CVS CEO Merlo on the Company's Future One Year After Aetna Acquisition

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Happy Friday, readers!

CVS is celebrating a big milestone this week: The one-year anniversary of the mammoth $69 billion CVS-Aetna deal’s close. And Larry Merlo, CEO of the combined company, has plenty to say on how the integration of a retail pharmacy giant and a major health insurer has gone so far—and what the future holds for CVS following the transformative acquisition.

Fortune sat down with Merlo for a wide-ranging conversation on meeting patients where they are, the value of Aetna to CVS’ expansion ambitions, and the pilot projects the company has coming down the pike.

The top line takeaway? “The Aetna integration certainly has changed CVS into a full-fledged health care company,” says Merlo.

That’s been the goal along, as was frequently stated by Merlo and former Aetna CEO Mark Bertolini as the merger was underway. But now there’s some steak to the sizzle.

The most visible example may be CVS’ new HealthHUBs—essentially revamped CVS stores that can provide a host of medical services that expand significantly on what its existing MinuteClinics can do with the goal of “meeting patients where they are.”

For instance, Merlo says, a patient may be able to get nutrition advice from an expert, or have conversations with a pharmacist that go beyond just filling a prescription. This new model also includes a “Care Concierge” who essentially triages customers and directs them to the right resources, whether it be a nutritionist or an on-site nurse practitioner.

Merlo says the company has been “very pleased with the customer response” to these HealthHUBs in pilot markets in Houston and plans on having 1,500 across the country by the end of 2021 (other initial and upcoming markets include Tampa, Atlanta, and the Philadelphia and New Jersey region).

This could prove a major business opportunity given that CVS’ existing MinuteClinics have seen 47 million patient visits since 2007, according to the company. And the Aetna integration is critical to the effort.

“An insurer doesn’t have customer-facing capabilities,” says Merlo. “So some of this gets back to being local, meeting people where they are. What we’re seeing in early returns from the HealthHUBs is engagement is much better.”

For example, Aetna, through its claims data, could determine that a diabetes patient has been six months late in having their blood tested for A1C levels. A pharmacist at CVS could pick up on that information while filling the patient’s regular prescription and explain why it’s important to keep tabs on that metric—and then direct them to a nurse practitioner in the store who can actually perform the service in-house.

There aren’t primary care doctors onsite at these HealthHUBs—but CVS has another partnership to address that well, a collaboration with telemedicine firm Teladoc. “We could bring that doctor in virtually during the actual patient visit,” explains Merlo.

So what’s next? For one thing, Merlo points to a pilot initiative called Healing Better that could help certain patients pre-plan what they may need to get after a surgery or other serious medical intervention.

“The traditional way of dealing with those situations is, you go and have you have your necessary blood work done beforehand, you have the procedure and then you leave the hospital with a lengthy list of things you have to get,” he says. “Well, why can’t we do that upfront?”

CVS has already seen an earnings surge in the wake of the Aetna acquisition. The company will report fourth quarter results in February 2020.

Read on for the day’s news, and have a wonderful weekend.

Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy

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