Inside This Issue - News
CEO: CVS 'outperformed' in 2012
January 7th, 2013
NEW YORK – CVS Caremark Inc. will continue to bring innovative ideas and services to the health care market, the company’s executives told dozens of Wall Street analysts gathered here last month for the company’s annual analysts day.
“We are a pharmacy innovation company, a company whose purpose is to help people on their path to better health,” president and chief executive officer Larry Merlo told the analysts. “And we see pharmacy innovation as central to meeting future health care challenges, central to helping more people achieve their best health and central to our growth.”
Simply put, Merlo said, CVS Caremark is reinventing pharmacy. This strategy, he noted, drives everything the company does. Speaking at his second Analysts Day since taking over as CVS Caremark’s top executive, Merlo cited what he sees as three key elements of the company’s operation that will keep it on the right path — continued leadership in its core businesses, driving pharmacy innovation to solve key health care issues and capitalizing on what he calls “our integration sweet spots to drive superior long-term growth and value.”
These factors have been at the core of CVS Caremark’s business for the past year, he said.
“Going into 2012 we set challenging, yet achievable financial targets, and we outperformed those expectations, with earnings per share and cash flow expected to be solidly ahead of our initial plan,” Merlo said.
For instance, he said, after the Walgreens-Express Scripts standoff last winter, CVS/pharmacy was able to attract new pharmacy customers.
The 24 million new prescriptions that the drug chain received as a result of Walgreens’ impasse with the pharmacy benefits management company was “well ahead of the range that we provided at last year’s meeting,” Merlo noted.
Over the past year, he told analysts, CVS Caremark has also revitalized its Caremark PBM and expects the business unit to end the year with a 20% increase in earnings before interest and taxes.
The company has also kept its vow to spur growth in MinuteClinic, Merlo said, with about 100 retail health clinics due to open this year. And, he noted, CVS Caremark has continued to bring more people on board for its pharmacy and prescription programs.
“We’ve added just under 4 million lives to our Maintenance Choice product in the past year,” he noted. “We’ve also added about 4 million lives to our Pharmacy Advisor program, and we expect to continue this momentum into 2013.”
Going forward, Merlo said he feels that CVS Caremark is well positioned to take advantage of the dynamics of the country’s evolving health care systems.
“Our integrated model enables us to drive pharmacy innovation, and we understand the health care landscape and where it’s heading,” he said. “With our breadth of capabilities, scale and agility, we can and will pivot to address significant health care opportunities however they take shape.”
Merlo stressed to the analysts in attendance that CVS Caremark is becoming a more integrated company. Its PBM and retail businesses both continue to grow and gain share, he said, and executives are diligently working to find new ways to capitalize on the company’s unique assets.
Since Merlo’s remarks were made at a meeting of analysts, he stressed that CVS Caremark remained committed to enhancing shareholder value.
“Our business is well positioned to drive substantial free cash flow, and we’ll continue to employ a highly disciplined approach to capital allocation,” Merlo said.