CVS 2Q16 Earnings Call Notes

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CVS Health’s (CVS) CEO Larry J. Merlo on Q2 2016

You see more care being chosen individually

“At the same time, back to your question, if you ask why we’ve been successful and why we expect to continue to be successful, we continue to see this retailization of healthcare. And you see more people in consumer-directed health plans. You see more care being chosen individually, when you think about some of the government-sponsored care with Medicare. And that points to the value associated with multiple consumer touch points.”

Renewal is 75% done, expecting ~97% retention

” the year ended up at 97.2%, okay, for last year’s selling season. And, as we mentioned, we have about 75% of the renewal is done, so we’re in the homestretch there. I don’t know what the retention rate was at this time last year. It probably wouldn’t be that far off with where we are.”

There is a lot of data out there. It’s one thing to collect it, another thing to use it

” I think you’re hearing a theme emerge. And it’s not a new theme, but whether we’re talking about your point on the front store or some of the things that have come up earlier with some of the questions about the pharmacy, there is a tremendous amount of data out there, okay? And it’s one thing to collect the data. It’s another thing in terms of how do you use the data to create an outcome or a behavioral change. And that’s where we’ve made significant investments in our business, whether it’s ExtraCare or whether it’s the capabilities back in the pharmacy, that is allowing us to do things in a very differentiated way that we think that is giving us an advantage in the marketplace.”

Biosimilars will behave more like brands than generics

” while biosimilars are just beginning to enter the market and their impact will be will be nominal or minimal, okay, in the near-term, we believe that they will grow in importance. And they will behave more like brands than generics, which create opportunities within the formulary management area. So that’s how we’ve thought about it at a very high level. “