CVS' Merlo says COVID-19 made case for company's diversification strategy

The front entrance of a CVS Pharmacy
CVS Health CEO Larry Merlo spoke at HLTH 2020 on Tuesday. (Eric Glenn/Shutterstock.com)

As the coronavirus pandemic hit U.S. shores, CVS Health was in the midst of a major business transformation following its acquisition of Aetna.

CVS closed its $69 billion acquisition of Aetna—one of the largest payers in the country—in late 2018 and was 20 months into integrating when it had to adapt to COVID-19, CEO Larry Merlo said.

Rather than creating a hurdle, Merlo said the pandemic served to underscore CVS' key strategic goal of making healthcare easier to access through the combined power of its suite of health plans, pharmacy benefit management tools and retail pharmacies.

"The pandemic really became an opportunity to reprioritize elements of that transformation journey," Merlo said. "It really brought our strategy to life in a much more meaningful way."

"It really speaks to strength of the diversification this business model brings," Merlo said.

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Merlo spoke Tuesday morning at HLTH's virtual conference alongside Aetna President Karen Lynch. HLTH will continue for the rest of this week.

Merlo said that the pandemic forced the industry to accelerate its adoption of home health solutions and other strategies to meet patients where they are, a change that CVS was well-positioned to adapt to.

He said COVID-19 represented a "very dramatic shift toward multichannel integrated health delivery." Reaching consumers through an "omni-channel" approach is commonplace in the retail space, and it's just now coming to healthcare as well.

"I think we’re now defining what omnichannel means for health and it really fits our strategy nicely," Merlo said.

Merlo added that while the pandemic led to more patients staying home and avoiding in-person care visits, healthcare is a "contact sport"—"eventually, you have to touch someone," he said. So offering an end-to-end approach that includes but doesn't rely solely on digital options is key, he said.

"What we’re talking about here underscores that our strategy is the right one," he said.