CVS Caremark's integrated model continues to prove successful in Q1 results

CVS Caremark executives were upbeat during last week’s conference call with analysts, as the company pulled in a “strong” first quarter and narrowed its 2013 guidance to reflect higher-than-expected performance.

The positive start to 2013 is important as it further demonstrates that CVS Caremark’s distinctive, integrated healthcare model is resonating and spelling success for this pharmacy innovation company.

“While CVS merely narrowed full year guidance despite the 1Q13 EPS beat, we remain confident that guidance will still prove conservative, as Maintenance Choice, ExtraCare, Pharmacy Advisor and MinuteClinic drive growth. CVS is on Citi's Top Picks Live! list,” stated Citi Research analyst Deborah Weinswig in a research note.

During the conference call, CVS Caremark president and CEO Larry Merlo told analysts that it recently completed its client advisory forum, which represented an opportunity to spend time with about 800 clients. What did their clients have to say?

“Obviously, they are very focused on the implementation and administration of the changes resulting from the Affordable Care Act, while continuing to look for innovative ways to both lower costs and improve outcomes. And with our integrated breadth of assets across retail pharmacy, where we interact with five million customers a day, our PBM, as well as our MinuteClinics, we can engage with patients through our unique clinical programs to help drive better outcomes. And we are very well aligned with the goals of health reform and well-positioned to be an important part of the solution,” Merlo told analysts.

In fact, CVS Caremark saved clients more than $643 million in 2012 in their overall healthcare spend due to improved medication adherence for chronic conditions, and its Maintenance Choice and Pharmacy Advisor programs contributed to the improved adherence rates and cost savings.

Meanwhile, CareFirst BlueCross BlueShield announced early last week that it has entered into a three-year agreement with CVS Caremark to provide pharmacy benefits and other related services to its commercial and Medicare Part D members — 1.1 million CareFirst members, to be exact.

It is also important to note that the MinuteClinic business is increasingly playing a vital role as it develops wellness programs and programs aimed at monitoring clients with chronic conditions.

During the company’s Annual Analyst Day meeting in December, it was noted that non-acute services account for 16% of total MinuteClinic visits. Over the last three years, its non-acute services have grown at a compound annual growth rate of 41%, Andrew Sussman, SVP and associate chief medical officer of CVS Caremark and president of MinuteClinic, told analysts in December.

During its 2011 Annual Analyst Day meeting, Merlo talked about “innovation with a purpose — a purpose that defines why we exist as an organization.”

CVS Caremark is indeed innovating with a purpose — and it is resonating with clients and customers.
 

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