Capitalizing on the Retailization of Health Care Helena Foulkes - - PowerPoint PPT Presentation

Capitalizing on the Retailization

• f Health Care

Helena Foulkes Executive Vice President & President, CVS Pharmacy

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Agenda

Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets Front Store Growth Strategy Retail Pharmacy

Retail Pharmacy at a Glance

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Estimated 2016 CVS Pharmacy Revenue 75% Pharmacy 25% Front Store

R E T A I L P H A R M A C Y

CVS Pharmacy Share of Total U.S. Retail Prescriptions

20.8% 23.8%

2013 Sep YTD 2016 Sep YTD

+300

bps

Strong Record of Pharmacy Share Growth Over the Past Several Years

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R E T A I L P H A R M A C Y

Refer to endnotes for additional information.

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Significant Presence in the U.S. Retail Pharmacy Market

• 9,600+ retail

locations

• More than 1.1B retail

scripts filled annually

Size and Scale

We own the last mile through our unmatched patient touchpoints and high frequency of consumer interaction

R E T A I L P H A R M A C Y

Refer to endnotes for additional information.

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A Strong Track Record of Leading Performance

We deliver best-in-class clinical outcomes to all patients 74.5 79.1 80.1 80.6 84.9 83.5

High-Cholesterol Hypertension Diabetes

Medication Possession Ratio

+610

bps

+580

bps

+340

bps

CVS Pharmacy Top Competitors

R E T A I L P H A R M A C Y

Refer to endnotes for additional information.

• Our history with CVS Caremark

has focused us on outcomes

• We have built clinical programs

into our workflow

• This ensures that performing

clinical programs is a key priority

An Integrated Approach

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Our Success Is Driven by Integrating Clinical Programs Into Our Workflow System

We are now leveraging these “clinical pipes” with

• ther PBMs and health plans

PATIENT CARE – GAP IN CARE

Smith, John

Phone Number: 123-456-7899 DOB: 01/01/1900 Age: 56 Years Gender: Male Txt Message: Not added

If you have diabetes, its important to speak with your doctor about the best ways to manage your condition

• Common long-term effects of diabetes can include reduced heart rate function
• Statin therapy may help prevent this complication
• Since we do not see a statin medication in your profile, we can contact your doctor to

review this information

• Your doctor will determine if a statin therapy is appropriate for you

Instructions: Confirm patient has gap in care and discuss reasons to close therapy

• gap. If creating prescriber request, always confirm the correct prescriber to contact

with the patient. Your pharmacist would like to speak with you today about a potential gap in your care

R E T A I L P H A R M A C Y

… and Has Developed Dozens of Programs, Including:

Right Medium Right Outreach

ScriptSync 8

Continuing to Innovate in Our Patient Communications and Adherence Programs

We have a suite of personalized adherence tools to better deliver clinical programs

Right Patient Right Time

Pharmacy Innovation Team Focuses on …

Mobile Rx Pickup Insurance Card Texts Rx Expiration Texts Mobile In-store Beacons 30- to 90- Day Switch Texts

R E T A I L P H A R M A C Y

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ScriptSync Drives Adherence Through Improved Convenience

Allows us to solve a consumer pain point AND provide added value to PBM and health plan partners

Patients picking up multiple prescriptions per month can now coordinate refills and improve adherence

1.5M+

enrolled since launch

73%

accept offer to enroll

6 percentage point

lift in medication possession after enrollment

R E T A I L P H A R M A C Y

Refer to endnotes for additional information.

10

Our Text Alerts Are Easier for Patients and Our Teams

We own the last mile and understand our consumers

We are Driving Adoption … … and an Innovative, Integrated Experience

175M

2016E 2014

600M Adherence text messages sent Your insurance card is not on file Your Rx may have expired Restock on-hand medications for back-to-school 85%

CAGR

Text us to refill your medication Text us to contact your doctor Text us a photo

• f your card

Refer to endnotes for additional information.

Nearly 55%

• f our growth

through non-Caremark payors

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Because of Our Unique Capabilities, We Have Grown Faster Than the Market

27% 7%

All Other Market CVS Pharmacy

~4X

Faster

Growth in Prescriptions

(2013 – 2016, Sep YTD)

R E T A I L P H A R M A C Y

Refer to endnotes for additional information.

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A Majority of Our Scripts Are Non-Caremark

CVS Pharmacy Scripts by PBM

(Oct 2016 YTD)

CVS Caremark 35% 65%

We are committed to partnering with other PBMs by leveraging the assets of CVS Health

Other PBMs and Payors

R E T A I L P H A R M A C Y

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Agenda

Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets Front Store Growth Strategy Partnering Through Enterprise Capabilities

…enabling us to deliver superior outcomes at a lower cost

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Bringing Together Assets From All of CVS Health to Win With PBMs and Health Plans

Patients Payors Providers Retail Mail Long-term Care Infusion Medical Claims Editing Digital Retail Clinics Specialty Clinical Programs Cost Management Tools

Clinical Programs

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We Deployed Select Assets for a Non-PBM Medicaid Payor Seeking to Drive Cost Efficiencies and Retention

Patients Payors Providers Mail Long-term Care Infusion Medical Claims Editing Digital Retail Clinics Specialty Cost Management Tools Retail

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Non-PBM Medicaid Payor Saw Improved Clinical Results

Patients Payors Providers Mail Long-term Care Infusion Medical Claims Editing Digital Retail Clinics Specialty Retail Clinical Programs

• Customized clinical pilots

leveraging in-store and telephonic capabilities

• Emergency room diversion
• utreach program

Closed gaps for patients at a rate 2X higher than client expectations

Cost Management Tools

• Retail marketing to support

member retention

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For Another Non-PBM Client, We Used Our Clinical Programs to Improve Star Ratings

Patients Payors Providers Mail Long-term Care Infusion Medical Claims Editing Digital Retail Clinics Specialty Retail Clinical Programs Cost Management Tools

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Non-PBM Client Achieved Improvements in Star Ratings Across Multiple Plans

Patients Payors Providers Mail Long-term Care Infusion Medical Claims Editing Digital Retail Clinics Specialty Retail Clinical Programs

• Clinical interventions and future initiatives:

− Client clinical rules engine − ScriptSync − CVS Pharmacy Clinical call center Assisted plan in improving Star rating from 3 to 4 and achieved 4% increase in adherence Cost Management Tools

• Adherence and refill opportunities

executed and enabled:

− ReadyFill and 90-Day Retail − Care 1-on-1

…enabling us to deliver superior outcomes at a lower cost

CVS Health Is Launching a Strategic Relationship With Optum

Patients Payors Providers Retail Mail Long-term Care Infusion Medical Claims Editing Digital Retail Clinics Specialty Clinical Programs

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Cost Management Tools

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CVS Health Is Launching a Strategic Relationship With Optum

Partnering to Offer Employers a New Pharmacy Network Option

• Fill 90-day scripts at any CVS Pharmacy or via OptumRx

home delivery

• Help improve consumer engagement and help health
• utcomes by leveraging CVS Pharmacy’s unmatched clinical

capabilities

• Going forward, Optum and CVS Pharmacy will continue

to develop new pharmacy and health solutions leveraging

• ur suite of assets

By continuing to partner with

• ther PBMs and

health plans we will grow our prescription share Goal

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Agenda

Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets

MinuteClinic Omnicare Target

Front Store Growth Strategy

MinuteClinic

More than 50% of the U.S. population is within 10 miles of a MinuteClinic

• Fully integrated 79

Target clinic locations

• > 50% retail clinic

market share

• Approximately three times

larger footprint than closest competitor

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MinuteClinic Footprint Covers Most Populous U.S. Areas

1,136

Total Clinics

MinuteClinic Clinic State

M I N U T E C L I N I C

Refer to endnotes for additional information.

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MinuteClinic Enhances the CVS Value Proposition to Patients, Providers, Payors and PBMs

• Address gaps in care with

providers, payors and PBMs

• Provide health risk

assessments/biometric screenings

• Electronic record integration

with health systems Investing in:

• Scheduling tools and

walk-in options

• Expansion of primary

care services

• Telehealth
• Up to 80% less expensive

than other sites of care

• MinuteClinic Savings

Strategy can further reduce costs

Low-Cost Care Population Health Patient Engagement and Access

M I N U T E C L I N I C

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Agenda

Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets

MinuteClinic Omnicare Target

Front Store Growth Strategy

Omnicare

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Omnicare Has Significant Growth Opportunities

76% 24%

Skilled nursing Assisted living and

• ther communities
• Achieving operational

excellence across Omnicare footprint

• Rolling out industry-leading

transitions experiences

• Serving assisted living and

independent living communities with new integrated capabilities

Omnicare Opportunities

Share of Prescriptions

(Oct 2016 YTD)

O M N I C A R E

Refer to endnotes for additional information.

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We Have Applied CVS Operational Excellence Across the Omnicare Footprint

• New workflow and intake process for

assisted living move-ins

• Technology upgrades and

investments including: − Labor scheduling tools − Prescribing enhancements to staff workflow Additional Operational Improvements

• STAT Fill Services now leverage

national CVS Pharmacy network for urgent medication needs

• 77% of Omnicare-served senior living

communities are within three miles of a CVS Pharmacy STAT Fill

O M N I C A R E

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Investments in Transitions Enhances Our Market Positioning

Skilled nursing Residential home Acute care hospital

O M N I C A R E

Goal of reducing medication transfer time from ten hours to two and a half hours Reinvented admission experience Transitions

• f care

solution Diverting hospital readmissions through greater pharmacy care

• versight

These new services will further reduce hospital readmissions for clients

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Initiatives in Flight to Accelerate Senior Living Growth

Assisted Living

Rolling out independent living pharmacy

• ffering:

 Working with independent living providers on phase 1 of roll-out  Bringing together best of CVS Pharmacy and Omnicare, e.g., − Medication delivery − Care 1-on-1

Independent Living

Bringing CVS Pharmacy expertise to accelerate growth through:

 Increased resident engagement (B2C)  Improved operating processes that enhance client relationships (B2B) − We have learned we must help communities understand the value of all residents filling with one pharmacy

O M N I C A R E

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Agenda

Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets

MinuteClinic Omnicare Target

Front Store Growth Strategy

Target

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Acquisition of Target Pharmacies Is Helping Fill in Our Geographic Footprint

Nationwide store count increased

>20%

Percent increase in store count after acquisition

>100% 45-99% 11-44% <10%

T A R G E T P A R T N E R S H I P

Successfully Completed Our Integration of Target Pharmacies …

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Patient volume levels since integration, indexed to 100% pre-integration After systems conversion, Target patient volumes are above pre-integration

Jan Feb Mar Apr May Jun Jul Aug Sep Oct CVS in Target System conversions

100

Patient Care Programs rolled out: In-store engagement launch

T A R G E T P A R T N E R S H I P

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… and Are Already Driving Traffic and Business Into Target, With More to Come in 2017

Proprietary Program Growth

(prescription growth, 2017E vs. 2016E)

2.2x 1.4x

Maintenance Choice Patient Care Programs

Patient and In-Store Experience

Successful in-store engagements to accelerate in 2017

T A R G E T P A R T N E R S H I P

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Agenda

Retail Pharmacy Partnering Through Enterprise Capabilities Update on Key Assets Front Store Growth Strategy Front Store Growth Strategy

• Expand personalization to

deepen relationships with our most loyal customers

• Invest in digital to deliver

convenience to our customers

• Leverage front store to enhance

pharmacy customer experience

• Continue to elevate Health,

Healthy Food and Beauty

• Help customers discover

innovative products

34 34

We Believe the Role of the Front Store Is to Support Our Pharmacy and Drive Margin

Key Takeaways Health & Beauty Sales

($, billions)

9.6 11.4

2016E 2011

+3.5%

CAGR 35

Success in High Margin Health & Beauty Categories

• These are categories where we have a right

to win, most closely tied to pharmacy

• Projected to grow 2X faster than

General Merchandise & Edibles over the next 3 years

• Margin is 1.7X higher than other categories

Market share

11.6% 11.7%

Refer to endnotes for additional information.

2011 2016E Long-Term Goal

Store Brands Penetration ~17% ~22% 25%

Store Brands penetration up 300 basis points since 2014

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Continued Success in Store Brands

Rebranding and messaging of Health OTC-on-the-go packs at the Pharmacy Gold Emblem Abound Exclusive MUA offering Cold and Flu single serve cups

Driving Innovation

Refer to endnotes for additional information.

MyCVS Store Elevate Beauty Better Health Made Easy Digital Innovation Customer- Driven Personalization

In-store Digital and personalization

37

We Are Focusing on Key Categories and on Personalization and Digital to Drive Profitable Growth

1 2 3 5 4

MyCVS Store Elevate Beauty Better Health Made Easy Digital Innovation Customer- Driven Personalization

In-store Digital and personalization

38

1 2 3 5 4

Our 5 Pillars Are Focused on 2 Areas – Shifting In-Store Focus and Expanding Personalization and Digital

39

We Are Updating Our Stores by Growing Core Categories

No costs beyond standard reset

Health & Beauty Other Categories

% Health & Beauty 2014 ~50% Today (~800 stores)

~65%

Future State

80%

I N - S T O R E

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Expanding and Elevating Our Health Assortment

“Discovery Zones” highlight emerging products New endcaps elevate OTC at front of store … … and emphasize

• ur health expertise

to the customer

I N - S T O R E

41 “Discovery Zone” brings variety of healthy snack, food and drink options Innovative store brand options developed “Trend Zone” highlights rotating and limited quantity set of snacks and drinks

Expanding and Elevating Our Healthy Food Selection

I N - S T O R E

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Expanding and Elevating Beauty

Innovative off- shelf programs featuring new trends … … and premium beauty products Prominent elevated beauty endcaps New displays emphasizing healthy and advanced skin care

I N - S T O R E

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We Are Seeing Positive Run-Rate Results in 400 Stores

Potential to scale-up resets in 3,000 stores over next several years

After

Sample Store Reset Run-Rate Results

Consumables Beauty Health General Merchandise Front Store Total

+9% +4% +2%

• 6%

+2.5%

Before After

I N - S T O R E

Refer to endnotes for additional information.

• Scale successful

elements, including a health focus, in markets

• ver-indexing Hispanic
• 11-store pilot in

Southern CA market

• 13-store pilot in

South FL market

44

Florida California All Hispanic Markets

Promising results demonstrate scalability

Rollout Continues to Be Successful

2015 2016 2017 and beyond

I N - S T O R E

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Traditional Circular Vehicles Are in Decline

• Shifting promotional dollars from

mass to digital and personalized

• Targeting top customers who drive

majority of our margin

100 70

2020+ Continued decline 2016E 2010 CVS Circular Distribution Indexed to 2010 We are leading the market by scaling back on our circular promotions

Our Focus

P E R S O N A L I Z A T I O N A N D D I G I T A L

Refer to endnotes for additional information.

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We Are Optimizing Our Approach to Promotions and Investing in Personalization

From To

• Readership down
• Pages and blocks down
• Social media (Facebook,

Pinterest) up

• Digital circular (Flipp) up
• Personalized messages up

P E R S O N A L I Z A T I O N A N D D I G I T A L

Predictive Modeling Offer Optimization Tailored Creative

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Personalization Helps Us Deliver the Right Messages to the Right Customers

Expanding personalization’s reach to accelerate the shift from mass

P E R S O N A L I Z A T I O N A N D D I G I T A L

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Personalization Through ExtraCare Is Effective at Growing Customer Value

Engaged Likely to Engage Addressable Over Time

ExtraCare Members

P E R S O N A L I Z A T I O N A N D D I G I T A L

Annual margin

3.6X greater …

… and growing faster

We Have Invested in Digital While Leveraging Our 9,600+ Store Locations

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Omnichannel Innovations

• On Demand In Hours

− Front Store pilot in process − Rx (with Front Store) pilot coming soon

• Front Store and CVS Curbside

− Rx Curbside pilot coming soon − Front Store available in 4,000 stores

P E R S O N A L I Z A T I O N A N D D I G I T A L

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Front Store Future Plans

We are focused on driving profitable growth across our stores

• Grow our profitable Health,

Healthy Food and Beauty categories

• Continue to deliver innovative

products and digital experiences to

• ur customers
• Expand personalization to build

stronger relationships with loyal customers

Today’s Key Takeaways

Driving More Affordable, Accessible and Effective Care

Though our unmatched clinical programs and digital innovations, we make it easier for patients to save time, money and stay healthy

Driving Outcomes and Savings

Face-to-face patient interactions give us unique insights, and provide frequent opportunities to help shape behavior

Providing the Front Door and the Last Mile

By offering a menu of pharmacy, long-term care, MinuteClinic and infusion services, we can be the partner of choice for all payors

Best Partner for PBMs and Health Plans

We will continue to capitalize on the retailization of health care, delivering differentiation in the market through our enterprise assets

Positioned for L-T Enterprise Growth

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We can deliver best-in-class clinical programs to help drive adherence, close gaps in care and improve health outcomes

Integrated Pharmacy Care

Capitalizing on the Retailization of Health Care

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Endnotes

Slide 4 1. Compares 2016 90-day adjusted scripts from January through September to 2013 January through September. 2016 includes Target. Source: IMS. Retail scripts include the adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include three times the amount of product days supplied compared to a normal 30-day prescription. Slide 5 1. Reflects 90 day adjusted scripts filled at all CVS retail locations. Source: CVS Health internal data analysis. Retail scripts include the adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. Slide 6 1. Reflects unadjusted scripts filled at all CVS retail locations by Caremark PBM members in the last twelve months through October 2016. Source: CVS Health internal data analysis. Slide 9 1. Retail ScriptSync™ Lift in Medical Possession Ratio: internal data analysis based on first 4 months of program enrollment. 2. Days on Hand Ratio measures how adherent patients are to all of their medications and number of days a patient had access to medications compared to the number of days in the measurement period. Slide 10 1. Texts expected for 2016 through year end. Source: CVS Health internal data analysis. Slide 11 1. Total CVS Pharmacy reflects prescriptions for 90 day adjusted scripts January through September for 2013 compared with January through September for 2016. 2016 CVS includes Target. Total market reflects 90 day adjusted scripts January through September for 2013 compared with January through September for 2016 excluding CVS Pharmacy. Source: IMS. Retail scripts include the adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions.

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Endnotes

Slide 22 1. MinuteClinic count as of December 8, 2016. Slide 25 1. Omnicare prescriptions year-to-date October, 2016. Source: CVS Health internal data analysis. Slide 35 1. Market is defined as remainder of Food/Drug/Mass; Compares 2016 year-to-date through August to January 2011 through August 2011. Source: IRI, CVS Health internal data analysis. 2. Source: CVS Health internal data analysis, IRI, Mintel market reports, Global-Markets reports, ITE Beauty. Slide 36 1. Based on Store Brand Drug Store market. 2016 year-to-date through August. Source: CVS Health internal data analysis; IRI. Slide 43 1. Incremental lift based on 2015 full store resets vs. control stores, steady-state measurement; Source: CVS Health internal data analysis. Slide 45 1. Sources: State of the News Media, The Pew Research Center, http://www.journalism.org/2015/04/29/newspapers-fact- sheet/, April 2015; The State of Radio, Newspapers & Magazines, The Video Advertising Bureau, www.thevab.com, November 2015.