Cvs Health Corporation · NYSE:CVS
Cvs Health — Investor Day (December 2016)
53 slides from Cvs Health's investor day presentation, Dec 15, 2016
Slide 1: Capitalizing on the Retailization of Health Care
Capitalizing on the Retailization of Health Care Helena Foulkes Executive Vice President & President, CVS Pharmacy
Slide 2: Agenda
Agenda Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets Front Store Growth Strategy 2
Slide 3: Retail Pharmacy at a Glance
RETAIL PHARMACY Retail Pharmacy at a Glance Estimated 2016 CVS Pharmacy Revenue 25% Front 75% Store Pharmacy 3
Slide 4: Strong Record of Pharmacy Share Growth Over the Past Several Years
RETAIL PHARMACY Strong Record of Pharmacy Share Growth Over the Past Several Years CVS Pharmacy Share of Total U.S. Retail Prescriptions +300 23.8% bps 20.8% 2013 Sep YTD 2016 Sep YTD 4 Refer to endnotes for additional information.
Slide 5: Significant Presence in the U.S. Retail Pharmacy Market
RETAIL PHARMACY Significant Presence in the U.S. Retail Pharmacy Market Size and Scale • 9,600+ retail locations • More than 1.1B retail scripts filled annually We own the last mile through our unmatched patient touchpoints and high frequency of consumer interaction 5 Refer to endnotes for additiona
Slide 6: A Strong Track Record of Leading Performance
RETAIL PHARMACY A Strong Track Record of Leading Performance Medication Possession Ratio +580 +340 +610 bps bps bps 84.9 83.5 80.6 79.1 80.1 74.5 Diabetes Hypertension High-Cholesterol Top Competitors CVS Pharmacy We deliver best-in-class clinical outcomes to all patients 6 Refer to endnotes for add
Slide 7: Our Success Is Driven by Integrating Clinical Programs Into Our Workflow System
RETAIL PHARMACY Our Success Is Driven by Integrating Clinical Programs Into Our Workflow System PATIENT CARE – GAP IN CARE An Integrated Approach Smith, John Phone Number: 123-456-7899 DOB: 01/01/1900 Age: 56 Years Gender: Male Txt Message: Not added Instructions: Confirm patient has gap in care and
Slide 8: Continuing to Innovate in Our Patient Communications and Adherence Programs
RETAIL PHARMACY Continuing to Innovate in Our Patient Communications and Adherence Programs Pharmacy Innovation Team … and Has Developed Dozens of Focuses on … Programs, Including: Right Outreach Right Patient Mobile Insurance ScriptSync Rx Pickup Card Texts Right Medium Right Time Rx Mobile 30- to
Slide 9: ScriptSync Drives Adherence Through Improved Convenience
RETAIL PHARMACY ScriptSync Drives Adherence Through Improved Convenience Patients picking up multiple 73% 1.5M+ prescriptions per month can accept offer enrolled since now coordinate refills and to enroll launch improve adherence 6 percentage point lift in medication possession after enrollment Allo
Slide 10: Our Text Alerts Are Easier for Patients and Our Teams
Our Text Alerts Are Easier for Patients and Our Teams We are Driving Adoption … … and an Innovative, Integrated Experience Adherence text Your insurance Your Rx may Restock on-hand messages sent card is not on file have expired medications for back-to-school 600M 85% CAGR 175M Text us a photo Text u
Slide 11: Because of Our Unique Capabilities, We Have Grown Faster Than the Market
RETAIL PHARMACY Because of Our Unique Capabilities, We Have Grown Faster Than the Market Growth in Prescriptions (2013 – 2016, Sep YTD) 27% Nearly 55% of our growth ~4X through Faster non-Caremark 7% payors CVS All Other Pharmacy Market 11 Refer to endnotes for additional information.
Slide 12: A Majority of Our Scripts Are Non-Caremark
RETAIL PHARMACY A Majority of Our Scripts Are Non-Caremark CVS Pharmacy Scripts by PBM (Oct 2016 YTD) Other PBMs 65% 35% CVS Caremark and Payors We are committed to partnering with other PBMs by leveraging the assets of CVS Health 12
Slide 13: Agenda
Agenda Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets Front Store Growth Strategy 13
Slide 14: Bringing Together Assets From All of CVS Health to Win With PBMs and Health Plans
Bringing Together Assets From All of CVS Health to Win With PBMs and Health Plans Cost Retail Management Long-term Tools Mail Care Retail Clinics Specialty Clinical Programs Infusion Patients Medical Digital Claims Payors Providers Editing …enabling us to deliver superior outcomes at a lower cost 14
Slide 15: We Deployed Select Assets for a Non-PBM Medicaid Payor
We Deployed Select Assets for a Non-PBM Medicaid Payor Seeking to Drive Cost Efficiencies and Retention Cost Retail Management Long-term Tools Mail Care Retail Clinics Specialty Clinical Programs Infusion Patients Medical Digital Claims Payors Providers Editing 15
Slide 16: Non-PBM Medicaid Payor Saw Improved Clinical Results
Non-PBM Medicaid Payor Saw Improved Clinical Results Cost Retail Management • Retail marketing to support Long-term Tools member retention Mail Care Retail Clinics Specialty Clinical • Customized clinical pilots Infusion Programs leveraging in-store and telephonic capabilities Patients • Emergency r
Slide 17: For Another Non-PBM Client, We Used Our Clinical Programs to Improve Star Ratings
For Another Non-PBM Client, We Used Our Clinical Programs to Improve Star Ratings Cost Retail Management Long-term Tools Mail Care Retail Clinics Specialty Clinical Programs Infusion Patients Medical Digital Claims Payors Providers Editing 17
Slide 18: Non-PBM Client Achieved Improvements in Star Ratings Across Multiple Plans
Non-PBM Client Achieved Improvements in Star Ratings Across Multiple Plans Cost • Adherence and refill opportunities Retail Management executed Tools and enabled: Long-term Care − ReadyFillMail and 90-Day Retail − Care 1-on-1 Retail Clinics Specialty Clinical • Clinical interventions and future init
Slide 19: CVS Health Is Launching a Strategic Relationship With Optum
CVS Health Is Launching a Strategic Relationship With Optum Cost Retail Management Long-term Tools Mail Care Retail Clinics Specialty Clinical Programs Infusion Patients Medical Digital Claims Payors Providers Editing …enabling us to deliver superior outcomes at a lower cost 19
Slide 20: CVS Health Is Launching a Strategic Relationship With Optum
CVS Health Is Launching a Strategic Relationship With Optum Partnering to Offer Employers a Goal New Pharmacy Network Option • Fill 90-day scripts at any CVS Pharmacy or via OptumRx home delivery By continuing • Help improve consumer engagement and help health to partner with outcomes by leveraging
Slide 21: Agenda
Agenda Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets MinuteClinic Omnicare Target Front Store Growth Strategy 21
Slide 22: MinuteClinic Footprint Covers Most Populous U.S. Areas
MINUTECLINIC MinuteClinic Footprint Covers Most Populous U.S. Areas • Fully integrated 79 Target clinic locations • > 50% retail clinic market share • Approximately three times 1,136 larger footprint than closest Total Clinics competitor Clinic State MinuteClinic More than 50% of the U.S. population
Slide 23: MinuteClinic Enhances the CVS Value Proposition to Patients, Providers, Payors and PBMs
MINUTECLINIC MinuteClinic Enhances the CVS Value Proposition to Patients, Providers, Payors and PBMs Population Health Patient Engagement Low-Cost Care and Access • Up to 80% less expensive • Address gaps in care with Investing in: than other sites of care providers, payors and PBMs • Scheduling too
Slide 24: Agenda
Agenda Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets MinuteClinic Omnicare Target Front Store Growth Strategy 24
Slide 25: Omnicare Has Significant Growth Opportunities
OMNICARE Omnicare Has Significant Growth Opportunities Omnicare Opportunities Share of Prescriptions (Oct 2016 YTD) • Achieving operational excellence across Omnicare footprint Skilled nursing Assisted living and other communities • Rolling out industry-leading transitions experiences 76% 24% • Serv
Slide 26: We Have Applied CVS Operational Excellence Across the Omnicare Footprint
OMNICARE We Have Applied CVS Operational Excellence Across the Omnicare Footprint STAT Fill Additional Operational Improvements • STAT Fill Services now leverage • New workflow and intake process for national CVS Pharmacy network for assisted living move-ins urgent medication needs • Technology upgr
Slide 27: Investments in Transitions Enhances Our Market Positioning
OMNICARE Investments in Transitions Enhances Our Market Positioning Acute care hospital Reinvented Goal of reducing medication admission transfer time from ten hours to experience two and a half hours Skilled nursing Residential home Transitions Diverting hospital readmissions of care through greate
Slide 28: Initiatives in Flight to Accelerate Senior Living Growth
OMNICARE Initiatives in Flight to Accelerate Senior Living Growth Assisted Living Independent Living Bringing CVS Pharmacy expertise to Rolling out independent living pharmacy accelerate growth through: offering: Increased resident engagement (B2C) Working with independent living providers on
Slide 29: Agenda
Agenda Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets MinuteClinic Omnicare Target Front Store Growth Strategy 29
Slide 30: Acquisition of Target Pharmacies Is Helping Fill in Our Geographic Footprint
TARGET PARTNERSHIP Acquisition of Target Pharmacies Is Helping Fill in Our Geographic Footprint Percent increase in store count after acquisition Nationwide store >100% count increased 45-99% 11-44% >20% <10% 30
Slide 31: Successfully Completed Our Integration of Target Pharmacies
TARGET PARTNERSHIP Successfully Completed Our Integration of Target Pharmacies … Patient volume levels since integration, indexed to 100% pre-integration Patient Care Programs rolled out: System conversions In-store engagement launch 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct CVS in Target After sy
Slide 32: Already Driving Traffic and Business Into Target, With More to Come in 2017
TARGET PARTNERSHIP … and Are Already Driving Traffic and Business Into Target, With More to Come in 2017 Proprietary Program Growth Patient and In-Store (prescription growth, 2017E vs. 2016E) Experience Successful in-store engagements Patient Care Programs 2.2x to accelerate in 2017 Maintenance Choi
Slide 33: Agenda
Agenda Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets Front Store Growth Strategy 33
Slide 34: We Believe the Role of the Front Store Is to Support Our Pharmacy and Drive Margin
We Believe the Role of the Front Store Is to Support Our Pharmacy and Drive Margin • Leverage front store to enhance • Expand personalization to pharmacy customer experience deepen relationships with our most loyal customers • Continue to elevate Health, Healthy Food and Beauty • Invest in digital t
Slide 35: Success in High Margin Health & Beauty Categories
Success in High Margin Health & Beauty Categories Health & Beauty Sales Key Takeaways ($, billions) +3.5% • These are categories where we have a right CAGR to win, most closely tied to pharmacy 11.4 9.6 • Projected to grow 2X faster than General Merchandise & Edibles over the next 3 years • Margin i
Slide 36: Continued Success in Store Brands
Continued Success in Store Brands Store Brands Penetration Driving Innovation Rebranding and OTC-on-the-go packs Exclusive messaging of Health at the Pharmacy MUA offering 25% ~22% ~17% Gold Emblem Cold and Flu single Abound serve cups 2011 2016E Long-Term Goal Store Brands penetration up 300 basis
Slide 37: We Are Focusing on Key Categories and on Personalization and Digital
We Are Focusing on Key Categories and on Personalization and Digital to Drive Profitable Growth 1 2 3 4 5 Better Health Elevate MyCVS Customer- Digital Made Easy Beauty Store Driven Innovation Personalization In-store Digital and personalization 37
Slide 38: Our Pillars Are Focused on Areas – Shifting In-Store Focus and Expanding Personalization and Digital
Our 5 Pillars Are Focused on 2 Areas – Shifting In-Store Focus and Expanding Personalization and Digital 1 2 3 4 5 Better Health Elevate MyCVS Customer- Digital Made Easy Beauty Store Driven Innovation Personalization In-store Digital and personalization 38
Slide 39: We Are Updating Our Stores by Growing Core Categories
IN-STORE We Are Updating Our Stores by Growing Core Categories % Health & Beauty 2014 Today (~800 stores) Future State ~50% ~65% 80% Health & Beauty Other Categories No costs beyond standard reset 39
Slide 40: Expanding and Elevating Our Health Assortment
IN-STORE Expanding and Elevating Our Health Assortment “Discovery Zones” highlight emerging products … and emphasize our health expertise to the customer New endcaps elevate OTC at front of store … 40
Slide 41: Expanding and Elevating Our Healthy Food Selection
IN-STORE Expanding and Elevating Our Healthy Food Selection “Discovery Zone” brings variety of healthy snack, food and drink options “Trend Zone” highlights rotating Innovative store and limited quantity brand options set of snacks and developed drinks 41
Slide 42: Expanding and Elevating Beauty
IN-STORE Expanding and Elevating Beauty Prominent elevated beauty endcaps … and premium beauty products Innovative off- New displays shelf programs emphasizing healthy featuring new and advanced skin care trends … 42
Slide 43: We Are Seeing Positive Run-Rate Results in Stores
IN-STORE We Are Seeing Positive Run-Rate Results in 400 Stores Sample Store Reset Run-Rate Results Consumables +9% Beauty +4% Health +2% Before General Merchandise -6% After Front Store Total +2.5% After Potential to scale-up resets in 3,000 stores over next several years 43 Refer to endnotes for ad
Slide 44: Rollout Continues to Be Successful
IN-STORE Rollout Continues to Be Successful 2015 2016 2017 and beyond Florida California All Hispanic Markets • 13-store pilot in • 11-store pilot in • Scale successful South FL market Southern CA market elements, including a health focus, in markets over-indexing Hispanic Promising results demonstr
Slide 45: Traditional Circular Vehicles Are in Decline
PERSONALIZATION AND DIGITAL Traditional Circular Vehicles Are in Decline CVS Circular Distribution Indexed to 2010 Our Focus 100 • Shifting promotional dollars from mass to digital and personalized 70 Continued decline • Targeting top customers who drive majority of our margin 2010 2016E 2020+ We ar
Slide 46: We Are Optimizing Our Approach to Promotions and Investing in Personalization
PERSONALIZATION AND DIGITAL We Are Optimizing Our Approach to Promotions and Investing in Personalization From To • Social media (Facebook, Pinterest) up • Readership down • Digital circular (Flipp) up • Pages and blocks down • Personalized messages up 46
Slide 47: Personalization Helps Us Deliver the Right Messages to the Right Customers
PERSONALIZATION AND DIGITAL Personalization Helps Us Deliver the Right Messages to the Right Customers Predictive Modeling Offer Optimization Tailored Creative Expanding personalization’s reach to accelerate the shift from mass 47
Slide 48: Personalization Through ExtraCare Is Effective at Growing Customer Value
PERSONALIZATION AND DIGITAL Personalization Through ExtraCare Is Effective at Growing Customer Value ExtraCare Members Addressable Over Time Likely to Engage Annual margin 3.6X greater … Engaged … and growing faster 48
Slide 49: We Have Invested in Digital While Leveraging Our 9,600+ Store Locations
PERSONALIZATION AND DIGITAL We Have Invested in Digital While Leveraging Our 9,600+ Store Locations Omnichannel Innovations • Front Store and CVS Curbside − Rx Curbside pilot coming soon − Front Store available in 4,000 stores • On Demand In Hours − Front Store pilot in process − Rx (with Front Stor
Slide 50: Front Store Future Plans
Front Store Future Plans • Grow our profitable Health, Healthy Food and Beauty categories • Continue to deliver innovative products and digital experiences to We are focused on our customers driving profitable growth across our • Expand personalization to build stores stronger relationships with loy
Slide 51: Today's Key Takeaways
Today’s Key Takeaways Driving More Affordable, Accessible and Effective Care Driving Outcomes Though our unmatched clinical programs and digital innovations, we and Savings make it easier for patients to save time, money and stay healthy Providing the Front Face-to-face patient interactions give us
Slide 52: Endnotes
Endnotes Slide 4 1. Compares 2016 90-day adjusted scripts from January through September to 2013 January through September. 2016 includes Target. Source: IMS. Retail scripts include the adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflec
Slide 53: Endnotes
Endnotes Slide 22 1. MinuteClinic count as of December 8, 2016. Slide 25 1. Omnicare prescriptions year-to-date October, 2016. Source: CVS Health internal data analysis. Slide 35 1. Market is defined as remainder of Food/Drug/Mass; Compares 2016 year-to-date through August to January 2011 through Au