Merlo Delivers First Stockholders Address

At CVS Caremark's Annual Meeting of Stockholders, new CEO Larry Merlo told investors that the company, based in Woonsocket, is well-positioned to deliver shareholder value.

Merlo replaces Thomas M. Ryan who announced plans to step down last year after more than a decade as chairman, president and chief executive.

"Our combined business model provides greater access, convenience and choice to consumers and is helping patients improve their health and lower their overall health care costs," Merlo told attendees.  The company's 2007 acquisition of Caremark created a unique combination of a drugstore and a pharmacy-benefits manager (PBM.) CVS has been under pressure from some investors to split the units.

"The fact is no one else can match our combination of assets -- a leading PBM, one of the largest retail pharmacy chains, a leading specialty pharmacy, a growing Medicare Part D business, and the largest and fastest-growing network of retail health clinics," Merlo said.

The meeting was Merlo's first and Ryan's last as CEO.  The 54 year-old pharmacist by training is the former head of the chain's retail operations and a 20 year veteran of the corporation.

CVS Caremark Board member and former Lead Director Terrence Murray recognized the work done by Ryan, who retired effectively with the end of the annual meeting.

Merlo said the company has a clear strategy for building future success. The plan includes a streamlining effort that will cut $1 billion in costs out of PBM operations, continued superior performance of the retail pharmacies and expanding health care services at MinuteClinic over the next several years.

"We have a solid base that is expected to lead to steady growth in operating income and significant free cash flow over the next several years," Merlo said. "We have a great management team and a breadth of capabilities that is unmatched in our industry. We strongly believe that our strategy fits in extremely well with the goals of health reform and the priorities of payors, which bodes well for a bright future."