Medco Health Solutions — Investor Presentation (March 2011)
36 slides from Medco Health Solutions's investor presentation, Mar 24, 2011
Slide 1: Medco Investor Presentation March 24, 2011
Medco Investor Presentation March 24, 2011
Slide 2: Forward-Looking Statement
Forward-Looking Statement 2 This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. No
Slide 3: Who is Medco
Who is Medco 3 Largest PBM Measured by Drug Spend Leading Specialty Pharmacy Largest Mail-Order Pharmacies in the World Leader in Clinical Innovation 2010 Revenues of $66.0B Over 65 Million Members Accredo Health Group 2010 Revenues of over $11.3B State-of-the-Art Automated Dispensing Facilities Med
Slide 4: GAAP EPS Growth
GAAP EPS Growth 4 (1) Excludes first-quarter 2006 legal settlements charge; see reconciliations to GAAP financial measures included in appendix and in company filings. (CHART) 2003-2011E CAGR 20.6% - 21.1%
Slide 5: The Medco Growth Strategy
e-Prescribing Agile Enterprise Mail-Order Generics Accredo(r) (Specialty) Net-New Business Medicare Liberty(r) (Diabetes) Medco Research Institute(tm) Medco Health Store(r)/OTC UBC(r) (REMS/Safety/ CER)1 Pharmaco- genomics DNA Direct(r) (Personalized Medicine) Therapeutic Resource Centers (TRCs) CER
Slide 6: The Medco Strategy Drives Real Growth
The Medco Strategy Drives Real Growth 6 Note: Graph is for illustrative purposes only. Graph components are not provided to scale. Accredo(r) (Specialty) Medicare Therapeutic Resource Centers (TRCs) Net-New Business International e-Prescribing Liberty(r) (Diabetes) Mail- Order Rebates Operational Ex
Slide 7: The Medco Growth Strategy
The Medco Growth Strategy 7 Note: Graph is for illustrative purposes only. Graph components are not provided to scale. This information does not constitute guidance or projections, and you should not rely on it as an estimate or forecast of future performance. See slide entitled "Forward-Looking Sta
Slide 8: The Medco Growth Strategy: History and Next Decade of Growth
The Medco Growth Strategy 8 Note: Graph is for illustrative purposes only. Graph components are not provided to scale. This information does not constitute guidance or projections, and you should not rely on it as an estimate or forecast of future performance. See slide entitled "Forward-Looking Sta
Slide 9: Continued Strong GAAP EPS Growth
The Medco Growth Strategy 9 Note: Graph is for illustrative purposes only. Graph components are not provided to scale. This information does not constitute guidance or projections, and you should not rely on it as an estimate or forecast of future performance. See slide entitled "Forward-Looking Sta
Slide 10: New Business and Client Retention
New Business and Client Retention 10 *As of Fourth-Quarter 2010 Earnings Call on February 22, 2011 Annualized New-Named Sales 2008/2009 Net-New Sales 2010 >$17.2B $5.3B $1.7B 2011* >$13.4B $5.3B $1.5B 2010 and 2011 client retention rates stand at over 99% Completed over 80% of 2011 scheduled and ear
Slide 11: A Strong Generic Pipeline Will Continue to Contribute Throughout the Decade
(CHART) A Strong Generic Pipeline Will Continue to Contribute Throughout the Decade for Medco 11 Source: U.S. Drug spend estimates for drugs going off-patent are based on IMS Health data for 2008 and 2009. Does not include future inflation. Brand drug expirations based on expected patent expiration
Slide 12: A Strong Generic Pipeline Will Continue to Contribute Throughout the Decade
A Strong Generic Pipeline Will Continue to Contribute Throughout the Decade for Medco 12 Note: EPS contribution based on Medco-specific book-of-business mail-order penetration, formulary status, and utilization of the products going off-patent each year.(1) Internal Medco assumptions; Information la
Slide 13: Valuable Generics Coming to Market Beginning in Late 2011 and Throughout 2012
(CHART) Valuable Generics Coming to Market Beginning in Late 2011 and Throughout 2012 13 $0.06 Plavix $5.0 B 5/17/12 ~50% Actos $2.9 B 8/17/12 ~50% Singulair $3.8 B 8/3/12 ~45% Lexapro $2.6 B 3/1/12 ~35% Diovan $3.0 B 9/21/12 ~50% Incremental EPS Contribution (1) December 2011 is a 5-week month(2) B
Slide 14: Mail-Order Volume
(CHART) Mail-Order Volume 14 (1) Unadjusted 2011E mail-order volume guidance - excluding the reduction of approximately 3 million scripts from the transfer of ~2 million Europa Apotheek Venlo scripts to new Medco Celesio JV, and expected conversion of ~1 million fexofenadine (generic form of Allegra
Slide 15: Mail-Order Volume
(CHART) Mail-Order Volume 15 (1) Unadjusted 2011E mail-order volume guidance - excluding the reduction of approximately 3 million scripts from the transfer of ~2 million Europa Apotheek Venlo scripts to new Medco Celesio JV, and expected conversion of ~1 million fexofenadine (generic form of Allegra
Slide 16: Specialty Pharmacy is an Important Growth Engine
Specialty Pharmacy is an Important Growth Engine 16 ($ in Billions) ($ in Millions) 2006 2007 2008 2009 2010 2011E Acute Chronic/Complex 5437 6043 7974.2 9527.5 11349.3 13000 2006 2007 2008 2009 2010 2011E 189 210 281.2 357.1 438.2 500 $5.4 $9.5 $8.0 $6.0 $189 $281 $357 $210 $11.3 $438 ~$13.0 ~$500
Slide 17: Over 600 New Drugs in the Specialty Pipeline
Over 600 New Drugs in the Specialty Pipeline 17 17 286 41 41 19 19 16 15 14 14 11 135 Phase II Total 335 Phase III Total276 Total 611 Source: Accredo Pipeline Database Phase II and Phase III. As of September 29, 2010. (1) Phase II total of 335 products only includes those drugs with published positi
Slide 18: US Biosimilars Opportunity Expected as Early as 2013
2013*Betaseron(r)Humulin(r)Novolin(r)Pulmozyme(r)Intron A(r)Infergen(r)Adagen(r)6 HGH products US Biosimilars Opportunity Expected as Early as 2013 18 Source: U.S. Drug spend estimates are based on IMS Health data for 2009 (if available), manufacturer reported U.S. sales or a percent of manufacturer
Slide 19: Medco Supports Medicare Part D in Diverse Ways
Medco Supports Medicare Part D in Diverse Ways, Protecting Medco from Group Retiree Erosion and Limiting Financial Risk Medco Retiree Solutions Portfolio Growth and Diversification 19 2007 2010 Retiree Drug Subsidy (RDS) Federal Clients Part D - PBM Inside - Administrative Services Only "ASO" Medco
Slide 20: Retiree Solutions: The Result of Operational Excellence
Retiree Solutions: The Result of Operational Excellence 20 Delivering Best in Class, High Value Solutions Drug Plan Customer Service Drug Plan Member Complaints & Medicare Audit Findings Member Experience with Drug Plan Drug Pricing and Patient Safety Overall Summary Rating Medco National Medco New
Slide 21: Medco Receives the Highest Possible CMS Star Rating
Medco Receives the Highest Possible CMS Star Rating 21 5 Stars Demonstrates Our Commitment to Operational Excellence and the Individual Beneficiary Medco PDP is the First and Only National PDP to Earn 5 Stars Note: More information about Center for Medicare and Medicaid Services' (CMS) Star Ratings
Slide 22: Medco's Clinical Innovations are Making Medicine Smarter
Medco's Clinical Innovations are Making Medicine Smarter(tm) 22 Driving Improved Outcomes and Lower Total Healthcare Costs Therapeutic Resource Centers (TRCs) Pharmaco- genomics DNA Direct(r) (Personalized Medicine) Medco Specialist Pharmacist Model Driving Increased Adherence and Compliance Complet
Slide 23: Medco is Exporting Smarter Medicine
Medco is Exporting Smarter Medicine 23 1. World Health Organization (WHO) National Health Accounts (NHA) Country health expenditure database (approximate).2. The European Health Report, 2009. World Health Organization (WHO) Medco Celesio BV Medco UBC EU27, Norway and Switzerland ~$1.7 Trillion(1) in
Slide 24: Medco Drives Safety and Economic Effectiveness in the U.S. and Abroad
Medco Drives Safety and Economic Effectiveness - in the U.S. and Abroad Dorval, Quebec 17 Locations Across USA Geneva, Switzerland Goring-on-Thames, UK Horsham, UK London, UK (2) Lorrach, Germany Prague, Czech Republic Tokyo, Japan 24 USA, Canada, Switzerland, UK, Germany, Japan, Czech Republic Worl
Slide 25: Medco Earns #1 Ranking on 2011 Fortune List
Medco Earns #1 Ranking on 2011 Fortune List 25 Medco Tops Industry on Fortune's List of 'World's Most Admired Companies' for Fourth Consecutive Year Health Care: Pharmacy and Other Services 1. Medco Health Solutions, Inc. InnovationPeople ManagementUse of Corporate AssetsSocial ResponsibilityQuality
Slide 26: 2011 EPS Guidance
2011 EPS Guidance 26 2011 Guidance(1) 2010 Actual % Growth GAAP diluted EPS $3.53-$3.66 $3.16 12%-16% Diluted EPS, excluding all amortization of intangibles (2) $3.99-$4.12 $3.55 12%-16% Diluted EPS, excluding the amortization of intangibles related to 2003 spin-off (2) $3.80-$3.93 $3.40 12%-16% As
Slide 27: Appendix
Appendix 27
Slide 28: Earnings Per Share Reconciliation (2003)
Earnings Per Share Reconciliation 28 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2003)*(Unaudited) * Per share amounts have been adjusted for the two-for-one common stock split, effected in the form of a 100% stock dividend, which became effective January 24, 2008.This adjustment
Slide 29: Earnings Per Share Reconciliation (2004)
Earnings Per Share Reconciliation 29 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2004)*(Unaudited) * Per share amounts have been adjusted for the two-for-one common stock split, effected in the form of a 100% stock dividend, which became effective January 24, 2008.This adjustment
Slide 30: Earnings Per Share Reconciliation (2005)
Earnings Per Share Reconciliation 30 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2005)*(Unaudited) * Per share amounts have been adjusted for the two-for-one common stock split, effected in the form of a 100% stock dividend, which became effective January 24, 2008.This adjustment
Slide 31: Earnings Per Share Reconciliation (2006)
Earnings Per Share Reconciliation 31 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2006)*(Unaudited) * Per share amounts have been adjusted for the two-for-one common stock split, effected in the form of a 100% stock dividend, which became effective January 24, 2008.This adjustment
Slide 32: Earnings Per Share Reconciliation (2007)
Earnings Per Share Reconciliation 32 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2007)*(Unaudited) * Per share amounts have been adjusted for the two-for-one common stock split, effected in the form of a 100% stock dividend, which became effective January 24, 2008.This adjustment
Slide 33: Earnings Per Share Reconciliation (2008)
Earnings Per Share Reconciliation 33 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2008)*(Unaudited) * Per share amounts have been adjusted for the two-for-one common stock split, effected in the form of a 100% stock dividend, which became effective January 24, 2008.This adjustment
Slide 34: Earnings Per Share Reconciliation (2009)
Earnings Per Share Reconciliation 34 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2009)(Unaudited) This adjustment represents the per share effect of the intangible amortization from the 2003 spin-off, when Medco became a publicly traded company.This adjustment represents the per s
Slide 35: Earnings Per Share Reconciliation (2010)
Earnings Per Share Reconciliation 35 Medco Health Solutions, Inc.Earnings Per Share Reconciliation (2010)(Unaudited) This adjustment represents the per share effect of the intangible amortization from the 2003 spin-off, when Medco became a publicly traded company.This adjustment represents the per s
Slide 36: Earnings Per Share Guidance Reconciliation
Earnings Per Share Guidance Reconciliation 36 Medco Health Solutions, Inc.Guidance Information(Unaudited) This adjustment represents the per share effect of the intangible amortization from the 2003 spin-off, when Medco became a publicly traded company.This adjustment represents the per share effect
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