Establishing the Foundation for Transformation Jon Roberts Executive Vice President & Chief Operating Officer
Cautionary statement regarding forward-looking statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. By their nature, all forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons as described in our Securities and Exchange Commission filings, including those set forth in the Risk Factors section and under the section entitled “Cautionary Statement Concerning Forward- Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The presentations at our 2019 Investor Day include non-GAAP financial measures that we use to describe our company’s performance. In accordance with SEC regulations, you can find the definitions of these non-GAAP measures, as well as reconciliations to most comparable GAAP measures, on the Investor Relations portion of our website. Link to our non-GAAP reconciliations. 2
Transforming our operations to enable long-term growth + To capitalize on this opportunity, we will CVS Aetna establish a new operational foundation Enhance our Optimize our Modernize our technology pharmacy enterprise to NEW OPPORTUNITY infrastructure to supply chain drive long-term deliver connected, Unmatched expertise across multiple to reduce costs value and fund personalized areas of health care future growth experiences Businesses with aligned objectives and complementary assets Data-driven, robust technology foundation 3
Agenda Consumer-centric, data-driven infrastructure Optimizing the pharmacy supply chain Enterprise modernization 4
Building a consumer-centric technology infrastructure Three Key Areas An intelligent Integrated data engagement and advanced platform analytics Seamless, connected digital & physical experiences 5
Creating an integrated data ecosystem …to unlock the power of our data; Creating a high-quality, reliable, protected and integrated data platform for the enterprise… delivering value in new ways Increasing consumer engagement Enhancing business benefits Medicare Driving new business Coram Medicaid Commercial *Data will be used only as permitted by applicable laws, client contracts and our internal policies and standards 6
Applying advanced analytics, including machine learning and artificial intelligence Engaging consumers Supporting our businesses Next best action Revenue & Network & analytics that develop membership growth provider tools targeted engagement Consumer opportunities to influence Behavior consumer behavior and Change improve health outcomes Cost management Personalization 7
Developing an intelligent engagement platform Understanding the consumer’s Consistent and connected journey and creating a outreach across various channels customized engagement strategy Continually updated 360 ° Personalized content view of consumer to management; the right topic, personalize product and service for the right consumer offerings and engagement Consumer-focused approach to Understanding the situational communication, when and how context; the right time and sequence they prefer 8
Turning data into insights and insights into action AT-RISK JOSEPH AGE: Maintaining my health is my first priority since learning I’m INCOME: JOB: Employed at risk for complications DEVICES USED: Mobile phone associated with my diabetes. PREFERENCES: Appreciates proactive outreach as he balances work, family and his health Data Platform Analytics Business Engagement Consumer Platforms Platform Touchpoint Our 360 ° view of Joseph Engagement Integrated back-end Connected channels Mobile scheduling technology (preferences, recommendations systems enable know when and how and reminders based on Joseph’s health info, etc.) seamless, simple, and to engage with delivered via in action preferences convenient front-end Joseph digital app experiences Refer to endnote 15. 9
Building on our existing foundation, we are taking an agile and scalable approach Build on our Take a use case driven Start small, show Build for existing technology approach to build value, and iterate the enterprise modernize and guided by the needs of with a design that ensuring we maximize rationalize as our customers, strategy allows us to expand, the value of our needed and businesses scale, and remain agile investment 10
Agenda Consumer-centric, data-driven technology Optimizing the pharmacy supply chain Enterprise modernization 11
Levers to optimize our pharmacy supply chain 1. Size, scale, 2. Traditional 3. Specialty & 4. Pharmacy & 5. Innovative and expertise generics biosimilars medical benefit contracting 12
1 . S I Z E , S C A L E , A N D E X P E R T I S E 100+ $18.5 Million Billion 3 2 Lives under Savings from Our advantages management generics and across PBM and biosimilars make us a Health Care Benefits (2016-2018) marketplace leader 2.7 $67 Billion Billion 1 2 Enterprise Rebate value delivered to clients prescriptions dispensed and and members managed per year (2016-2018) Our scale and expertise enable us to hold down costs for consumers and customers 13
2 . T R A D I T I O N A L G E N E R I C S Red Oak continues to position us to win in the traditional generics marketplace New Capabilities • Increased data and analytics capabilities • Expanded ability to identify risks and opportunities across the global supply chain • Enhanced supplier assessment framework to deliver greater stability and predictability • Improved monitoring of international regulatory agencies and each element of the supply chain 14
2 . T R A D I T I O N A L G E N E R I C S Historic and potential future generic launches Sales of branded products with recent and upcoming generic launches (excluding biosimilars) 4 U.S. Sales ($ Billions) $30 $25 Opportunity remains Abilify ($7.9B) Future Opportunities: beyond the traditional Nexium ($6.0B) $20 Crestor ($6.5B) generic marketplace to Namenda ($1.5B) Advair Diskus Complex generics Gleevec ($2.5B) ($4.7B) Copaxone 20MG Zetia ($2.5B) Lyrica ($4.3B) create value with our ($1.6B) Copaxone 40MG $15 Celebrex ($2.6B) Suboxone Film Single-source generics Seroquel XR ($3.3B) ($1.8B) ($1.4B) Diovan ($2.2B) unique capabilities. Renvela Tabs ProAir HFA ($1.8B) Benicar (plain) Lovaza ($1.0B) ($1.4B) ($1.1B) Cialis ($1.9B) Viagra ($1.4B) $10 Ventolin HFA Nasonex ($1.0B) Sensipar ($1.5B) Strattera ($1.1B) ($1.4B) Revlimid ($9.5B) Namenda XR Lialda ($1.0B) Vesicare ($1.2B) Vyvanse ($3.5B) Vimpat ($1.3B) ($1.2B) Latuda ($2.8B) $5 Zytiga ($1.2B) Truvada ($3.0B) Aubagio ($1.4B) Androgel ($1.0B) Dulera ($777M) $0 2014 2015 2016 2017 2018 2019P 2020P 2021P 2022P 2023P 15
3 . S P E C I A L T Y A N D B I O S I M I L A R S In Specialty, we will increase the use of biosimilars as approvals gain momentum Sales of branded products with recent and upcoming biosimilar launches 5 U.S. Sales ($ Billions) $13.6 Humira Cost management opportunity improves when there is increased competition in a class $6.8 or new therapy options $5.6 Rituxan are coming to market Herceptin Epogen Neulasta $2.3 Avastin 2018 2019P 2020P 2023P Estimated launch date 16
4 . P H A R M A C Y A N D M E D I C A L B E N E F I T S We will take an enterprise approach to reducing specialty drug costs under both the medical and pharmacy benefit Our combined capabilities create $280 more opportunities to: • Align incentives across stakeholders to increase competition in medical Pharmacy $150 U.S. specialty benefits pharmaceutical • Explore value-based collaboration market by channel with providers to enhance formulary (In billions) 6 compliance Medical $130 • Work to ensure drug prices align to the value they deliver 2021P Integrated approach can improve affordability of prescription drugs 17
5 . I N N O V A T I V E C O N T R A C T I N G High-cost therapies present opportunities for innovative approaches Gene therapy Examples: Expensive $850K $2M+ $2-3M Single-use agents Luxturna Zolgensma Valoctocogene “Curative” inherited for spinal muscular atrophy Roxaparvovec Replace lifetime therapy vision loss 7 in pediatric patients 8 for hemophilia A 9 $475K $375K Car T-cell therapy Kymriah Lisocabtagene Maraleucel High-cost aggressive non- Hodgkin’s acute lymphoblastic Patient-specific therapy leukemia 10 lymphoma 11 Drug or procedure Medical or pharmacy benefit 18
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