CVS 3Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

“let me walk you through the multiple ways that we’ll continue to grow our business in this evolving landscape. First, we’ll participate in coverage expansion and the public exchanges, as well as Medicaid. Second, we’ll participate in the private exchange market for both active employees and retirees. And I think it’s important to remember that our opportunities to participate are not limited to just our PBM, but span across our entire enterprise to include both our retail pharmacies, along with our MinuteClinic businesses.”

“through our PBM, because we’ll participate in the public exchanges through our health plan clients on a carve-in basis, where the health plan offers integrated medical and pharmacy benefits and we provide the PBM services.”

“Moving to the private exchanges, we’ll participate through both a carve-in basis – again through our health plan clients – as well as on a carve-out basis as a standalone PBM where we have direct prescription benefit offerings on the exchange products.”

“we are well-positioned to win lives on the exchanges given our unique products and services as well as our trusted brand and name recognition.”

“large employers cannot participate on the public exchanges until 2017.”

“the fact is that less than 1% of covered lives are expected to move to private exchange products in 2014. And based on conversations we have had with our PBM clients and private exchange partners, we believe that most large employers are taking a wait and see approach to private exchanges, particularly with their active employees.”

“large employers may consider moving their retirees to the exchanges over time, and we may see more movement to private exchanges by smaller employers over the next few years, because the exchanges do offer a way to reduce administrative burdens.”

“We have discussed in the past that we continue to see a cautious consumer. We did see some pullback in consumer spending that began in the spring timeframe. It’s manifesting itself in fewer trips. At the same time, we have seen the promotional environment intensify in both the drug and mass channels. At the same time, we have not made dramatic changes in our promotional strategy.”

“inflation’s been pretty consistent over the last several years, so it’s generally 8% to 10%. You have to add on top of that mix, though, as new drugs come to the market they’re fairly expensive, and then utilization is the third component. So that translates into trend or cost increases that our clients are seeing that are in the high teens, low 20s, “