CVS CEO Larry Merlo's biggest challenge in 27-year run with company? Aetna takeover, analysts say

CVS Health's $69 billion bid for Aetna represents CVS CEO Larry Merlo's most ambitious and challenging step in his 27 years with the pharmacy giant, the Hartford Courant reports.

Here are four things to know about Mr. Merlo's career and the proposed Aetna deal.

1. Mr. Merlo, a pharmacist, became CEO of CVS in 2011. Since taking the reins, he began transitioning the drugstore chain into a healthcare company. Mr. Merlo removed tobacco products from CVS' shelves. The move cost CVS $2 billion annually, but elevated its standing within the healthcare sector. He also turned around a financially draining $27 billion merger with pharmacy benefits manager Caremark.

2. CVS Health's proposed acquisition of Aetna, unveiled in December, is Mr. Merlo's next move toward growing CVS' role within the healthcare industry. Under the potential merger, CVS Health will establish and expand its walk-in medical "MinuteClinics," which currently operate in more than 1,000 pharmacies. The goal is to move care closer to where patients live, strengthening the partnership between pharmacists, physicians and patients. Improving care outcomes and avoiding costly emergency room visits are a few of the deal's end goals, which the companies intend to reach through early care interventions at neighborhood clinics.

3. Scott Mushkin, a managing director at Wolfe Research in Stamford, Conn., told the Hartford Courant the deal represents something different than Mr. Merlo has ever attempted as CVS' CEO.

"What Larry surprised on the upside is that he's really been good at navigating CVS through pretty hostile competitive dynamics over the last few years. The difference now is that they actually have to create these clinics or these mini-centers. Yes, they have MinuteClinics. They need a lot more than MinuteClinics to really make this work," Mr. Mushkin said.

4. Patricia Kroboth, PhD, dean of the pharmacy school at the University of Pittsburgh, where Mr. Merlo studied, told the Hartford Courant Mr. Merlo's pharmacy education is a key part of CVS Health's pivot toward the healthcare sector — and its move to acquire Aetna.

"He has that in-depth knowledge of what it means to be a pharmacist who is interacting with the public and through his other experiences what it means to manage the insurance aspects of this," Dr. Kroboth said. "He understands how sometimes spending more money on drugs makes the overall cost of a disease less."

For the full Hartford Courant article, click here.

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