YTD Q3 cardholders have printed or sent to card over $9 billion in savings and rewards ! Offers targeted to categories you buy and related ones ! ExtraCare coupon
Slide 15: Focus On Top Customers And Significant Share Of Wallet Opportunity
1 Focus On Top Customers And Significant Share Of Wallet Opportunity 40% of front store Our share of their shoppers make up Health and Beauty 87% of ExtraCare spend is ~30% front store Sales 15
Slide 16: Leverage Insights To Convert Customers To Categories They Are Buying Elsewhere
1 Leverage Insights To Convert Customers To Categories They Are Buying Elsewhere ! We have roughly 50 “categories” in our CVS/pharmacy ® extracare/coupon stores Ms. Meg Smith $2 off any shampoo ! Almost one quarter of our shoppers only or conditioner shop one or two categories ! Opportunity to: CVS/
Slide 17: Personalized Circular Is Purposeful Innovation
1 Personalized Circular Is Purposeful Innovation 17
Slide 18: Driving Growth Through Personalization
Driving Growth Through Personalization 1 ExtraCare 2 Customer Service Initiatives 3 Store Brands Growth 4 Store Clustering Initiative 5 Integrated Digital Offering 18
Slide 19: myCustomer: The Ultimate Personalization
2 myCustomer: The Ultimate Personalization 19
Slide 20: myCustomer Experience Scores Continue To Improve
2 myCustomer Experience Scores Continue To Improve myCustomer Experience Scores 6.0% Growth Baseline Q1 2013 Q2 2013 Q3 2013 20
Slide 21: Improved Customer Service Drives Sales
2 Improved Customer Service Drives Sales YTD Total Comp % By myCustomer Experience Score Quintile 4.8% 2.3% 1.8% 0.9% 0.3% myCustomer Experience Score Quintile Low High Notes: Data represents YTD September. 21
Slide 22: Driving Growth Through Personalization
Driving Growth Through Personalization 1 ExtraCare 2 Customer Service Initiatives 3 Store Brands Growth 4 Store Clustering Initiative 5 Integrated Digital Offering 22
Slide 23: 2013 Activities Set The Foundation For Future Growth
3 2013 Activities Set The Foundation For Future Growth QUALITY DIFFERENTIATION Gold Emblem Launch Essence Of Beauty Re-launch INNOVATION WINNING AT SHELF Digestive Health National Brand Substitutes 23
Slide 24: CVS/pharmacy Maintains Market Leading Store Brand Penetration In Key Business Areas
3 CVS/pharmacy Maintains Market Leading Store Brand Penetration In Key Business Areas YTD Store Brand Penetration Health Beauty Personal Care Drug Edibles General Merchandise Total 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: IRI YTD ended Oct 26, 2013. 24
Slide 25: Aggressive Store Brands Growth Goal
3 Aggressive Store Brands Growth Goal Store Brands Sales (% of total front store sales) 20% + 17.8% 15.6% 2009 2013E Goal Note: 2009 includes the acquisition of Longs Drug. 25
Slide 26: Driving Growth Through Personalization
Driving Growth Through Personalization 1 ExtraCare 2 Customer Service Initiatives 3 Store Brands Growth 4 Store Clustering Initiative 5 Integrated Digital Offering 26
Slide 27: myCVS Clustering: Differentiated Assortment To Better Meet The Needs Of Customers
4 myCVS Clustering: Differentiated Assortment To Better Meet The Needs Of Customers ! Defined clusters – Urban – Suburban ! Execute / leverage existing programs – Plan-o-grams – Remodels – New stores 27
Slide 28: Currently Piloting Suburban Cluster
4 Currently Piloting Suburban Cluster Criteria ! High-performing stores ! Integrate pharmacy and MinuteClinic ! Focused on Health and Beauty Components ! Premium assortment ! Advanced service level ! Piloting stores this year Timing ! Evaluate and learn – Adjust as appropriate 28
Slide 29: Driving Growth Through Personalization
Driving Growth Through Personalization 1 ExtraCare 2 Customer Service Initiatives 3 Store Brands Growth 4 Store Clustering Initiative 5 Integrated Digital Offering 29
Slide 30: CVS Caremark Digital Vision: Empowering Connected Health
5 CVS Caremark Digital Vision: Empowering Connected Health Bringing together people, services and expertise to deliver the most accessible and integrated personal experience ! Differentiated customer experience ! Greater share of health and prescription wallet ! Reduced total cost to serve ! Ultimat
Slide 31: Delivering A Superior Mobile Experience In Retail Pharmacy
5 Delivering A Superior Mobile Experience In Retail Pharmacy Traffic from CVS mobile site and app increased nearly 250% from 2012 to 2013 31
Slide 32: Extending The Superior Mobile Experience To PBM Members
5 Extending The Superior Mobile Experience To PBM Members ! Extends retail app features to clients and members – Easy refill process – Pill identifier – Drug interaction checker 32
Slide 33: Creating A Superior, Seamless Digital Experience Across The Enterprise
5 Creating A Superior, Seamless Digital Experience Across The Enterprise Only CVS Caremark can deliver a fully-integrated pharmacy experience 33
Slide 34: Driving Retail Growth With Ability & Agility
Driving Retail Growth With Ability & Agility ! Consumers trust us and our brand in a changing world ! Pharmacy business is performing well and positioned for the future ! Focused on profitable growth in the front store ! Driving growth through personalization ! Digital strategy will drive improved,