Larry Merlo outlines CVS Health's competitive edge during Annual Analyst Day in NY

NEW YORK — CVS Health remains unrivaled as it remains the only company with the ability to impact payors, consumers and providers with innovative, channel-agnostic solutions. That was a key message that Larry Merlo, president and CEO of CVS Health, had for analysts during Tuesday’s Annual Analyst Day held in New York City.



Merlo took the stage during Tuesday’s Annual Analyst Day — aptly themed “Positioned for today, preparing for tomorrow” — to outline how the company has capitalized on market trends and how it has developed a one-of-kind health care company with unmatched integrated assets.



In looking ahead, he outlined how the company is well positioned to meet the evolving needs of the evolving marketplace as demographics and reform continue to transform the market, plan sponsors look for innovative ways to curb spending to slow specialty growth and manage pharmacy spend, consumers take a more active role in their health care decisions, and providers increasingly forming strategic alliances to share both the risk and the upside of providing outcomes with greater cost efficiency.



“We expect that reform and demographic changes will increase the number of lives gaining insurance coverage and that will provide a long-term secular tail-wind for the industry,” Merlo told analysts. “Along with the additional lives, comes some churn in the mix of payors and we do expect that employer-sponsored coverage will decline between now and 2019 with some employer-sponsored lives, mostly retirees, moving into exchange products. We see continued growth in both Medicare and Medicaid and with 7 million lives gaining insurance coverage on the public exchanges in the first year there is still plenty of room for growth.”



“All this considered, with growth in overall insured lives and churn of market, we expect CVS Health to be a net gainer,” Merlo added.



Merlo also discussed the continued opportunity within specialty.



“When we met with clients this selling season it is probably not going to surprise that, by far and away, their biggest concerns was the accelerating growth in specialty,” said Merlo. “And, again, we are well-positioned to help manage this trend through our broad specialty capabilities that have led us to become the largest specialty pharmacy in the country.”



Merlo said the company expects to generate roughly $31 billion in enterprise specialty revenues this year. That is expected to grow to about $37 billion in 2015.



Merlo also predicted that the "retailization" of health care will continue.



“Last year, we talked about this ‘retailization of healthcare’ and we expect this trend to continue as more employers move their employees into consumer-directed health plans,” Merlo told analysts. “…We will be able to win with our consumer-friendly offerings, whether it is the convenience of our CVS pharmacies, or the low-cost, transparent pricing model of MinuteClinic.”



Merlo also pointed out that the company is expanding its digital offerings to better engage with consumers and improve their experience.



In summary, Merlo said the company is focused on four key drivers:



• The company will continue to win lives whether or not it is the PBM;

• It will seek to capture a greater share of prescription spend across its enterprise channels;

• It will continue to drive operational efficiency; and

• It will continue to encourage and enable innovation to meet consumers’ needs.