CVS Health Corporation · NYSE:CVS
CVS Health — Merger or Acquisition (December 2017)
35 slides from CVS Health's merger presentation, December 2017
Slide 1: CVS Health + Aetna: Revolutionizing the Consumer Health Care Experience
CVS Health + Aetna: Revolutionizing the Consumer Health Care Experience
Slide 2: Important Information for Investors and Shareholders
Important Information for Investors and Shareholders No Offer or Solicitation This communication is for informational purposes only and not intended to and does not constitute an offer to subscribe for, buy or sell, the solicitation of an offer to subscribe for, buy or sell or an invitation to subsc
Slide 3: Important Information for Investors and Shareholders
Important Information for Investors and Shareholders Participants in Solicitation CVS Health, Aetna, their respective directors and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information ab
Slide 4: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of CVS Health or Aetna. This communication may contain forward-looking statements within the me
Slide 5: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements cause actual future results and other future events to differ materially from those currently estimated by management, including, but not limited to: the timing to consummate the proposed transaction; the risk that a regulatory approval that
Slide 6: Compelling Strategic Rationale
Compelling Strategic Rationale
Slide 7: Compelling Strategic Combination
COMPELLING STRATEGIC RATIONALE Compelling Strategic Combination Creates a leading health care platform with unmatched suite of services High-touch connectivity to consumers as go-to local health care access point Improved quality of care through enhanced data integration / predictive analytics Drive
Slide 8: CVS Health-Aetna Combination Will Help Address U.S. Health Care System Challenges
COMPELLING STRATEGIC RATIONALE CVS Health-Aetna Combination Will Help Address U.S. Health Care System Challenges Growth in Health Aging U.S. Increasing Health Movement To Care Expenditures Population Care Consumerism Value-Based Care • Integrating medical • More competitive • Broad market access • C
Slide 9: To Compete in the Future, New Assets and Capabilities Will Be Required
COMPELLING STRATEGIC RATIONALE To Compete in the Future, a Number of New Assets and Capabilities Will Be Required Traditional bases of competition needed but not sufficient Additional capabilities required going forward Ability to reach New ways of identifying (e.g., data and predictive analytics) a
Slide 10: CVS Health and Aetna Bring Unique and Differentiated Capabilities
COMPELLING STRATEGIC RATIONALE CVS Health and Aetna Bring Unique and Differentiated Capabilities to the Combination Unparalleled reach that positions us as the World class consumer health and front door to health care engagement model Ability to support patients, payors and Leading health fi
Slide 11: Integrated Health Care Platform Offers Better Care and Convenience at a Lower Cost
COMPELLING STRATEGIC RATIONALE Integrated Health Care Platform Offers Better Care and Convenience at a Lower Cost Walk-In Retail Clinics Member and client benefits Specialty Mail • Better clinical outcomes from combination Infusion Pharmacy of medical and pharmacy claims data Benefits Qualit • Incre
Slide 12: Example: Better Manage Medical Cost for Chronic Patients
COMPELLING STRATEGIC RATIONALE Example: CVS Health + Aetna Can Help Better Manage Medical Cost for Chronic Patients Components of care delivery model Alignment across Access to care Patient engagement Post-discharge providers Inconvenient and Insufficient time to fully Lack of coordination to Lack o
Slide 13: Transaction Summary
Transaction Summary ¥ CVSHealth
Slide 14: Key Transaction Terms
TRANSACTION SUMMARY Key Transaction Terms • Equity value of $69 billion. Including the assumption of Aetna debt, total transaction value of $77 billion. Purchase Price • Approximately $207 per Aetna share in cash and stock, comprised of $145.00 in cash and 0.8378 in CVS shares per AET share* • CVS s
Slide 15: Creating a New Leader in Health Care
TRANSACTION SUMMARY Creating a New Leader in Health Care Revenue, Trailing Twelve Months ($, billions) Creating a Fortune 4 221 company with more than 197 182 $18 billion in pro forma adjusted EBITDA 118 100 89 61 53 41 Comp Comp Comp Comp Comp Comp A B C D E F Managed Care % 26% 64% 2% 0% 2% 100% 9
Slide 16: Potential to Deliver $750 Million of Synergies in Second Full Year
TRANSACTION SUMMARY Potential to Deliver $750 Million of Synergies in Second Full Year • Streamline redundant corporate functions • Improved pricing from third party vendors Traditional • Combine PBM and PDP operations • Improved enterprise dispensing Medical Cost • Improve care management by reduci
Slide 17: Potential for Longer-Term Synergies to Deliver Significant Incremental Value
TRANSACTION SUMMARY Potential for Longer-Term Synergies to Deliver Significant Incremental Value Medical Cost • Improving chronic care management to reduce wasteful spending Reduction: Chronic • Reducing readmissions via pharmacist-led interventions Care Management • Improving adherence to reduce me
Slide 18: Continue to Execute Disciplined Long-Term Financial Policies
TRANSACTION SUMMARY Continue to Execute Disciplined Long-Term Financial Policies New debt of $45 billion will result in pro forma leverage of approximately 4.6x; expect to deleverage rapidly Focus on deleveraging to low 3x adj. debt to adj. Leverage EBITDA to maintain strong balance sheet We are com
Slide 19: Today's Key Takeaways
COMPELLING STRATEGIC RATIONALE Today’s Key Takeaways CVS Health + Aetna: Significant Value Creation Benefit from uniquely integrated, community-based health care Consumers experience, helping them better navigate the system to achieve their best health Helps address growing cost of treating chronic
Slide 20: Appendix: Financial Supplement
Appendix: Financial Supplement
Slide 21: Sources and Uses of Funds
TRANSACTION OVERVIEW Sources and Uses of Funds Available Cash 4.1 New Debt 44.8 Sources New Equity Issued in Transaction 21.0 ($B) Total Sources 69.9 Purchase Equity 69.2 Uses Other 0.7 ($B) Total Uses 69.9 21
Slide 22: Pro Forma Last Twelve Month Financial Profile
TRANSACTION SUMMARY Pro Forma Last Twelve Month Financial Profile Pro Eliminations ($, billions) Forma Revenue 182.4 61.4 (22.4) 221.4 Adjusted EBITDA 12.3 6.2 18.5 % Margin 6.7% 10.1% 8.4% 22 Refer to reconciliation to comparable GAAP measure on slides 23 and 24.
Slide 23: Non-GAAP Reconciliation – CVS Health Adjusted EBITDA
APPENDIX Non-GAAP Reconciliation – CVS Health Adjusted EBITDA ($, millions) TTM Q3 2017 Income from continuing operations 5,051 Income tax provision 3,161 Income before income tax provision 8,212 Interest expense, net 986 Depreciation and amortization 2,485 EBITDA 11,683 Non-GAAP adjustments: Acquis
Slide 24: Non-GAAP Reconciliation – Aetna Adjusted EBITDA
APPENDIX Non-GAAP Reconciliation – Aetna Adjusted EBITDA ($, millions) TTM Q3 2017 Income before income taxes 2,741 Interest expense 344 Loss on early extinguishment of long-term debt 246 Penn Treaty-related guaranty fund assessments 231 Transaction and integration-related costs 1,386 Restructuring
Slide 25: Appendix: CVS Health Strengths and Capabilities
Appendix: CVS Health Strengths and Capabilities
Slide 26: Leadership Across Multiple Segments
CVS HEALTH STRENGTHS AND CAPABILITIES Leadership Across Multiple Segments Retail Pharmacy Medicare Specialty Long-Term Retail Clinics Pharmacy Benefits Part D Pharmacy Care Pharmacy More than Nearly 90 SilverScript > 40% of Leading Providing high- 9,700 locations million plan PDP with 5.
Slide 27: Nationwide Retail Footprint Provides Direct Touchpoints with Consumers
CVS HEALTH STRENGTHS AND CAPABILITIES Nationwide Retail Footprint Provides Direct Touchpoints with Consumers Unsurpassed Reach More than 30,000 clinical professionals Nearly 70% of U.S. population lives within 3 miles of a CVS Pharmacy More than 50% of U.S. population lives within 10 miles of
Slide 28: Extensive Consumer Reach Across Many Platforms
CVS HEALTH STRENGTHS AND CAPABILITIES Extensive Consumer Reach Across Many Platforms Active Patient Base Clinical Message Reach Phone Number Accuracy ExtraCare Emails Number of unique patients Automated calls or texts Percent of patients with an Number of emails in that fill an Rx each year in deliv
Slide 29: We Make Data Actionable and Deliver It When and Where Interventions Can Do the Most Good
CVS HEALTH STRENGTHS AND CAPABILITIES We Make Data Actionable and Deliver It When and Where Interventions Can Do the Most Good Patient Providers Hospitals Post-Acute Care Optimal Interventions Powered by the Health Engagement Engine Foundation of rich data and analytic expertise 29
Slide 30: CVS Caremark Offers Unmatched Suite of Cost Management Capabilities
CVS HEALTH STRENGTHS AND CAPABILITIES CVS Caremark Offers Unmatched Suite of Cost Management Capabilities Cost Management Solutions Utilization Site-Of-Care Health care Management Management affordability improved as client Formulary Medical Claims trend lowered to Management Editing 3.2% Ne
Slide 31: Appendix: Aetna Strengths and Capabilities
Appendix: Aetna Strengths and Capabilities
Slide 32: Aetna is a Leading Health Services Company
AETNA STRENGTHS AND CAPABILITIES Aetna is a Leading Health Services Company 44.6M* Leading Strong Next Unique Medicare Clinical Generation Members Franchise Assets Capabilities 22.2M* medical members One of the fastest growing Over 5,200 nurses and World class digital and Medicare franchises
Slide 33: Nationwide, Geographically Diverse Membership
AETNA STRENGTHS AND CAPABILITIES Nationwide, Geographically Diverse Membership AK WA ME MT ND VT NH As of September 30, OR MN NY MA ID SD WI MI CT RI 2017, Aetna provides WY PA NJ NE IA IN OH MD DE health benefits and NV IL WV UT CA CO KS MO KY VA services for ~22.2 NC TN AZ NM OK AR SC million medi
Slide 34: Aetna's Extensive Next Generation Provider Network
AETNA STRENGTHS AND CAPABILITIES Aetna’s Extensive Next Generation Provider Network Extensive Provider Aetna’s value-based strategy Network JV health plan Align incentives and collaborate with providers to: DEGREE OF PROVIDER RISK AETNA FOCUS Participating Risk-bearing entity • Help providers build
Slide 35: Focused on Improving Consumer Health and Engagement
AETNA STRENGTHS AND CAPABILITIES Focused on Improving Consumer Health and Engagement Care model that engages Health and improves financing health holistically Improving In-home and health with Best-in-class local community- holistic service and based care consumer advocacy focus Targeted Enhanced so