Well before Larry J. Merlo became CEO of Woonstocket-based CVS Health Corp. in 2011, the company knew how to get big by acquisition, scooping up many hundreds of drugstores, decades after decade.
Named president in 2010, Merlo came onboard as CEO of what was then CVS Caremark Corp. and greatly accelerated the company’s expansion from merely big to astonishingly wide as it revised its persona and mission in unexpected ways that continue to evolve.
Merlo and the company, later renamed CVS Health, used opportunities opened by the Affordable Care Act to transform CVS Health into a multifaceted health-management company. It acts as a retailer, health care provider through its MinuteClinics, pharmacy benefits manager and mail-order-prescription provider. It can wrangle discounts for drugs by using its market power with pharmaceutical companies.
Merlo started his career as a pharmacist, and he uses the phrase “retailization of health care.” He has said that the Affordable Care Act has turned people into cost-conscious consumers, hence the value of his company’s growing number of MinuteClinics and the enhanced status of its pharmacists as health advisers.
Merlo hit a home run in 2014 by ending tobacco sales at CVS/pharmacy stores, part of its re-branding as a health care company. CVS Health suffered no financial blowback and earned untold amounts of goodwill. And its topline has grown despite eliminating all tobacco sales. In 2015 revenue for the company increased 10 percent over its 2014 total to $153.3 billion, Net income grew 12.8 percent to $5.2 billion. •
