Cvs Health Corporation · NYSE:CVS
Cvs Health — 37th Annual J.P. Morgan Healthcare Conference (January 2019)
24 slides from Cvs Health's conference presentation, Jan 8, 2019
Slide 1: Transforming the Consumer Health Care Experience
Transforming the Consumer Health Care Experience Larry Merlo President & Chief Executive Officer 37th Annual J.P. Morgan Healthcare Conference January 8, 2019
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. By their nature, all forward-looking statements involve risks and uncertainties. Actual
Slide 3: Our Integrated Model Positions Us to Transform the Consumer Health Care Experience
Our Integrated Model Positions Us to Transform the Consumer Health Care Experience Retail / Long- Pharmacy Health Care Term Care Services Benefits 3
Slide 4: Our Integrated Model Positions Us to Transform the Consumer Health Care Experience
Our Integrated Model Positions Us to Transform the Consumer Health Care Experience 4
Slide 5: Making Progress on Aetna Integration
Making Progress on Aetna Integration Closing Date • Transaction completed on November 28, 2018 • Equity value of ~$70 billion. Including the assumption of Aetna debt, total transaction value of ~$78 billion; funded with: • Cash on-hand Purchase Price • Issuance of $40 billion in senior notes • Term
Slide 6: Clear Path to Debt Repayment
Clear Path to Debt Repayment Share Suspend the share repurchase program Repurchases until target leverage ratio achieved Cash available to be Keep dividends per share flat until used for debt Dividends target leverage ratio achieved retirement to achieve targeted leverage of M&A No additional major
Slide 7: 2019 Headwinds and Tailwinds
2019 Headwinds and Tailwinds HEADWINDS TAILWINDS • Less impactful break-open generics • Retail script growth outpacing market • Continuing pricing and • Specialty growth reimbursement pressures • Progress on enterprise streamlining • Brand inflation levels lower than initiative historical levels • G
Slide 8: Agenda
Agenda Transforming Roadmap the Consumer for Value Health Creation Experience 8
Slide 9: Challenges in Today's Health Care System Lead to Inferior Outcomes and Increased Costs
Challenges in Today’s Health Care System Lead to Inferior Outcomes and Increased Costs Current System Increased costs Current system COMPLEX EPISODIC is unsustainable and in need of transformation Inferior FRAGMENTED WASTEFUL outcomes 9
Slide 10: Transforming the Consumer Experience Begins With Creating a New Front Door to Health Care
Transforming the Consumer Experience Begins With Creating a New Front Door to Health Care Improving the consumer experience Consumer New Front Door to Health Care System needs to be redesigned with a focus on consumers 10
Slide 11: Three Imperatives Guide How Health Care Consumer Engagement Is Transformed
Three Imperatives Guide How Health Care Consumer Engagement Is Transformed … … and guide our strategies for medical 1 Be Local cost savings Common Chronic Disease Management Readmission Prevention 2 Make it Simple Site of Care Management Optimize Primary Care 3 Improve Health Complex Chronic Disease
Slide 12: Potential to Deliver Significant Medical Cost Savings
Potential to Deliver Significant Medical Cost Savings 1 $2.4 trillion Total medical spending in the U.S. 2 estimated spending $2.1 trillion 86% for chronic disease up to estimated spending $500 billion 3 25% that is preventable $25 to $100 U.S. savings potential billion 5% to 20% through initiatives
Slide 13: Agenda
Agenda Transforming Roadmap the Consumer for Value Health Creation Experience 13
Slide 14: Clear Line of Sight to Deliver More Than $750 Million of Synergies in Year Two
Clear Line of Sight to Deliver More Than $750 Million of Synergies in Year Two $750 Million + Business Integration • Plan design • Specialty / Coram / PBM Operations / Other General and Administrative • Vendor contracting • Streamline corporate functions Medical Cost Savings • Improve adherence and
Slide 15: Executing on Our Integration Plans
Executing on Our Integration Plans 2019 2020 Rationalization of corporate functions Procurement and formulary alignment Medical cost reductions Executing integration plans Realizing synergies 15
Slide 16: Strategic Priorities for Long-Term Value Creation
Strategic Priorities for Long-Term Value Creation Creating New Health Care Programs Simplifying the Patient Journey Long-Term Driving Enterprise Growth Value Creation 16
Slide 17: Portfolio of Programs to Drive Significant Post-Year Two Medical Cost Savings
CREATING NEW HEALTH CARE PROGRAMS Portfolio of Programs to Drive Significant Post-Year Two Medical Cost Savings Common Chronic Gap closure, adherence and assistance with care management Disease Management plans to improve health outcomes for chronic patients Readmission Integrate CVS and Aetna clini
Slide 18: Launching Pilot Programs to Build Foundation for Longer-Term Medical Cost Savings
CREATING NEW HEALTH CARE PROGRAMS Launching Pilot Programs to Build Foundation for Longer-Term Medical Cost Savings Common Chronic • Provide adherence outreach and counseling to Aetna Disease Management members at high-risk for adverse health events (launched Q4 2018) • Deploy specialized enhanced s
Slide 19: Introducing New Concept Stores to Simplify Patient Journey
SIMPLIFYING THE PATIENT JOURNEY Introducing New Concept Stores to Simplify Patient Journey Purpose Strategy Identify • New retail health • Clinical services in-store, • Targeting concentrations engagement model to including additional of Aetna and other health bring more services to screening and nu
Slide 20: Overview of Concept Store Design
SIMPLIFYING THE PATIENT JOURNEY Overview of Concept Store Design 20
Slide 21: Costs Associated With Broader Expansion of Service Offerings Will Be Manageable
SIMPLIFYING THE PATIENT JOURNEY Costs Associated With Broader Expansion of Service Offerings Will Be Manageable Capital Expenditures • Combined CVS & Aetna pro forma annual capital expenditures of ~ $2.6 billion Impact on Front Store • Potential to allocate up to 20% of space to health care service
Slide 22: Simplifying the Patient Journey for Joint Replacements
SIMPLIFYING THE PATIENT JOURNEY Simplifying the Patient Journey for Joint Replacements Current journey for joint replacement lacks necessary support Patient initiates elective Uncoordinated post- Time-delayed and usually knee replacement op support for patient uncoordinated follow up post op Limited
Slide 23: Multiple Levers of Value Creation to Accelerate Enterprise Growth
DRIVING ENTERPRISE GROWTH Multiple Levers of Value Creation to Accelerate Enterprise Growth Value Creation Levers Open Platform Allows for Increased Broad Customer Partnerships Expanded Satisfaction Membership Customer and Retention Growth Value Through Medical Cost CVS Assets Savings Value creation
Slide 24: Significant Value Creation for Shareholders
Significant Value Creation for Shareholders • Continues evolution of CVS Health to Broadens Health play larger role in health care system Care Reach and better address patient challenges • Clear line of sight to >$750 million Drives Near-Term Value Creation in synergies in year two after Shareholder
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