Medco Health Solutions — Sanford C. Bernstein 27th Annual Strategic Decisions Conference 2011
25 slides from Medco Health Solutions's conference presentation, Jun 1, 2011
Slide 1: Smarter Medicine: A World of Opportunity
1 SMARTER MEDICINE > A WORLD OF OPPORTUNITY Sanford C. Bernstein 27th Annual Strategic Decisions Conference 2011 June 1, 2011 Timothy C. Wentworth Group President, Employer/Key Accounts
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 Excludes first-quarter 2006 legal settlements charge; see reconciliations to GAAP financial measures included in appendix and in company filings. As of first-quarter 2011 earnings call on April 28, 2011. (CHART) 2003-2011E CAGR 20.8 - 21.2% MHS stock price has appreciated over 400%
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: New Business and Client Retention
New Business and Client Retention 7 *As of first-quarter 2011 earnings call on April 28, 2011. Annualized New-Named Sales 2008/2009 Net-New Sales 2010 >$17.2B $5.3B ~$1.7B 2011* >$13.4B $5.3B ~$1.5B 2011 client retention rate stands at over 99%* Completed over 90% of 2011 scheduled and early electiv
Slide 8: A Strong Generic Pipeline Will Continue to Contribute Throughout the Decade
A Strong Generic Pipeline Will Continue to Contribute Throughout the Decade for Medco 8 Source: U.S. Drug spend estimates for drugs going off-patent are based on IMS Health data for 2009 and 2010. Does not include future inflation. Brand drug expirations based on expected patent expiration dates cur
Slide 9: 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 9 $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 $3.0 B 9/21/12 ~50% Incremental EPS Contribution (1) December 2011 is a 5-week month (2) B
Slide 10: Mail-Order Volume
(CHART) Mail-Order Volume 10 Total Mail-Order Prescription Volumes (in Millions) 78 88 87 89 95 106 103 110 108-110
Slide 11: Mail-Order Volume
(CHART) Mail-Order Volume 11 Total Mail-Order Prescription Volumes (in Millions) 78 88 87 89 95 106 103 Mail-Order Generic Prescription Volumes 110 108-110
Slide 12: Specialty Pharmacy is an Important Growth Engine
Specialty Pharmacy is an Important Growth Engine 12 ($ 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 13: New Drugs in the Specialty Pipeline
Over 600 New Drugs in the Specialty Pipeline 13 13 286 41 41 19 19 16 15 14 14 11 135 Phase II Total 335 Phase III Total 276 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 posit
Slide 14: Biosimilar 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 14 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 manu
Slide 15: 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 15 2007 2010 Retiree Drug Subsidy (RDS) Federal Clients Part D - PBM Inside - Administrative Services Only "ASO" Medco
Slide 16: Retiree Solutions: The Result of Operational Excellence
Retiree Solutions: The Result of Operational Excellence 16 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 17: Medco Receives the Highest Possible CMS Star Rating
Medco Receives the Highest Possible CMS Star Rating 17 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 18: Medco's Clinical Innovations are Making Medicine Smarter
Medco's Clinical Innovations are Making Medicine Smarter(tm) 18 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 19: Medco is Exporting Smarter Medicine
Medco is Exporting Smarter Medicine 19 EU27, Norway and Switzerland ~$1.7 Trillion(1) in Healthcare Spend Healthcare Spend in Europe is Rising Faster than Income, Driven Primarily by Chronic Diseases 77% of Healthcare Burden in Europe is Due to Chronic Disease(2) 1. World Health Organization (WHO) N
Slide 20: Medco is Exporting Smarter Medicine
Medco is Exporting Smarter Medicine 20 Medco Celesio BV Medco UBC
Slide 21: Medco Earns #1 Ranking on 2011 Fortune List
Medco Earns #1 Ranking on 2011 Fortune List 21 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. Innovation People Management Use of Corporate Assets Social Responsibility Qua
Slide 22: Strengthened 2011 EPS Guidance
Strengthened 2011 EPS Guidance 22 As of first-quarter 2011 earnings call on April 28, 2011. See reconciliation table in appendix and in company filings. Revised 2011 Guidance (1) Previous 2011 Guidance 2010 Actual Revised % Growth vs. 2010 GAAP diluted EPS $3.59-$3.69 $3.53-$3.66 $3.16 14%-17% Dilut
Slide 23: Appendix
Appendix 23
Slide 24: Earnings Per Share Reconciliation
Earnings Per Share Reconciliation 24 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 adjustme
Slide 25: Earnings Per Share Guidance Reconciliation
Earnings Per Share Guidance Reconciliation 25 Medco Health Solutions, Inc. Guidance Information (Unaudited) This adjustment represents the per share effect of all intangible amortization. Full Year Ended Previous Guidance Previous Guidance Current Guidance Current Guidance December 25, 2010 Full Yea
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