CVS Health Corporation · NYSE:CVS
CVS Health — Investor Day (December 2015)
35 slides from CVS Health's investor day presentation, Dec 16, 2015
Slide 1: Delivering Value Today, Ensuring Growth for Tomorrow
Delivering Value Today, Ensuring Growth for Tomorrow Jon Roberts Executive Vice President & President CVS/caremark President,
Slide 2: Agenda
Agenda Demonstrating Demonstrating Value: Value: PBM PBM Performance P f Performance Highlights Hi hli ht Highlights Addressing Clients Clients’ Top Concern: Cost Ensuring Growth: Our Integrated Model and the E l i Health Evolving H lth Care C Market M k t 2
Slide 3: Continued Strong PBM Performance
Continued Strong PBM Performance Net Revenue Operating Profit ($, billions) ($, billions) 121.5 15.0% 4.4 15.6% CAGR CAGR 3.5 88.4 58.9 2.2 2011 2014 2016E 2011 2014 2016E Note: 1. 2016E based on midpoint of 2016 guidance. 3
Slide 4: Another Successful Selling Season: Gross New Business Wins of $13.5 Billion for 2016
Another Successful Selling Season: Gross New Business Wins of $13.5 Billion for 2016 $1.8B13 5B 13.5B $11.2B IN NEW BUSINESS WINS State of Oklahoma State St t off Illinois Health Plan Government & Union Employer Notes: 1. As of 12/04/2015. 2. Gross wins exclude Medicare Part D SilverScript individua
Slide 5: Net New Client Business of $11.5 Billion for 2016 with 98% Retention
Net New Client Business of $11.5 Billion for 2016 with 98% Retention Revenues ($, billions) 60% of client non-renewalsl 13.5 0.8 due to acquisition and retirees 0.4 0.8 11.5 Business Not Renewed Gross New Acquired Moved to Exchange Competitive Net New Business B i Business (P i (Primarily il RRetire
Slide 6: Gross New Business Creates Share Gain Opportunity
Gross New Business Creates Share Gain Opportunity GROSS WINS BY CHANNEL ENTERPRISE SHARE 54% $0.6B Mail Choice 28% $1.8B data Specialty 22% $11.1B $ Retail New Existing Existing Networks Business Health Plan Employer Notes: 1. Enterprise share represents the percent of Rx volume dispensed through a
Slide 7: Client Priorities: Prescription Drug Cost Top Concern Across Segments
Client Priorities: Prescription Drug Cost Top Concern Across Segments UTILIZATION AVOIDING MEDICARE MEMBER CLIENT PRESCRIPTION & CLINICAL DISRUPTION EXPERTISE SERVICE SERVICE DRUG COST PROGRAMS LEVEL OF IMPORTANCE 7
Slide 8: Our Model Provides Flexibility to Address Client Priorities: Employers
Our Model Provides Flexibility to Address dd ess C Client e t Priorities o t es Employers UTILIZATION AVOIDING MEDICARE MEMBER CLIENT PRESCRIPTION & CLINICAL DISRUPTION EXPERTISE SERVICE SERVICE DRUG COST PROGRAMS LEVEL OF IMPORTANCE 8
Slide 9: Our Model Provides Flexibility to Address Client Priorities: Health Plans
Our Model Provides Flexibility to Address dd ess C Client e t Priorities o t es Health Plans UTILIZATION AVOIDING MEDICARE MEMBER CLIENT PRESCRIPTION & CLINICAL DISRUPTION EXPERTISE SERVICE SERVICE DRUG COST PROGRAMS LEVEL OF IMPORTANCE 9
Slide 10: Our Model Provides Flexibility to Address Client Priorities: Medicare
Our Model Provides Flexibility to Address Client Priorities Medicare UTILIZATION AVOIDING MEDICARE MEMBER CLIENT PRESCRIPTION & CLINICAL DISRUPTION EXPERTISE SERVICE SERVICE DRUG COST PROGRAMS LEVEL OF IMPORTANCE 10
Slide 11: Multi-segment PBM Market Demands Flexibility
Multi-segment PBM Market Demands Flexibility Employers p y Government Health and Unions Plans Expertise, flexibility and proven performance support our continued growth 11
Slide 12: Delivering on Client Priorities: Clients and Members Highly Satisfied with Service
Delivering on Client Priorities: Clients and Members Highly Satisfied with Service 2015 Client Satisfaction 2015 Member Satisfaction 96% 95% CVS/caremark scored highest in overall customer satisfaction in 2015 PBMI Survey Source: PBMI 2015 Pharmacy Benefit Management Customer Satisfaction Report; PB
Slide 13: Delivering on Client Priorities: Medicare
Delivering on Client Priorities: Medicare Consultative Services Competitiveness Actuarial A t i l / bid, bid formulary f l Progressive and and plan integrated strategies to design support help manage trend MEDICARE HEALTH PLAN Star Ratings g Compliance p 73% of client lives are Robust compliance 4 t
Slide 14: Delivering on Client Priorities: Clinical Programs
Delivering on Client Priorities: Clinical Programs MEDICATION ROBUST UTILIZATION RECONCILIATION PROGRAMS 48% reduction in hospital p 6% savings for medical readmissions; $3,300 and pharmacy savings per patient benefits from counseled specialty utilization management SPECIALTY CARE PHARMACY ADVISOR M
Slide 15: Agenda
Agenda Demonstrating Value: PBM Performance P f Highlights Hi hli ht Clients’ Top Concern: Cost Addressing Clients Ensuring Growth: Our Integrated Model and the E l i Health Evolving H lth Care C Market M k t 15
Slide 16: Size and Scale Ensures Competitive Cost
Size and Scale Ensures Competitive Cost Generic • Sourced through Red Oak, the largest generic sourcing Purchasing entity in the U.S. Formulary • $6.4B in incremental client savings ‘12-’16E from our Management leading formulary management strategy Specialty • Largest specialty pharmacy; able to man
Slide 17: Comprehensive Program Addresses Possible Areas of Fraud, Waste and Abuse
Comprehensive Program Addresses 3 Possible Areas of Fraud, Waste and Abuse MEMBER • Medication abuse / misuse CVS/caremark provides: • Doctor shopping • Pharmacy shopping • Active and retrospective claims monitoring PRESCRIBER • Review of high-risk high risk prescribing patterns • Illegal or irrespo
Slide 18: 2014 Double-digit Pharmacy Trend: A Call to Action
2014 Double-digit Pharmacy Trend: A Call to Action IMPACT TO TREND 1 0% 1.0% 2.0% 3.4% (5.9)% 11.8% 1.5% 2.1% 7.7% 2014 Book Non- Specialty Utilization Hep C Compounds Generic Drug Mix of Business specialty Brand Inflation Brand Inflation Trend Inflation Note: 1. Trend is net of rebates. Source: CVS
Slide 19: RxInsights: Client-Specific Reporting on Trend Performance and Key Metrics
RxInsights: Client-Specific Reporting on Trend Performance and Key y Metrics EXECUTIVE SUMMARY Note: 1. Sample data, actual results may vary. 19
Slide 20: RxInsights Demo
CVS HEALTH - COMPREHENSIVE SOLUTIONS TO MANAGE TREND IDENTIFY EXPLORE MANAGE OPTIMIZE EMERGING ROOT CAUSES THROUGH CHANNEL TREND FORMULARY Interactive RxInsights Individual classes are p plotted below. The g graph p is showing g the relationship p between Cost and Contribution to Trend. Size represe
Slide 21: Strong Adoption of Key Cost Management Solutions … Meaningful Opportunity Remains
Strong Adoption of Key Cost Management Solutions … Meaningful Opportunity Remains Total Lives Current Lives Savings Opportunity MAINTENANCE CHOICE 23M 44M Up to 4% TOTAL NETWORK STRATEGIES 37M 75M Up to 4% FORMULARY STRATEGIES 25M 53M Up to 12% EXCLUSIVE SPECIALTY 35M 50M Up to 7% SPECIALTY MEDICAL
Slide 22: Adoption of Our Plan Designs Helps Reduce Plan Costs While Growing Enterprise Share
Adoption of Our Plan Designs Helps Reduce Plan Costs While Growing Enterprise Share Enterprise Share Growth in a Multi-state Health Plan 11.4 pp increase 31.3% 26.7% 19.9% 2010 2013 2016E Plan has implemented programs that reduce plan and member cost and grow enterprise share 22
Slide 23: 2015 Year-to-date Pharmacy Trend Summary
2014 Year-to-date 2015 Double-digit Trend Pharmacy Summary Trend: A Call to Action JAN THROUGH SEP COMMERCIAL TREND 11.8% 1.6% 0.8% (0.3)% (1.9)% 2.3% (2.8)% 6.4% 6 7% 6.7% 2015 2014 YTDBook Book Non- Specialty Utilization Hep C Compounds Generic Drug Mix of Business specialty Brand Inflation Brand
Slide 24: Agenda
Agenda Demonstrating Value: PBM Performance P f Highlights Hi hli ht Addressing Clients Clients’ Top Concern: Cost Ensuring Growth: Our Integrated Model and the E l i Health Evolving H lth Care C Market M k t 24
Slide 25: Driving Market Evolution: Government Programs Linking Payments to Quality
Driving Market Evolution: Government Programs Linking g Payments ay e ts to Qua Quality ty 50% of traditional 1 in 3 Medicare spending Americans are currently will be linked to quality incentives by 2018 covered by government- % OF MEDICARE 50% SPENDING TIED TO sponsored p health QUALITY INCENTIVES
Slide 26: Our Model Uniquely Meets Evolving Needs
Our Model Uniquely Meets Evolving Needs Integrated Assets and Ability to Improve Outcomes Position Us for Growth Data and Effective outreach Connectivity and Capabilities to analytics to guide to consumers coordination reduce risk of interventions between visits to with providers to readmissions and
Slide 27: We Make Data Actionable and Deliver It When and Where Interventions Can Do the Most Good
We Make Data Actionable and Deliver It When and Where Interventions Can Do the Most Good Patient Providers Hospitals Post-acute Care Optimal Interventions P Powered d by b the th Health Engagement Engine Foundation of rich data and analytic expertise 27 1 Data/Analytics Guide Interventions
Slide 28: CVS Health Uses Pharmacy Data to Help Providers Reduce Risk and Improve Quality
CVS Health Uses Pharmacy Data to Help Providers Reduce Risk and Improve Quality Which of my Risk Adjustment Targeting: patients are high p g Accurate assessment of p population p risk to help p risk? optimize reimbursement Who will drop Adherence Prediction: off therapy Assess a patient’s risk of no
Slide 29: Connected Assets Support Effective Consumer Outreach
Connected Assets Support Effective Consumer Outreach CVS/omnicare ™ Adherence Medication counseling reviews for high Omnicare Omnicare risk patients Wellness support support Supportfor for Support for self-management Specialty condition Transitions transitions inincare Care of chronic conditions man
Slide 30: Connecting with At-risk Providers and Extending the Care Team to Help Them Succeed
Connecting with At-risk Providers and Extending the Care Team to Help Them Succeed Adh Adherence opportunities t iti Intervention results Medication M di ti and d allergy info MinuteClinic Provider visit summaries Affiliated with 60+ health systems to share data and support patient interventions and
Slide 31: Supporting Patients After Discharge from Hospital: Care Transitions Challenge the System
Supporting Patients After Discharge from Hospital: Care Transitions Challenge the System 1/5 readmitted within 30 days 3/4 of these readmissions are preventable 2/3 readmissions related to medication issues Costs: $12B per year Sources: 1. Health Affairs Health Policy Brief, November 12, 2013, Medic
Slide 32: Supporting Patients After Discharge from Hospital: Reducing Risk, Improving Outcomes
Supporting Patients After Discharge from Hospital: Reducing Risk, Improving Outcomes Medication Reconciliation by Pharmacist Shown to reduce readmissions by 48% Home Infusion Services Earlier discharge; alternative, lower-cost sites of care High-touch Specialty Services Adherence support; rare disea
Slide 33: One-of-a-kind: Assets and Capabilities to Connect and Coordinate with All Stakeholders
One-of-a-kind: Assets and Capabilities to Connect and Coordinate with All Stakeholders LARGEST LARGEST SPECIALTY RETAIL CLINIC PHARMACY Integrated Model Helps RETAIL PHARMACY Lower Costs LARGEST HOME FOOTPRINT and INFUSION Improve Outcomes INDUSTRY-LEADING LEADING POST-ACUTE PBM PROGRAMS PHARMACY SE
Slide 34: The Right Strategy for an Evolving Health Care Market
The Right Strategy for an Evolving Health Care Market Demonstrating Value Industry-leading trend management tools / solutions to People, Payors and Providers Provider and patient support that improves outcomes Growing g the Core,, Flexibility to meet evolving market needs Broadening the Base Adding
Slide 35: Endnote
Endnote 1. , CVS/caremark, CVS Caremark, RxInsights, Maintenance Choice, Health Engagement Engine and CVS/omnicare are trademarks or registered trademarks of CVS Pharmacy, Inc. 35