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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 23, 2010
MEDCO HEALTH SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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1-31312
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22-3461740
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| (State or other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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100 Parsons Pond Drive, Franklin Lakes, NJ
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07417
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(Zip Code) |
Registrant’s telephone number, including area code:
201-269-3400
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| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 7.01 Regulation FD Disclosure.
Senior members of Medco Health Solutions, Inc.’s (the “Company”) management team will be making a presentation at
the Barclays Capital 2010 Global Healthcare Conference on Tuesday, March 23, 2010 at 8:00 a.m. Eastern Time at the
Loews Miami Beach Hotel, South Beach in Miami, Florida. A live audio webcast of the Company’s presentation at the
conference will be available on the Company’s Investor Relations website at
www.medcohealth.com/investor
. A
replay of the Company’s presentation will also be available on the Company’s website for one month following the
presentation. The slides accompanying the presentation are attached to this Current Report on Form 8-K (“Current
Report”) as Exhibit 99.1 and are incorporated herein solely for purposes of this Item 7.01 disclosure. These materials
will also be available on the Company’s Investor Relations website at
www.medcohealth.com/investor
.
The information in Item 7.01 of this Current Report, including Exhibit 99.1 attached hereto, is being furnished
and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of such section. The information in Item 7.01 of this Current Report, including
Exhibit 99.1 attached hereto, shall not be incorporated by reference into any registration statement or other document
pursuant to the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
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Exhibit No.
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99.1
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Slide Presentation Barclays Capital 2010 Global Healthcare
Conference on Tuesday, March 23, 2010
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
MEDCO HEALTH SOLUTIONS, INC.
Date: March 23, 2010
By:
/s/ Thomas M. Moriarty
Thomas M. Moriarty
General Counsel, Secretary and
Senior Vice President,
Pharmaceutical Strategies and
Solutions
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Strategy
Barclays Capital 2010 Global Healthcare Conference
Brian T. Griffin
Group President, Health Plans
Execution
Results
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Forward-Looking Statements
This presentation contains "forward-looking statements" as that term is defined in
the Private Securities Litigation Reform Act of 1995. These statements involve
risks and uncertainties that may cause results to differ materially from those set
forth in the statements. No forward-looking statement can be guaranteed, and
actual results may differ materially from those projected. We undertake no
obligation to publicly update any forward-looking statement, whether as a result of
new information, future events or otherwise. The forward-looking statements are
not historical facts, but rather are based on current expectations, estimates,
assumptions and projections about the business and future financial results of the
pharmacy benefit management ("PBM") and specialty pharmacy industries, and
other legal, regulatory and economic developments. We use words such as
"anticipates," "believes," "plans," "expects," "projects," "future," "intends,"
"may," "will," "should," "could," "estimates," "predicts," "potential," "continue,"
"guidance" and similar expressions to identify these forward-looking statements.
Medco's actual results could differ materially from the results contemplated by
these forward-looking statements due to a number of factors.
Forward-looking statements in this presentation should be evaluated together with
the risks and uncertainties that affect our business, particularly those mentioned
in the Risk Factors section of the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and other documents filed from time to time with
the Securities and Exchange Commission.
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Who is Medco
Largest PBM Measured by Drug Spend
2009 revenues of $59.8 billion
Serving ~65 million members
Leader in Clinical Innovation
Only provider with specialized pharmacists & personalized
pharmacy services in practice today
Medco Therapeutic Resource Centers(r)
Personalized medicine programs
Leading Specialty Pharmacy
Largest Mail-Order Pharmacies in the World
GAAP EPS CAGR of over 22% since Spin-Off
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2003 2004 2005 2006* 2007 2008 2009 2010E
GAAP EPS 0.79 0.88 1.03 1.21 1.63 2.13 2.61 3.1
Medco is Driving Value to Shareholders
Through Continued GAAP EPS Growth
* Excludes first-quarter 2006 legal settlements charge; see reconciliations to
GAAP financial measures in Medco's previously filed financial statements.
GAAP EPS CAGR 21.3% - 21.8%
22.5%
17%-21%
MHS stock price has appreciated 436%
from spin-off through year-end 2009
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The Case for Smarter Medicine:
Getting Granular
Poor Management of Chronic and Complex Diseases Can Lead to
$350 Billion of Excess Total Healthcare Costs3
1. Medco Research
2. Center for Disease Control
3. Medco estimate
50% of US Population1
96% of drug costs in the US1
75% of medical expenses
in the US2
For 88% of chronic and complex
diseases, drugs are a first choice
for medical intervention1
Chronic & Complex
Diseases Represent:
Non-compliance: up to 50%
non-compliance rates after one
year of therapy are not
uncommon in many of the key
disease categories
Omissions in care: 33% of
patients experienced an omission
in therapy gap1
Instability of a Chronic or
Complex Patient is Most Often
Tied to Gaps-in-Care
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Clinical Innovations Making Medicine Smarter
Medco Therapeutic Resource Centers(r)
Medco specialist pharmacists housed in 15 Medco Therapeutic
Resource Centers(r) with expertise in medications used to treat certain
chronic conditions
Driving patient adherence with evidence-based protocols
Personalized Medicine
Pharmacogenomics is integrated at Medco and now a core competence
Acquisition of DNA Direct, Inc.
Medco and Mayo Clinic warfarin study findings
Hospitalization rates for heart patients taking warfarin dropped by ~30%
when genetic information was available to doctors prescribing the drug
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Financial Strategy
New Business
Mail Order
Generics
Specialty Pharmacy
Medicare
Clinical Innovations
TRCs & Pharmacogenomics
Medco Health Store(tm)/OTC
International
e-Prescribing
Biosimilars
Medco: A Portfolio of Drivers
Shareholder Value
Smarter Medicine
Comparative
Effectiveness
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2009 2010 2011 2012 2013 2014 2015
Acute
Chronic/Complex 13.7 9.6 11.6 31 10.7 14.4 9.8
Drivers of Growth:
Generics - A Strong Pipeline of Opportunity
Prevacid(r)
Topamax(r)
Valtrex(r)
Adderall XR (r)
Effexor XR(r)
Flomax(r)
Aricept(r)
Cozaar(r)
Hyzaar(r)
Lipitor(r)
Zyprexa
Plavix(r)
Seroquel(r)
Singulair(r)
Actos(r)
Lexapro(r)
Levaquin(r)
Diovan(r)
Tricor(r)
Lovenox(r)
Lidoderm(r)
Viagra(r)
$13.7
$9.6
$11.6
$31.0
$10.7
$14.4
$9.8
Oxycontin(r)
Cymbalta(r)
Aciphex(r)
Nexium(r)
Celebrex(r)
Proair HFA(r)
Abilify(r)
2009 2010 2011 2012 2013 2014 2015
5.9 13.7 13.7 13.7 13.7 13.7 13.7
5.2 9.6 9.6 9.6 9.6 9.6
2.6 11.6 11.6 11.6 11.6
17.2 31 31 31
4.4 10.7 10.7
7.6 14.4
4
$5.9
$19.0
$25.9
$52.1
$70.3
$84.2
$95.0
Source: U.S. Drug spend estimates are based on IMS Health data for 2008. Compounded
amounts are prorated for mid-term expirations. Brand drug expirations based on expected patent
expiration dates current as of March 2010. Changes may occur due to litigation, patent challenges, etc.
$100.8 Billion in Brand Drugs
Off-Patent from 2009-2015
Off-Patent Compounding Effect -
Prorated
2010 Generic
Contribution of
$0.25; ~64% in 2H'10
($ in Billions)
($ in Billions)
You are here
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2005 2006 2007 2008 2009 2010E
Mail-Order Generic 36.4 39.9 47.4 58.2 59.6 65
Mail-Order Brand 50.9 49.1 47.4 47.6 43.5 43
Drivers of Growth:
Mail-Order Generic Volumes Increasing
2005 2006 2007 2008 2009 2010E
New Business 4 4.7 2.9
Mail-Order Volume 87 89 95 106 103.1 108
Mail-Order Generic Volume
Mail-Order Brand Volume
Mail Order Prescription Volume
Mail-Order Brand vs. Mail-Order
Generic Prescription Volume
(In Millions)
*Lower 2009 mail volume a result of weak national economy
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2005 2006 2007 2008 2009 2010E
Mail-Order Generic 36.4 39.9 47.4 58.2 59.6 65
Mail-Order Brand 50.9 49.1 47.4 47.6 43.5 43
Drivers of Growth:
Mail-Order Generic Volumes Increasing
Mail-Order Generic Volume
Mail-Order Generic Prescription Volume
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2006 2007 2008 2009 2010E
Acute
Chronic/Complex 5437 6043 7974.2 9527.5 11000
Drivers of Growth:
Specialty Pharmacy - An Important Growth Engine
$5.4
$9.5
$8.0
$6.0
2006 2007 2008 2009 2010E
189 210 281.2 357.1 450
$189
$281
$357
$210
$11.0+
~$450
Accredo Net Revenues
Accredo Operating Income
CAGR ~24%
CAGR 20%+
($ in Billions)
($ in Millions)
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Drivers of Growth:
Medicare - Growth and Diversification
Retiree Distribution by Medicare Solution (Lives %)
RDS PDP Part D Federal Other
2.12 0.33 0.86 0.23 3.23
2007
RDS PDP Part D Federal Other
1.89 0.59 5.27 1.49 3.1
2009
Retiree Drug Subsidy
Federal Clients
Part D - PBM Inside - "ASO"
Medco PDP - "At risk"
Other
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Drivers of Growth:
Over $21 Billion in New-Named Sales in 3 Years*
Annualized
New-Named Sales
Net-New Sales
2010**
* 2008-2010; ** As of fourth-quarter 2009 earnings call
2010 scheduled and early elective renewals total ~$15 billion
$4.3B
$4.2B
Client Retention Rate
99%
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OTC
Vitamins
Supplements
Rx
Rx
Medco Health Store(tm) Provides a Safety Net for
Vitamins/OTC Drug and Rx Drug Interactions
68% of adults are regularly taking an Rx drug and also
using an OTC drug or dietary supplement1
Proton Pump Inhibitors
increase the risk of major
cardiovascular event by more
than 50 percent for patients
taking Plavix(r)
Omeprazole obtained OTC
outside the pharmacy benefit
can not be reviewed for safety
WARNING!
Codeine - OTC Cough Syrups
Patients who are extensive
metabolizers of codeine can be
poisoned by excess conversion
of codeine to morphine
(Genotype AD6)
WARNING!
Warfarin plus aspirin increases
the risk of severe bleeding
Nearly 50% of potential drug-
drug interactions involved the
use of anticoagulants along
with antiplatelet drugs1
WARNING!
1. Source: Journal AMA Jan09
2. Source: Medco data
3. www.fda.gov
4. US GAO Report to Congressional Requestors: DIETARY SUPPLEMENTS - FDA Should Take Further Actions to Improve Oversight and
Consumer Understanding (Jan 2009). "Dietary supplements" includes vitamins.
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OTC
Vitamins
Supplements
Rx
Rx
Rx
Rx
Medco Health Store(tm) Provides a Safety Net for
Vitamins/OTC Drug and Rx Drug Interactions
68% of adults are regularly taking an Rx drug and also
using an OTC drug or dietary supplement1
Proton Pump Inhibitors
increase the risk of major
cardiovascular event by more
than 50 percent for patients
taking Plavix(r)
Omeprazole obtained OTC
outside the pharmacy benefit
can not be reviewed for safety
WARNING!
Codeine - OTC Cough Syrups
Patients who are extensive
metabolizers of codeine can be
poisoned by excess conversion
of codeine to morphine
(Genotype AD6)
WARNING!
Warfarin plus aspirin increases
the risk of severe bleeding
Nearly 50% of potential drug-
drug interactions involved the
use of anticoagulants along
with antiplatelet drugs1
WARNING!
80,000
Rx Doses2
300,000
OTC Drug Products3
75,000
Dietary Supplements4
1. Source: Journal AMA Jan09
2. Source: Medco data
3. www.fda.gov
4. US GAO Report to Congressional Requestors: DIETARY SUPPLEMENTS - FDA Should Take Further Actions to Improve Oversight and
Consumer Understanding (Jan 2009). "Dietary supplements" includes vitamins.
Over 30 Billion
Combinations
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Medco is Exporting Smarter Medicine
Germany
Sweden
UK
August 2009 - Joint
venture with United
Drug focusing on
specialty pharmacy
services
United Kingdom
Drug Spend: $22.3B
Population: 61M
March 2008 -
Collaboration with
Apoteket, government-
owned pharmacy, to
develop CDUR system
Sweden
Drug Spend: $4.3B
Population: 9M
April 2008 - Majority
stake acquisition of
Europa Apotheek
Venlo B.V.
Germany
Drug Spend: $41.3B
Population: 82M
Source: IMS
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Medco Tops Fortune Rankings in 2010
Innovation
Use of corporate assets
Quality of management
Financial soundness
Quality of products/services
Most Admired in Health Care:
Pharmacy and Other Services
1. Medco Health Solutions, Inc.
People management
Long-term investment
Global competitiveness
Attributes MHS Ranked #1*
Attributes MHS Ranked #2*
*Within broader Healthcare category
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Strong Financial Results Expected to Continue
2010 Guidance(1) 2009
Actual % Growth
GAAP Diluted EPS $3.05-$3.15 $2.61 17%-21%
Diluted EPS, excluding the amortization of intangibles related to 2003 spin-off (2) $3.28-$3.38 $2.83 16%-19%
1 As of fourth-quarter 2009 earnings call
2 See earnings per share guidance reconciliation in appendix
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Drug Mix Trend (%)
Brand Drugs Account for 85%
of Client Drug Spend
Brand Name
Generic
Total Prescriptions Dispensed (%)
2004 0.52 0.48
2005 0.48 0.52
2006 0.44 0.56
2007 0.4 0.6
2008 0.36 0.64
MAT 2008/2009 0.34 0.66
2004 0.88 0.12
2005 0.87 0.13
2006 0.86 0.14
2007 0.86 0.14
2008 0.86 0.14
MAT 2008/2009 0.85 0.15
Total Expenditures on Prescription Drugs (%)
*
*
*MAT denotes moving annual total; MAT 08/09 represents the 12 months ending in July 2009.
Source: IMS Health, National Prescription Audit Plans, National Sales Perspective, September 2009.
Includes re-stated historical data effective with January 2009 update to IMS databases. Data includes specialty drugs.
Drug Spend Mix Trend (%)
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2006 2007 2008 2009
Acute
e-Rx's 10949896 29447150 67749689 190068527
e-Prescription Industry Statistics
2006 2007 2008 2009
Active e-Prescribers 15.868 35.597 74.487 155.917
Active e-Prescribers as % of Total 0.03 0.06 0.12 0.26
Total e-Prescriptions
Total Active e-Prescribers
(in millions)
Source: SureScripts
10.9
67.7
29.4
190.1
Total Active e-Prescribers
Active e-Prescribers as
% of Total Prescribers
(in thousands)
15.9
35.6
74.5
155.9
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Reconciliation Tables
Full Years Ended Full Years Ended
Earnings Per Share Reconciliation December 29,
2007 December 30, 2006
GAAP diluted earnings per share $1.63 $1.04
Adjustment for the 2006 legal settlements charge1 - $0.17
Diluted earnings per share, excluding the legal charge $1.63 $1.21
Diluted earnings per share growth over prior year 35% 17%
1) This represents the pre-tax legal settlements charge of $162.6 million recorded in the first quarter of 2006.
Medco Health Solutions, Inc.
Selected Information (Unaudited)
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Reconciliation Tables
Full Year Ended
December 27, 2008 Full Year Ended December 26, 2009 Estimated Full Year Ended December 25, 2010 Estimated Full Year Ended December 25, 2010
Earnings Per Share Guidance
Reconciliation Actual Actual Low End High End
GAAP diluted earnings per share $2.13 $2.61 $3.05 $3.15
Adjustment for the amortization of
intangible assets(1) 0.20 0.22 0.23 0.23
Diluted earnings per share,
excluding intangible amortization $2.33 $2.83 $3.28 $3.38
GAAP diluted earnings per share growth
over prior year 22.5% 17% 21%
Diluted earnings per share growth
over prior year, excluding intangible
amortization 21.5% 16% 19%
1) This adjustment represents the per share effect of the intangible amortization from the 2003 spin-off, when Medco became a publicly
traded company.
Medco Health Solutions, Inc.
Selected Information (Unaudited)
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