CVS Health (CVS) 4 May 212021 Q1 Earnings call transcript

Ladies and gentlemen, good morning, and welcome to the CVS Health First Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode, a question-and-answer will follow CVS Health’s prepared remarks at which point we will review instructions on how to ask your questions.

As a reminder, today's conference is being recorded. I would now like to turn the call over to Katie Durant, Senior Director of Investor Relations for CVS Health. Please go ahead.

morning, good and you, everyone. Thank CVS Welcome Call. Quarter Earnings First to the XXXX Health I'm President Karen Eva by joined morning this Lynch, Vice and Boratto, President and CFO. Executive and CEO;

session Operating Officer; Retail Lotvin, remarks, host we Healthcare Following Finke, Services; and Alan include Montgomery, benefits; our Chief a Pharmacy. and President, prepared Neil question-and-answer Roberts, Jon that Dan will President, Pharmacy will of President

filed to with and a SEC XX-Q slide our posted website, release been Form along press Our that morning. have we the this our with presentation

During we current our and of the call, future future will this as Statements make benefits projections. industry reflecting views financial products certain and our market events, our well consumer Forward-Looking conditions services, as related and to expected financial performance, our

those subject could the to file uncertainties them. materially are SEC risks to recent annual differ statement Factors We and this risks review regarding most in uncertainties, our these our and cause in and and reports to what in release on section Form you that results the Statements may in Form press indicated Forward-Looking are that Statements morning's concerning from significant XX-K report the information strongly we Forward-Looking be in included Risk cautionary the in actual described Our earnings XX-Q. with particular, encourage

these is on website, be condition. one of we accordance reconciliation portion our reconciliation the year. with Relations will this morning's non-GAAP of broadcast this about you measures archived document and earnings our financial call financial find use posted Today's in press on performance comparable will it GAAP for a the and In measures release where website. Investor During the SEC call, measures to when Company's talking can the regulations, non-GAAP being

Now I to the like over would call Karen. turn to

for CVS results. you call strong to an continues be has and In our Health quarter unprecedented morning, everyone, environment, today. what thank delivered joining Good first

achieve response our pandemic against I’m helped the quarter, been COVID-XX. year all-out to CVS defined proud first by XXX,XXX the an we the not million approximately For Health worked Americans and us has were say past President's without the have vaccinate effort colleagues tirelessly of our orchestrated accelerated XXX-day of This have and it. the vaccines. needed who to all the would dedication delivered In to of when throughout been XXX most. effort pandemic and the they possible goal

show centered results providing is are value an health consumer. around we creating integrated Our superior care model the by that

customers and capabilities, positions unparalleled their us to throughout uniquely with lifetime. reach Our relationship support them

revenue nearly adjusted delivered of X.X%. earnings first $X.XX, generated XXXX. quarter share quarter of first growth We strong per up Our X% versus of

a to As $X.XX our increasing our to business. are reflect we momentum guidance share earnings adjusted the per across $X.XX to result, today,

outlook our details provide our new markets. reflects Importantly, Eva will on and our performance more results. growth current both in and

Care strong and virtually. and better different services. over Benefits their growth the our segments, consumers in performed our momentum at deliver that It continued Each to exceed by delivered to three we and Before health of in care engaging health seeing like highlight customers' achievements. ability are transparency, business businesses the will in I fueled control would in and choice That is consumers or ways this Today, results convenience, new needs why the where turning we community, we underscore our government segment, share working expectations are health important want clear to their home to several is We quarter. and care. anticipate, in our meet by than expectations. Health

During the utilization normal first approached quarter, levels. near baseline

first reach, business over quarter. membership members, with increased and our XX% new significantly lines the continued Services We Government our across delivering we in growth states. dual in expanded have Medicare momentum outperformed We We business. all adding eligible XX

reenter will we quarter, last XXXX. announced exchanges the we in public as Finally,

We up make branded with eight meaningful first impact we maximize returns states offerings. ever where can our expect to we enter a and Aetna-CVS to believe

to committed helping are all to provide We access Americans. affordable care for

We building the service specialty and our in excellence. of Services, also on revenue operating management capabilities and Pharmacy foundation income achieved growth overall strong

market-leading the revenue we trend, As last in XX% drug and more due Pharmacy spend in X.X% key results into which year-over-year. experiencing our a our reflects trend with customers clients to X.X% channels. in also marketplace of commercial announced market. XXXX. up trend clients wins controlling resonate the in to success management differentiator remains for overall week, steady Specialty drive growth we delivered our only programs, in drug engine net new This costs with continue negative management Pharmacy Specialty was and a

positioned well growth continued are for XXXX. in We

to continues delivery XX of million vital COVID care Since segment tests is April. part an and and the over community in we wellness a play strategy. over began, Retail Our through customer our role successfully we vaccines XX million integral administered and

XX and of than more X,XXX to third states CVS have administered in A locations. We communities. been of members underrepresented vaccinations are vaccines in currently administering

Our once strong trip also second We our over for second appointments provide visits, and digital round only. result we the approach. consumer-centric both is looking doses of of compliance dose schedule XX% appointments at

testing flu, We customers helped somewhat of cold new impact cough through the services driving weak among and and a season. are health vaccines. are This to successfully CVS offset who engagement COVID Health has

actively seen a improvement are customers in have shopping in part trend. April, nationwide we more as location vaccinated CVS early, of Although

through a new testing, a have those X% customers new Pharmacy. in conversion COVID are realized to filling we at us CVS about prescription For that

We total, our expanded recently of XX% to with Building success university to vaccinations. include XXXX. million consumers continue the on and offering program, to our in Ready Return we approximately employer CarePass program our subscription from attract approximately X.X up members

client in new and administered are capturing growing. successfully additional retail Health. and benefits have challenging new environment service into We we a CVS we from XX,XXX interest already strong through navigated doses, is this customers have bringing Overall, while

using the CVS technology assets connect Health As the our across consumers and services nation's care company, leading advancing we ecosystem. diversified health to are health

conditions prevalent, deliver health to complex most are by and We platform our integrated expanding the more care. addressing costly

next the individual. Our lead and their interventions, on points impact a most to valuable on are virtual a to will positive prioritize both health approach combines can care face-to-face medical best that the member and that of action take, We costs. personalized the

Diabetes access return approximately show this to With For our results changing to this improvement year. projected This an an X% million on-track medical today, expect early we X.X program Medicare in its program add to Transformed members members and exceed is two million in example, members of cost behaviors. having to savings one. on X.X investment program additional

at medical with MinuteClinic. Our designed co-pay plans low are no new benefit or co-pay

members up from two These year-over-year. affordable convenient million million offer to Aetna CVS We XXX% member assets. members about and plans or with seven Health enrolled, have many approximately access growth broad care

commercial show members those without the benefit. likely are substantially enrolled results quarter use of MinuteClinic to when more a in this First Aetna to compared plan type

visit members more likely to acute MinuteClinic need, approximately are COVID fact, an In XX% medical these or a immunization for test.

We new services also an of include component the our behavioral important HealthHUB expanded pandemic. during care, around offerings to especially increasingly health,

of CVS is strategy face-to-face, connects consumers a navigating that Our team, best a deliver the to to by single care care. site experience individuals and virtually integrated to

our the We customers experiences company CVS convenient our most delivering are focused connected Health across a digital assets. on for

a health, digital to hybrid three of in areas in enhance There in capabilities as an services quarter. customer into digital last our our We the to saw uniquely our set and combined was digital of the offerings; and us services, experience to in Starting digital I testing, flagship members; improve vast increasingly engagement want and assets some specifically increase engagement new Growth of and are They our growth. Omni-channel leveraging expand expanded our expanding visits with vaccinations pharmacy. ability health the than properties include: structure. assets world, positions health where Our to more and year-over-year. our by and consumers' highlight XX% driven health our for cost with redefine achievements using with such COVID understanding engagement. digital primarily to experience

a their helps of expanding And cost the processing health channels. are industry. We with Rising high-potential and partner launch the best gives our This model us our of services technology into Next, primary harnessing and we Health our to innovations. CVS process learning our in needs. fund machine care companies the advanced site digital to navigate invest and to COVID-XX announced natural that new digital Ventures the simplify of lastly, technology-enabled recently challenge and care as virtual health are we care health to AI, digital-first for to early-stage the care health insight such optimize innovation care. access launched We through consumers approach transformation also digital structure. that of language drive has allows us and meet

of critical our our nation Health, CVS further to For serve proven value at time a has the the such chance strategy.

significant made expansion in diagnostics of the vaccine have and We our progress businesses.

health, broader building on care services. virtual and home focused health are We in capabilities

allowed transformation meet management the road In value there hopefully, these Our Investor the our permitting, outline finally, December where investments they exploring to individuals growth we presence this areas our allowing us have meaningful New will moment increased of strategic will and are. show us digital for makes capture avenue their growth. financial health. priorities us in our hold as and are to we our in returns. brand every of on as be national of that more for sustainable, longer-term closing, everyday integral for conditions us each well team York, Xth, an to profitable will and I is part health customers. results lifetime And enable Day and where quarter of fully map It our XXXX every our strong and increasingly our Accordingly,

will over Boratto. Chief Financial our Now turn Eva I it Officer, to

good and Karen, Thanks, everyone. morning,

growth our programs. a delivered our stated, earnings increased expansion $X.XX strong exceeded of successful our net as the X.X% business, and plus the enterprise Adjusted across per Karen solid share COVID-XX revenue in vaccine expectations. testing first and new of quarter. strong As continued We of of X.X%, the result performance

cash more Aetna leverage three XXXX. paid million debt, flows close net the quarter, strong, to the shareholders billion remain in operations. $X.X we of cash the and have while We $XXX a through of on-track in our returning transaction, $X debt paid billion dividends. billion Our of times over remain from long-term low down of generating $XX long-term we Since in than with down goal

flows. on Across core. We of are technology maintaining Company, balance allocation capital are is modernization the which we additional our initiatives, savings executing for generate cash strategy and at our sheet discipline cost managing to and the our

This last are to calls. efficiently eight centers As AI-enabled frequently for implemented we asked enterprise. the over capability address we this call And expanding quarter, mentioned technology to COVID-related intelligent agent across questions. addressed an calls million

simplify other We authorization our are prior AI and also technologies using to processes.

clinical the time workload the and improves maintaining This to We providers that our overall rigor, shortening vital patients safety improvements it get to on and quality experience are are decreasing programs patient therapy. appropriate takes on the clients. the while

We the close taken have end foot on-track square to of rethink XX and of X.X by a facilities, advantage of in work non-retail to our million increasing the in resulting space office QX. reduction are infrastructure virtualization

progress initiatives, We are and significant on our remains. pleased opportunity with these to-date

segment. our look a at take results let's Now by

Our with increased redetermination sequentially, Foster's about and that result. continued Xst. Total Kentucky driven Health X%, increased of Services January HIF Care the Benefits in segment XXX,XXX the of our Medicaid membership total risk-adjusted or growth the business by suspension membership continued new The up program repeal year-over-year, pressured eligibility and driven effective Government about XXX,XXX win of Medicare revenues business. X.X% revenue by

membership about continued existing up are PDP by members, membership commercial Sup portfolio decline growth results Med these Medicare Government of XXX,XXX, X%. as Advantage XXX,XXX PDP, to to our members about X% commercial is Included our the Services. in-group conversion strategies of with sequentially sequentially. Medicare nearly Medicare in membership of continues sequential attrition commercial Medicare well to Advantage. one as Our driven and in Converting increasing core in and successful over increased grow, Within Advantage

Our of the increase year. of XX XX.X% prior represents compared quarter MBR for basis to points an

was lower the from performance Medicare the in by was the benefits basis the improved While historical these repeal XXX generally were QX XXXX, regulatory contractual HIF sponsors in along in impacted pressured negatively of Bringing be prior aggregate, prior with and in in Medicaid, our up MBRs development risk-adjusted levels year's and and the were initiatives, the by together, to X.X of clients of adjusted will revenue. points medical was Of year's lower plan MBR factors the cost income development. Offsetting XXXX, note, the these quarter requirements. XX.X% reduction approximately of for billion, baseline given factors costs impact returned which year-over-year. and consistent with operating portions

to billion segment Benefits full-year Health to billion of $X.XX our our guidance Care sequestration. current income including to-date our extension adjusted assumptions, of increasing are operating the performance as We $X.XX result a and

year, best costs, non-COVID the remainder our includes baseline administration continuing costs normal levels related of medical with vaccine. to the largely costs returning for the and and guidance testing assumes the medical estimate towards modestly of utilization This elevated. Our COVID of

nearly drug I with by product price basis Now growth to move points. compression, revenues negatively price in Total inflation Services. last affected pharmacy Revenue line wins, weak by net growth continues new X% will business driven on flu by versus was expectations. our mix. Brand as which increased cough/cold and XXX digits year, approximately as to and be primarily season, well affected claims the specialty mid-single of Pharmacy

FEP This benefits contracts from season, first specialty purchasing marketplace. for year. Adjusted strong We of and retention, which are ramp improvements compared ongoing and through retention including our in to in Services clients the with return trend to increased value just with several FEP the by of growth in drive quarter the of continue over fueled mail management for CVS the our XXXX the programs, operating the was generic XX.X% selling specialty the the to income specialty. of economics, last Pharmacy XX% Health launches and and retail renewals

the prepare adjusted our XXXX. Care. the to increasing reflect to review our trends performance X.XX specialty business FEP and now guidance are X.XX business, onboard We to required operating Retail/Long-Term in in And to income to to-date investments by offset let's the partially billion billion

drove discussing of effects of the weak by the the the which Before XXX me approximately flu store season, lead front basis XXX P&L, Overall, and start points, basis adjusted into let the script it to cough/cold income and operating about declines quarter. components and the of points I of decline XX% get respectively. for

flat demand The the Moving accretive. prescriptions served front vaccine comparison year-over-year. essentially diagnostic members and grew the on P&L. pandemic. the and year-over-year testing with revenues start Total of of March revenue headwind we from administration XXXX as store scripts includes of and to COVID X.X%, acceleration were the customers our the in at

offset During the the margins of a by guidance, the from points. adjusted Gross benefit QX of our mix our have the X.XX driven are of of reimbursement Consistent share with points partially to to segment on earnings offset share return Care minimal XXXX declined impact revenues, the to fee XX segment from quarter, a XX versus we and by anticipated many guidance continued front gain guidance in increasing results increase basis by an market COVID-XX to prior our higher guidance, XXXX, X.XX X.XX, basis to vaccine up prior continued pharmacy store pressure, related X.XX. is for At COVID-XX with weather-related discussed we vaccination program this year. financial operating as hesitancy. is per are urban testing. Adjusted declined all as consolidated testing the well expected XX.X% as pieces COVID-XX to XXXX. and such long-term front items of COVID-XX have recovery income as than administration unknowns year-over-year, time, Bringing QX and of the reflecting and in of care our not costs slower we vaccine severe Retail/Long-Term costs I traffic together, and changing

can further we see to the slide of You changes details our posted our in website. presentation

organic remain XX And three expect billion. initiatives. operations We at growth to our gross between capital billion expectations cash strong continue to billion to billion expenditure and XX.X from X.X fund

needs creating investments meet most appropriate We consumer at digital continue time seamless to we and and to in care work place. services expand bringing experience, health the our as technology a Omni-channel on consumers'

course we expect these expect XXX move X.X spoke year. Consistent we COVID-XX needs annual initiatives earnings to and half. generate us expected substantial to approximately of billion, our value year, This the continue what our in the which current savings front consumers. are to the fluid and ramp and on-track deliver to financial shareholders. the estimates, throughout February, in more clients earnings front of with to invest return we cost somewhat continue year. our commitments, to the to company of the to our on be about to Based In on enterprise savings we per generate million summary, cash are vaccines in half as includes allows Our cadence heavily to our our of the we share over weighted XX% to to meet

We have executed are against sustainable positioned long-term our well growth commitments to and deliver growth.

open it now Let's questions. for your up

question first Stanley. [Operator with Morgan will Ricky Instructions] from take We our Goldwasser

quarter. good a Congratulations on very

my PBM really So on understand mean, is performance, moving the factors. strong segment. trying focused clearly, I question to very and

specialty and You improved mentioned purchasing.

of us biosimilar pricing on from seems type lot more getting you side, environment. what purchasing, color questions improved give products. a is you adoption are specific also bit investors are generic you what like It the So performance can on to And little specialty we the then are maybe a alluding of there on seeing? around the so of are

So to what I there. you. see are Thank seeing you wanted

will by X.X%, that to as in strong will strong continued Ricky. announced truly And give our fueled in average off very Alan But PBM of I mentioned, morning really it economics, trend wrap trend had of more start resonating more strong I to the the we and specifics. business, growth trend hand purchasing we programs. to see management Good you last specialty really marketplace. week with we the importantly, we

story is over there. we The groups, me success Ricky, thing give the had more can continues between integrated and some other you medical strong detail. employer resonate our he mention, to it and value let to Alan, pharmacy But that I would with have turn

it specialty, across you categories. good kind you? a sort the you So of are Ricky how as about of economics about think couple morning in of Yes, think

as purchasing as across brands economics well right. So one improved generics, is just generally

well the have of critically also year all were our meet programs last greater create allows the take important, that us that as advantage launched So to Then, successfully obligations customers for executing against as created there. value that that we late generics right.

dispensing that than So as drive thought and the continue remarks, their in trend and did. drive are we think as to us specialty to drivers continuing manage FEP initially to customers specialty. mentioned to well were rates bit levels as principal generic as clients. Karen I allows higher we a then of us their benefits to able both spend economics Those And is the little Eva to specialty choose our what outstanding within

a again, So becomes cycle. self-reinforcing it

a and on vaccine. quick the follow-up Great just

clarify, to about the saw reimbursement Just benefit, rates. you think improvement in when vaccine you clearly, an

Given that vaccine, we growth it we you assumed guidance? assuming versus that for might there, a a year peak are seeing prior and around now hesitancy are some in you volumes have in lower vaccine seems what the seen

Ricky, this that will have seen take you vaccine one. recently, I said, is Overall, as Eva. hesitancy. some we

there. given We now, have In year a market. at in provided some current seeing are should we that our around seen estimates additional you outlook, The X% our impact are we a one we drop-off our there the volume Right vaccine. overall booster as in look trending of outlook of the was the probably end But assuming data lower at performance what about pediatric a X% of be included of to to-date and recent this range we or. later the had not is are was it to the growth. XX%, contributor

Thanks.

Next question please.

Valiquette with Barclays. We to Steven go will

open. is line Your

good thanks Great everybody. morning

There or seems also the than be Aetna HCB SG&A, well. segment focus better on than to which the So some that as MLR the in segment, better investor expected. expected within in came

if the curious of So can expense. I'm operating you some

having are we time hard hearing a you. Steve, Hey

wonder speak So if could you up. I

Okay.

but question on well. better there, some My The focus within seem just on sure SG&A expected, segment than not happened came be investor was also I'm segment. HCB Sorry. there I the expected than better to apologize. what MLR in that retina so as

trends well within was gave curious number, I development to I just also, you able as prior just the you So if the missed are if And that operating expense year Aetna. speak to HCB. it, to handy have if Thanks. within

Yes. prior hand for and period development. start, I to I will will it Eva

quarter trying to expect, and year, our last last competitive. Aetna improve We continue this I of really to be to look do do development? ways prepared health to continue to for in my we segment. can we continue do efficiencies as the using mentioned to technology embarked the we to every the benefit reflected efficiency. every expenses the at remarks, And the looking in as year those real. And care talk ways the more that Eva, the we And in to did continue for see that company, and in initiatives to quarter. that technology, results you cost about prior you look efficient really to more first the is overall become year is we on year might want On at year across make ways effects harness are

Karen. prior Good Overall, Thanks. morning did in Steve. quarter. we year development elevated Sure, the experience

you really when financial would on unusual is a at it it look the MLR However, statement years. to say given I requirements, prior contractual compared not MBR basis, net that

okay, Got Okay. thanks. it,

Thanks.

question please. Next

with Gill Lisa to now go will JPMorgan. We

Your line is open.

about health Thanks talk your much. to you comment Can go with health with specialists connecting site doing behavioral about are I want And consumer care. talked mental are together and about how around broader that of comment and home, behavioral you the that Karen, do back psychiatrists when there how best both consumer the psychologists? that virtual - the how contracting you very think the health you specifically, about or are all earlier to into when if about health? these you we physical really I community. a think elements How feeds talking working made those

of behavioral to have substance in Good pandemic seen we think in critically seen increased it. - the think focus I the interactions health, important Well, I individuals, health with and have to is relative it behavioral The morning what on abuse. us has increases number for Lisa. we

And our screenings, our worker in health we And are behavioral in the the is do seeing we will clinical what as our e-clinic we with social HealthHUB. In clinical be then with results we capabilities. trying in MinuteClinic, to this is are in certain we do seen the mental referred in connect depression anxiety. increases strong we them of have and really every single actually have health. domestic health violence, well What the done physical number have is digitally seen then workers very put have a connect in HealthHUB facility We licensed increases they that program. licensed can in to through the we

seeing already three month those with in are us. have We visits a from that individuals engaged

It Lisa. individual to provider, met. And So clearly, a physical holistic is to Health, health care appointment. customer there took same be and the make as learned for then then is health a out they month, story, take combining us, important they differentiator them when is and behavioral person couldn't. of us about to those and CVS trying into for a need you connections. to she in where mental day. month, something She would that get health want get believe told got and we I Quick about We her the to had think reached an that was meeting take she to she after month an another her see her and it

So our products there health and to I'm to excited the holistic really need about for support very us definitely of possibilities a is services the individuals. enhance and

and are health Is physically both we a costs members? where care program is this Aetna are how the Just this and fees service do because a opportunities perspective, about you be attachment this And that there how keep like that or do financial rate Karen? that driver them some therefore, be planned mentally charging you members, lower that? to member this? to is able And for think and are about to of overall well enough going around we going to these from we for think big a is other an to

Neela, about and than it way I just Yes. managed other we because care over broader with to contracts to The will Aetna it is hand plans. think it have

it. the are is part kind and So they how of economics in. that of insurance coming of It is coverage, their

to a in Neela Let me ask little bit more talk detail.

which main I insurance the is are we and way moment, that people would accessing say the using in that care. are at

huge and and fee-for-service very because sort As next is large a of of we expect do a part month. recognize expect convenience our desirable of and the the business Overtime, to makes to Karen we the to proposition it do mentioned, evenings that market access in DXC we factor, launch weekends that grow is customers.

Thank you.

Credit comes next Rice with A.J. Our Suisse. question from

Your open. is line

really how the to Aetna out, the principal comments for Just seems start wonder, the and I like businesses integrating new offerings. about two But with That maybe the I MinuteClinic appreciate is that. three other you be to the into and from things would highlighting things beyond realized are years product you as there businesses the deal, highlight some why deal integrating. are HealthHUBs people may better individual have way three are worth all together that

morning AJ. Good

a are there think things. number I of

pharmacy I is the of another say area. integration medical MinuteClinic. would mentioned You

put are of as part combination of the we programs overall We have the clinical a of companies. number out advancing also that three

we manage or value we insurance an in people home, MinuteClinics at our our programs meet them can the we program, demonstrate can have and of kidney where and their obviously integrated program, All meet chronic diabetes either oncology Our those the program. programs, those coverage. offering

different points. So proof are number a there of

their combined also action. then are in program leveraging to and analytics where Ready We company or I our and And them a sell through say to like the technology Return our have having engage of in demonstrable groups programs programs we testing vaccine next employer is our our ability our another our MinuteClinic. sites then impact our and would new

number of would three that to that a point companies. things So of I demonstrates combined the the value

question. additional quick a just Maybe Okay.

highlighting you of extensions in think deployment are acquisition. we should I through know extension companies about the that of to interest seeing about sector a just how provider, we pursue seeing you service to some are Is is the lot that the to interest do? capital in opportunities we how should priority service But others debt. We a your of think are reduce for continue incremental guys still line, that?

capital like is mentioned question. foremost thank you to of Obviously, let you our that at options all the turn A.J., services, that is Yes. are debt. us. deployment additional our But our care And to things we clearly, me around for demonstrated priority first offerings by pay something virtual down looking and Eva. interest as it to be yes, of would and that. But over

good certainly add top our paying would to priority. A.J, What debt a Thanks, I Karen, remains morning. down

provided, in would continue out provide out I business M&A will remind we you the in businesses and we terms the CapEx building to and I well to spending there are our and of drive that, smaller to the call needs. forward. the invest outlook what where Additionally, services And for as capabilities fill organically did

Thanks. Okay.

AJ. Thanks

please. Next question

next question America. Cherny comes from with Our Bank Michael of

open. Your is line

Good so morning I these some wanted the sourcing dynamics colors into back a of are you for seeing. little far. dive and bit thanks that to

As it entire particular segment called the the of close that as component total world we generics How the both are market? of durability, some easily especially and for does generics on and about you ongoing as in specialty, pretty XX% to that a purchaser drugs sourcing efficiencies, enterprise of on think out you in factor especially where the largest a these the Services in whole the should world the given whole. through are in you across Pharmacy think how a

Overall, have to PBM just of our question. that the we Connect and segment. generics obviously, capabilities specialty enterprise, that Mike, entire Specialty specialty remind been Care the have the of segment would it you I or our segment economics scale there company. the it our the within generics on the the optimize manifest themselves consistently been able for with and size given program. Thanks Retail/Long-term And is our the launches PBM Eva. source we some is for whether benefit

you so will of see do And continuing provide to market, more to durability, a that around right, your And new the benefits. there. And I availability question from provide bit think see we to color longer-term will generics come little that. Alan on to program benefits biosimilars

I just if Yes, Michael, add. could

that phase businesses total of know, generics given sort small the competition. well is of substitutability older traditional of as increased XX% drug of as for evolution you biosimilars spend And As the molecules, somewhere entering FDA specialty around of the now. specialty is the north right

look robust the and which specialty dispensing a the is four-years, generics and we of given in for to volume pipeline as we two, creates the ongoing rate forward now see very us. largely point, is biosimilars while, So over your opportunity both dollar specialty, three, XX% next still generic

Thanks.

more I really question. quarterly, flu what one you the the cough/cold the to of don't on trajectory but think year's about is year? know guide of the implied Just quick season business end how of since the in terms next

it as you levels we the to I are be assuming economy have. cough/cold to I if as return say great skill predict Mike, that season to people vaccinated, are Care But a cough/cold again, segment. flu look, is, on a segments season could the affect cough/cold normal what lower continues the the what flu weak happens lower scripts if with medical would the would Retail/Long-Term is cost, Obviously, differently. will and season

So overall, there more at level. when affect it different it a about But think segments normal-ish the differently. variability, will I is

Thanks. Understood.

please. question Next

Research. Nephron with comes from Eric Percher question next Our

line open. Your is

and A Thanks you segment question reimbursement [Josh the on Eric (Ph) Retail here. pressure. and Pharmacy Raskin]

it As I that and we see integrated there been pressure a the pharmacy know we increase But itself, over you years does drive headwind remain pressure? new offset look of strategies and comment and when always the implemented can reimbursement what reimbursement on that that you a reimbursement same pressure has that actual opportunities. it to services, course, volume prior strategies type have enter year, are at have of or

contracting to way. appropriate us. revising of we clearly an cost initiatives Hi manage a are Josh. currently be And continues we on A reimbursement, challenge working and Eric supply chain this on managing in our are and that our strategies, to for things continuing couple recognize what

and on all has I of to the more exploring anything our call, have are if think we will talk I options let here, we December. see here. me mentioned add in Eva just to As about And

Oak Karen we cost have Eric, we right, have volume, to have and value. As continue said, we Red unlock to

at looking lower As our you costs beyond we reduce front to the the saw, to we operating operations, purchasing trying really ways and continue are looking technology to cost. the utilizing are in on costs side,

Zinc And Red that the the does reflecting the that benefits, see new into with in you. Oak? when biosimilars side, on success we fall entity Thank part or sourcing is

through Caremark through directly of that So biosimilars part Caremark, of Zinc is is contracting. Part through that traditional within Red our flow would and not Oak.

Thank you.

Next question please.

with We go now to Jones Goldman Sachs. will Bob

is line open. Your

to out sequestration question. talk XXX Maybe utilization any And specifically little moving there raise full-year. just inform pieces guidance. a the at and and raise the of the maybe about know how you for I performance hoping the of just the the and updated Thanks segment bit that million help great. go maybe that there to extension. was on views But number back guidance HCB strong the inform I for subsequent Hi, midpoint. the break could obviously is a

strong. morning delivered the it is our Good as outlook Eva. we strong said, in quarter, Bob, performance remains and you And

So four outlook. we pieces I give what key to reflected try in will that you

that were Our what our where and seen a on that requirements. benefits client for to-date basis, earlier about the from years Think different performance commented given and year's have I development. net from we prior not and MDRs generally previous contractual XXXX

of costs the We sequestration have testing we two driven One, the end the we first at about for updated than lower decline. vaccine to And through you medical costs, And have our assumptions the levels costs, COVID-related medical by immunized, given people the half included year. incur spend. cost and year, as expect areas. become are of continue costs treatment as we to those largely think

to our seasonal more And with we utilization in costs, normal what for second return the to half. consistent remains As particularly it it expect outlook pertains we levels, non-COVID previously. provided baseline to membership

out strategy, kind Who get on of get in the offerings around the latest Great of one that targeting to will way. be or exchanges back the Any the a relative go-to-market be follow-up there? the be? thoughts more to decision the is that. latest within to thoughts exchanges other I helpful. what meaningful updated within HCB you some on helpful thoughts into quick will guess That would just your

is it Karen. Bob, Hi

into we a that exchanges today. market people is we million would are to that entering given that say, don't First, access have the I that we XX have XX to million

offer branded We are clearly Aetna-CVS going product. to an

We continue we networks to midst and are the have filing will narrow rates. our of in

want much information. anything competitive see give add And me to he if Finke has else insight too Dan don't here. I wants or So let to

Karen. Thanks, Sure.

opportunity to enter Karen said, as individual market. So are we the about excited the

the the We middle of filings. in are

stated, deliberate Karen a to we approach As really are disciplined and selecting taking those states.

One of our use the connect of assets. opportunities strategies is CVS to our around really

really to offerings, support giving of and digital MinuteClinics forward our of And and some we enhancing are to opportunities around pharmacy assets, access with and so our HealthHUBs. our those course, looking physical our

And we and excited are really the marketplace. offering this so to to new bring different

Next question please.

Our from Research. Justin next Wolfe Lake comes question with

line Your is open.

Thanks good morning.

peers. doing that generic anything are been you Zinc, of PBM with First there. on same the allowing not feel pretty is quarters. purchasing I'm the I your versus last seeing the strong It your want et know outperformance. cetera, you question, here. wondering very is like peers for if differently performance might I has in four, over there follow-up outperformance just that specialty three, your be five opportunity, at terms But purchasing incredible that to your

Thank you for Alan. is it Hi question. the

volume. enables are which I right, bring driving on us paying more to key think really customers, here competition, to the attention drivers value creating for more to our close

talk right. that also think of I two - let's talk the things, we one should things about

performance purchasing and the and the is first agents. So around specialty generics

we have what is, would is a of open choice. market portion good business our is second there we call The where

of patients Specialty Specialty benefits from aggressive about to and talking members very an Expedite. are the Connect in and experience both We perspective

entire of And the value example volume. ultimately better to because how create drives is, so that experiences an we and use it more enterprise again,

for detail drive can where So side. on volume. value. to And the it continue It we drive as of is, it opportunities competition performance said, to combination more more create that economics a is a generic is of to attention and combination you purchasing look and

it is Alan, critical. your strong, as add PBM very strong performance Eva. Justin, to overall and know, is a remains season welcome you remains sector client we the Year, very Sorry, satisfaction this. just had which, Justin, high, in

for Sure. targets quick then Thanks for a with to deal. Those XXXX. expected the benefit And transformation just a are laid be you out big the that. on follow-up

feel look was ahead how of on updated get transformation you number So kind some year. as XXX next of hoping target. I And kind HealthHUBs to that any X,XXX the to about versus of color you

Hey give will comment Justin, and I Eva the transformation the can HealthHUBs update. on

I'm do at really by would coverage. not now. end Just I'm quarter. health have looking What XXX we of XXX to We to on the about X,XXX-ish expect built at We get HealthHUBs, you, the during the the looking about hubs about year. I number. tell

Aetna it be of more U.S. coverage is important the think the Caremark year, the be now, XX% XX% population. of the by here. about will And I coverage end right the metric on business will almost

think the get So that I hubs and versus how about exact is really number. the how we coverage

I are comments And Justin, on points say the value heard focusing proof unlocking throughout and we on the transformation, of brought, some how that Karen's you we driving would medical A, is: market type win by savings; and an of in and having two, customers into open our to services; these lives to continuing in products way. the ability marketplace differentiated new new sell cost

outline as with you Day. is are we transformation And as Investor running. December Karen pleased will more how So specifically, look said, we

Thanks.

Operator more question. we have one time for

to Lance Bernstein. go will Wilkes We with

open. is line Your

particular, the you bit Good going little the are organize within you sort or going and morning. Could home be work virtual looking home the that of health what just focus, how then Omni-channel home these you managed just or manage there? well? efforts just is strategy, to talk and as them about how at to HealthHUB together are you are asking in And about to going offerings populations are company out a and maybe the in secondarily,

our on more operating business, to continue come the evaluate to the to model, on and best we approach that. Lance, managing Well,

talk to our services developing our Let strategy. me overall as he ask home is Alan home about strategy

thanks Lance. Yes, you

So it is Alan.

part As channel that evolving we think as really about home, of important as home about a I delivery, right. care think

how people after change receive many including care. to in expect a have We things seen the pandemic,

home, for technologies. is services think specific and either create it, advantage entirely us or it that side, partly do the as of take customers products how we that delivered create medical about are or help we cost on in both savings differentiate new So experiences

is quorum all first have, our that local. in is member dialysis our or virtual on digital, populations, physical or process, about meeting the specific about how we home the which of and new that the home. need But do care the we are touch is integrate home is customer are it support thinking the focusing whether program, products in it So whether than or points we rather channel need across especially they virtual, how

And themselves present home there. obviously, infusion just it the aspect, the opportunities understanding and of Great. drug-specific for some

population like kind In of an frail physicians. that might and elderly there of health, important home for be a and kind MA emerging addition, is with the stabilization is spaces there

as you area over focus? As talking your of are one about thinking another home, areas as far you about are

And I enough. clear wasn't I'm sorry,

about think effective care of using risk. more and talking hospital core of exactly how population. we specific when skilled are about, their nursing we facilities hospitals, them out at the the populations the people virtual business are the a keeping by example, you So keeping enable, population, out to out in are health services them benefits who transitioning That an would frail, home services physical be example managing the more for of is of

the would us is be ones at at, and dialysis. we exactly a you to to look looking expect traditionally in population drug that So like addition

Great. Thanks.

to I we three today, would like you leave I the you points hope that with took away Before from conclude call.

growth. driving health is it integrated model care and our First, is unique,

see ways clearly can you customers. with interacting You that our that our in but financial results it are also across business, in we see can our different

strategy. technology we And to increasingly to and against the we digital structure. to and well are and cost significant growth positioned Secondly, making redefine using deliver our finally, our experience health are are improve progress

thank us So joining for you all today.

Webcast. CVS and today's Quarter Call Health XXXX Earnings concludes First This

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