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Merlo to investors: CVS Health is at ‘forefront of changing healthcare landscape’
WOONSOCKET, R.I. — What is the CVS Health competitive edge? To answer that question, CVS Health president and CEO Larry Merlo took the stage Wednesday during the UBS Global Healthcare Conference, a three-day conference in New York City that brings together investors and more than 200 companies across a variety of healthcare sectors.
During his presentation, which was webcast, Merlo provided a recap of the CVS Health business and shared what he believes sets the company apart from rivals.
Kicking off his remarks, Merlo revealed that the PBM business has more 71 million members, with about 25% share of the U.S. PBM market. This year, the company expects operating profit for the PBM segment to be about $3.8 billion, which represents growth of more than 70% since 2011.
The 2015 selling season proved successful as the company won $7.5 billion in gross new business. Net new business for 2015 totals just over $4 billion. Meanwhile, the 2016 selling season is off to “a good start.”
It comes as no surprise that Merlo sees the specialty pharmacy market growing “dramatically,” climbing from $86 billion in 2014 to more than $150 billion by 2018. With the growth will come challenges for clients looking to control spend and for patients looking for greater access to cost-effective solutions.
“When we meet with clients by far and away their biggest concern is the accelerated growth in specialty pharmacy spend,” Merlo said, who noted that the company has been in the specialty business for more than 35 years. “Again, we are well positioned to help manage this trend through our broad specialty capabilities. Those capabilities have led us to become the largest specialty pharmacy in the United States, dispensing about 25% of all specialty scripts.”
Merlo noted that the company generated about $31 billion in enterprise specialty revenues last year, which is expected to grow to about $37 billion this year.
Merlo also stated that company’s retail pharmacy business continues to enjoy strong growth.
“Our growth is outpacing the market as we have not only grown faster than the overall retail market but nearly three times faster that other drug chains,” Merlo said.
Then there’s MinuteClinic, the company’s retail clinic business, which has nearly 1,000 clinics in 31 states and District of Columbia. The goal: to operate 1,500 clinics by 2017.
As previously reported by Drug Store News, CVS Health is not only focusing on expanding MinuteClinic’s geographic footprint but also its scope of services to include chronic condition monitoring and wellness programs. Meanwhile, the company has established affiliations with more than 50 major healthcare systems nationwide.
“That has enabled us to further expand our platform that supports primary care both conveniently and cost effectively,” Merlo said.
Looking ahead, CVS Health, which considers itself to be at the forefront of a changing healthcare landscape, will continue to deliver breakthrough products and services, Merlo told investors.
“We are the only company that has the ability to impact consumers, payors, providers with innovative, channel-agnostic solutions. And our unique products like Maintenance Choice, Pharmacy Advisor, and now Specialty Connect, they remain unmatched in the marketplace,” Merlo told investors. “We have broad and deep specialty capabilities. We are a leader in that space, providing unmatched tools to holistically manage the specialty patient. We have unrivaled scale and expertise, which allows us to be a low-cost provider. Additionally, I mentioned that we are the largest retail clinic provider and the only PBM that can offer reduced or zero co-pays at MinuteClinics, again providing high-quality, cost-effective care in driving down the overall healthcare costs for payors. And finally our robust suite of assets combined with our deep clinical expertise enables us to deliver superior outcomes at lower costs.”