Good morning, and welcome to the CVS Health First Quarter 2020 Earnings Conference Call. A question-and-answer session will follow CVS Health's prepared remarks. As a reminder, this call is being recorded.

Thank you, and good morning, everyone. Welcome to the CVS Health first quarter 2020 earnings conference call. As a reminder, this call is being recorded. I'm Valerie Haertel, Senior Vice President of Investor Relations for CVS Health. I'm joined this morning by Larry Merlo; and Eva Boratto, Executive Vice President and CFO. Following our prepared remarks, we'll host a question-and-answer session that will include Jon Roberts, Executive Vice President and Chief Operating Officer; Karen Lynch, Executive Vice President and President of Aetna; and Alan Lotvin, Executive Vice President and President of Caremark. In order to provide more people with the chance to ask a question during the Q&A, please limit yourself to no more than one question with a quick follow-up. In addition to this call, our press release and Form 10-Q, we have posted a slide presentation on our website. Please note that during this call, we will make certain reviews including our financial projections and statements related to our future financial performance, future events, industry and market conditions, and the future impact of COVID-19 on our enterprise. Our forward-looking statements are based on management's estimates, assumptions and projections and are subject to significant uncertainties and other factors, many of which are beyond CVS Health's control, including the future impact of COVID-19 on our enterprise. We strongly encourage you to review the information we filed with the SEC regarding these risks and uncertainties, in particular those that are described in the Risk Factors section of our 2019 annual report on Form 10-K and the Cautionary Statement Concerning Forward-Looking Statements and risk factor disclosures in our quarterly reports on Form 10-Q. You should also review the section entitled Cautionary Statements Concerning Forward-Looking Statements in this morning's earnings press release. During this call, we'll use non-GAAP financial measures when talking about the company's performance and financial conditions. In accordance with SEC regulations, you can find a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in this morning's earnings press release and a reconciliation document posted on the Investor Relations portion of our website. And as always, today's call is being broadcast on our website where it will be archived. I will turn the call over to Larry.

Well, thanks, Valerie. Good morning everyone and thank you for joining our 2020 Q1 earnings call. These are certainly unprecedented times for us all. And at CVS Health our dedicated colleagues have been working on the frontlines in the fight against the COVID-19 pandemic, responding in real time with solutions for consumers and patients across the country. And I'd like to take a moment to express my sincere gratitude to our colleagues for their work in all parts of our organization. They are doing a phenomenal job of responding to the needs of our communities, and I could not be more proud of their efforts. Now, as we all know, over the last couple of months, the situation has rapidly intensified as the pandemic has spread from coast-to-coast. Federal, state and local governments, in partnership with the private sector have worked to curb the spread of the virus and its impact on our population and the economy. As CVS Health is one of the largest providers of essential services, we are supporting these efforts through our community reach, local presence, broad healthcare offerings, digital capabilities and our hard working colleagues, and we are part of the solution during these difficult times. So let me provide an overview of the actions we've taken in response to COVID-19 with two key priorities in mind. First is the well-being and safety of our colleagues, consumers and communities we serve. Second is maintaining the continuity of our businesses and operations. In order do that, we are making investments to support our consumers, clients and members while deepening our relationships and advancing our long-term strategy of being the most consumer centric health company. Starting with our colleagues, we took swift action designed to keep them safe, while we kept our stores and other operations up and running with minimal disruption. We implemented social distancing practices, enhanced cleaning protocols, distributed personal protective equipment and outfitted stores with plexiglass barriers. We also provided our colleagues with enhanced benefits and resources, including family support and announced bonuses for our frontline colleagues for their outstanding work. All of these actions help ensure the continuity of our operations at a time when they are needed the most. For our consumers and members impacted by COVID-19, we are providing them with continued access to quality healthcare, while relieving some of the added costs and stress resulting from the pandemic.

Thanks, Larry. And good morning, everyone. Like Larry, I want to take this opportunity to thank all of my colleagues for their hard work, courage and dedication as we navigate this difficult time. As Larry mentioned, the onset of the COVID-19 pandemic brought about new challenges to all of us, and CVS has been adapting our business operations to support our key stakeholders. Through this pandemic, we've continued to advance our cost reduction priorities, including delivering integration synergy goals and our transformative goals to become a more digital enterprise. The rapid changes across the country in response to COVID-19 has led us to accelerate some of those initiatives. In light of the COVID-19 uncertainty, we also took steps to enhance our liquidity and strengthen our capital. We issued 4 billion in bonds in March as a preemptive measure against cash needs in a severely adverse scenario. While this will add about 15 million additional interest expense monthly, it puts us in a strong liquidity position to weather potential crises, with access to over 5 billion of cash and short-term investments at the end of March, as well as 6 billion available by issuing commercial paper we're borrowing under our backup credit facility and strong operating cash flows. Once we return to normalcy we expect to repay the incremental debt. We will also continue to prudently manage our operating expenses and will reduce our planned capital expenditures by $200 million this year. Our long-term leverage target remains unchanged and we continue to prioritize paying down our debt and maintaining our dividend with no share repurchases planned until we meet our leverage target.

Thank you. We'll take our first question from Lisa Gill of JP Morgan. Your line is open.

And thank you, Larry and team for all that, that CVS is doing on the front lines. Let me just first start. Eva, one of the comments you made is that there was a strong underlying core versus your expectations in the first quarter. Can you just maybe talk about what areas performed better on the core side than you were expecting. And I know you're not going to give any incremental guidance, but I just want to understand how we think about the front end and the impact to overall results. So you talked about the April update, and I appreciate that being down 10.9% on the front end. If it stays like that for some period of time, how does that impact the overall results as we think about the core guidance that you gave?

Hi, Lisa, it’s Eva. Thanks for thanks for your question and your comments about everything the company is doing. I think as we commented on the strong underlying core, right, I'll start with the PBM. You saw really strong top-line and bottom-line growth with specialty leading the way. We're realizing the benefits of some of the initiatives that we had started last year and underlying sales in the PBM. So we're pleased with that and the performance we've reported was above our initial expectation. Additionally, as you look at the retail business. Again, strong performance ex-COVID, pleased with the front store comp of 2% prior to COVID, continued strong script growth and we reported over 8% script growth when you adjust for COVID, you're still above 6% and that's the continuation of our patient care programs and what have you. And from a Health Care Benefits perspective, I'd say our results were largely in line. We're pleased with the growth in the government sector. But on the Medicaid side as I outlined, we have some MBR pressure that we're working through. Lisa, on the guidance question, I'll say there are a host of assumptions underneath of leaving our guidance unchanged. And it's based on a number of factors, as you look at things coming back on-board, I don't think it's consistent across the country, right, it'll be state-by-state and we've really tried to factor all the different pieces. And Jon, if you want to add anything on the front store?

Well, I mean Lisa, listen all categories are obviously down in April coming off from the peak in March and it's still very early. We have very limited data. But we are seeing that as shelter-in orders are lifting and we return our hours of operation to the normal hours, we're beginning to see sales improve. So, still early, but the early view is improving.

And Lisa, it’s Larry, just maybe one final point on it, specific to front store sales. Keep in mind front store now represents 8%, 9% of enterprise revenues, continues to be important. And team has done a great job in terms of -- when you think about the underlying ex-COVID, the sales performance was around 2%. So, that reflects a lot of the activities that we've talked about in the past around personalization. Lisa, I think one of the things that we're seeing and learning is -- and we talked about things that are happening today that are part of today's norm. But things that will migrate from today's norms to tomorrow's everyday routines, and as you heard in our prepared remarks, we've seen a dramatic increase in home delivery. One of the questions that we've always had is, how do we increase the front store attachment rate to prescriptions? And again, we've seen a fourfold increase in terms of those prescriptions being accompanied with a front store purchase. So, we think that's an opportunity that we can capitalize on, as we begin to return to, I’ll say, a new normal environment.

Our next question comes from Eric Percher of Nephron Research. Your line is open.

Eric Percher and Josh Raskin here from Nephron. Maybe building on the last question of what a new norm may look like. You spoke to some of the shifts occurring in mail, specialty shift and home infusion. How material are these? Do you see the shift, I think mail is 5% of all scripts, as being material. And obviously across your models, you can capture then in a couple of ways. And I'd love to hear the same on specialty and infusion and whether you think there is share gain from the hospital channel as well?

Yes, Eric, it’s Larry. Maybe I'll start and ask Alan to talk more specifically on mail. I think the core and the home infusion is a great opportunity and ties back to something that we've talked about many times. When you think about, how do we provide care in the right care setting with the variables being convenience as well as cost. And our infusion nurses have made 60,000 visits since the pandemic began, which is a great example of what we're talking about in terms of -- we freed up important hospital capacity by working with the hospitals in terms of expediting discharge back into the home for those patients who needed to continue to require IV therapy, and were well enough to do that within the comfort of their home, and we're able to provide that service. So, Eric, a lot of this goes back to the strategy that we've been talking about for the last couple of years in terms of, what we can do to make healthcare local and simple, whether it's in the community, in the home or in the palm of your hand.

So Eric, it’s Alan Lotvin. I'll add a couple of points. One, on home delivery, we've seen an increase in home delivery in mail but I think when you think about mail and the power of enterprise, we have the ability to bring prescriptions to people's home not only through traditional mail, but also as Jon talked about through home delivery from retail and that's also up dramatically. And the last point I would make is that as we talked about the early view into what we're seeing, with mail and specialty in April, we're not seeing the same patterns of decline that we're seeing in the retail network.

And along the same lines of early views, are you seeing any change in pre-authorizations on the HCP side relative to that 30% decline, where that may move?

Hi, Eric, it’s Karen. In April, pre-auth, we saw almost a 40% decline in prior authorization. And in utilization it's down 30% through April. I would tell you that as states are opening up, however, we uptick in pre-auth and pre-cert but not dramatic increases yet.

Our next question comes from Ann Hynes of Mizuho Securities. Your line is open.

So just for clarification. Eva, I know you said kind of Health Care Benefits segment results were in line with your estimates. So when I look at your prior guidance for Health Care Benefits, the operating profit guidance was 5% to 6.7%. So is that decline -- negative 4.5%, was that Q1 decline in line with your expectations going into the year? It will be my first question. And my second question is, I know you touched this in your prepared remarks. Can you just remind us some of the initiatives you did in 2019 in specialty, which resulted in such strong results? Thank you.

Yes, sure. So Ann on the Health Care Benefits, I would say the results are largely in line as I said before. And as you think about the results, a couple of things our operations are elevated in Q1, as we're on-boarding the growth in the Medicare business that we spoke to as well as IlliniCare and bringing that acquisition on. And recall I spoke last year to some stranded costs related to the Aetna-PDP divestiture. We're aggressively working that down as we go throughout the year. That said, I did highlight some of the pressure on the Medicaid and MBR and that certainly is something we're working through. And I’ll let Alan provide some additional color on some of the specialty initiatives.

So on the specialty side, Ann, we’ve expanded a program we call Specialty Expedite, which is a way to simplify the process of getting prescriptions sorted for both physicians and patients, in short of time. It has been very well accepted in the provider community. We continue to refine Specialty Connect, our approach to allowing patients to pick up or drop off prescriptions. Specialty prescriptions at retail is a very, very popular approach. Again, resonates very strongly in the provider community. And we really continue to drive our digital adoption and the ability to interact with our Specialty members via text and secure messaging, which again creates just a tailwind for us as we work more closely with these patients.

And Ann, it's Larry, maybe just one final point. Keep in mind when we talk about 19% Specialty growth that now includes the Specialty business within Ingenio in those numbers as well.

Our next question comes from Charles Rhyee of Cowen. Your line is open.

Thanks for taking the questions. Just a follow-up from earlier question around Jon, I think you were responding to Lisa's question around the experience you're seeing in the reopen states. Anything, any more details you can give like a breakdown between not just pharmacy but also front-end? And is it foot traffic that is accelerating and talk about may be how consumers are kind of responding as they are kind of going back to sort of a normal life, is first. And then just going back to, I think earlier, in the prepared remarks you talked about strong retention rate in the PBM business. Maybe talk about what new business activity looks like this year. Is it fair to think that with all the disruptions that employers are seeing, we should expect a lot less new business activity? Thank you.

Charles, this is Jon, I'll start. So we are -- I mean if you look at where most of the COVID positive cases are, we're seeing more of a significant sales impact both in the front and in the pharmacy than we see in other areas that are less impacted. But as the shelter-in-place orders are lifted, we're turning back on our marketing programs with personalization. That is a big part of our sales driving programs. We're also returning our hours of operation back to normal. So as an example 75% of our stores reduced their front store hours of operation, and it was about 12% of the hour, so returning or return those back to normal as the community is open up. In pharmacy, we did less of an hour’s reduction of about 2%. But listen, it's still very early, but we are seeing some positive trends as I said earlier. In pharmacy, we're seeing less of an impact and I think a lot of that is due to our home delivery program that Larry talked about in his remarks. But I think the biggest headwind we're seeing now in pharmacy is really around new therapy starts. So you've seen doctor visits are down and as a result of that we're seeing about 25% less or lower new therapy starts for April than we saw a year ago. So, this includes new maintenance prescriptions, as well as prescriptions for acute events. And they typically grow about 7% each year. In certain drug classes such as antibiotics new starts are down 40% to 50%. So as physicians start seeing patients, again, we expect this volume to normalize.

So I'll jump in, it’s Alan, on the new business question. So I'll first talk about retention. As Eva mentioned, we were about 70%, a little over 70% of the way through our own book, we're at a 97% to 98% retention rate. So we're very happy with that. With respect to new business, we'll talk more about that next quarter. But I will tell you that RFP activity is consistent with what we've seen over the last few years. We have not seen much of a slowdown. Obviously, I can't predict what's going to happen as we get towards the end of the year. But as of now, we're seeing roughly consistent what we've seen in the last two weeks.

Our next question comes from Ricky Goldwasser of Morgan Stanley. Your line is open.

Question is focused on your Medicaid comments around some of the higher cost. But if we look forward -- an article yesterday talked about states that are starting to cut Medicaid rates. So what are your thoughts about how prevalent it’s going to be this year and next year and the impact on margins? I think your long-term target at Investor Day was low-single-digit to mid-single-digit, so how should we think about the potential impact of rate cuts on that?

Hey, Ricky. It's Karen. Relative to your first question on the pressures being in Medicaid. There's really two factors. One is, there we had a longer flu season that impacted Medicaid. And the second was really around some unusually high cost claimants in the Medicaid business. Relative to the Medicaid business on a go forward basis, it's a little early to tell. We are working very closely with our Medicaid states. We expect to see obviously improved enrollment in Medicaid, as we continue to see unemployment increase over time, and we haven't had any states come back and cut rates on us yet, but obviously we would manage to -- our medical costs and our operating expenses to try to maintain those single margins as appropriate.

Ricky, it’s Larry. One final point I’d add, as you look forward, I think that your question around Medicaid margins is, it's really an open question at this point. Because if you go back and look at the stimulus activity out of Washington, now there's no dialogue beginning on a stimulus for and some of this is, it could really be framed as a policy question that the stimulus today has not addressed the issue of individual subsidies for COBRA as an example, acknowledging that there is going to be a relationship between what happens to the Medicaid rosters, assuming unemployment does increase to some number, versus what happens with COBRA if there are subsides applied for individuals to enroll in COBRA. So, that's something that we'll be watching closely and having discussion around.

Just one follow-up on that. Do you have any view around what would be the risk profile since you got uptick in Medicaid enrollment, in past you used to see sicker population actually signing up to the Medicaid benefit. Do you think that given what we're seeing in COVID and how it's impacting cross section of the population that you might have a different risk pool and maybe kind of like younger population signing up? Wondering what your thoughts are on that?

Ricky, I think if we look at historical patterns when we’ve seen unemployment, you look back at 2008, 2009, when we saw increases in Medicaid as well. What we saw was a more healthy population come in, and we would expect to see that as well, because we've got commercial business relatively speaking healthy. So I would think the risk profile will change somewhat and skew to a healthier growth.

Our next question is from Justin Lake of Wolfe Research.

A couple of things here. First, can you help us understand the $0.10 benefit that you discussed here in terms of how much benefit to the bottom-line from incremental revenue that you can tell us about? And then thoughts about the incremental costs on COVID in March that might have offset some of that benefit? And how we should think about the incremental costs on COVID going forward for the rest of the year? And then just my follow-up would be that what was the benefit of the legal resolution in the quarter in the pharmacy business that you've noted in the results?

Hi, Justin, it's Eva, I'll take that question. I think if you look at the $0.10 benefit, and we outlined this on our Slide 19. I would think about Q1, you can see the benefit really largely coming from the Retail segment, as the Other segment really had pretty modest impact, and there's some puts and takes. And I think that as you think about the margins, the investments that we've made, and that Larry outlined, a lot of those investments are largely going to hit in Q2, given the nature of those underlying investments, so think about the benefit. There are some investments but more generally in line with underlying margins as the other investments on compensation and what have you and the additional protective gear has really, really ramped as you came towards the end of the quarter. Going back to your other question on the Retail/Long-Term Care segment, you could see year-over-year we have favorability in our underlying costs. And I'm not going to explicitly break out the legal matter. But year-over-year, we had some costs last year. We had some favorability this year. So net-net it was a positive as you look at that outside growth.

Our next question is from Michael Cherny of Bank of America.

Good morning, and thanks for all the details so far. I want to kind of summarize a few questions you had. Larry, you went through a lot of details early on some of the benefits you're seeing tied to the increase in telehealth, tied to some of the other dynamics on the ability to deliver at home. As you think about the pause you're taking on some of the longer term, investments in long-term strategies, and particularly around HealthHUB, is there anything you're learning through this pandemic that can better educate you on how to think about to help a build out given that there are a lot of dynamics in place that would appear at this point to have people that want to stay away from the average traditional retail store versus coming into more. And so just balancing those dynamics with your approach towards having this incremental differentiated front end healthcare service at a time where the entire world is rethinking how much time they want to spend outside their house.

Yes. Mike, it's a great question. And I touched on this a bit earlier that what we're seeing -- we see validating our strategy and we talked about some of the used cases that we're seeing play out and whether it's home delivery, telemedicine, and I'll touch one that absolutely is in the community and that's testing. So, Mike, when you think about, we call it our triad of care, in the community, in the home, in the palm of your hand. Think about that as what we're defining here is omni-channel for health, and each one plays a role. But as individuals, we'll need all three in terms of what we do, when we do it, and how we do it. And so back to your question, the learnings and the experience that we're seeing; number one, it validates our strategy; number two, we're working to further optimize what we're seeing to become part of an everyday routine. And I'll speak to the role of testing in the community as being an important part of diagnostics that, yes, we're focused on COVID testing today. But there's a broader universe of diagnostics and monitoring that we see becoming an important part of our HealthHUB strategy. So we're evaluating all of the products and services roadmap, and I'm sure you're going to see us accelerate some of the things that are on our drawing board as a result of what we're experiencing.

Our next question is from Ralph Giacobbe of Citi.

I was hoping if you could bifurcate the commercial risk membership decline between economic factors versus either loss or just shift to ASO. And then how you're viewing the economic backdrop specifically as it relates to the commercial market? And then just a follow up to that, is there any greater appetite to get back into the exchanges in a bigger way at this point? Thanks.

Hi, Ralph, it's Karen. Relative to membership, we lost two very large folks in labor cases and they were fully insured cases, which is really reflecting the decrease in overall membership. And on a year-over-year basis as you know, we have been -- we also have a decline -- a small decline in small group. And as you know we've been pushing on small group to move it from insurer to ASO. We continue to see those trends. Relative to the question on unemployment in the last six weeks, we do expect to see declines in the latter half of the year. We already are seeing some membership decline in April in our commercial book as a result of the economic downturn. However, we are seeing an increase in our Medicaid membership as well in April. So that's really what we're doing. But we do except depending on what how this plays out and the duration of this, that we'll continue to see decreases in our commercial book.

And then the exchanges?

The exchanges, as you know we are -- exchanges today, it's something that we’re continuing to evaluate and we'll continue to look at it, we obviously won’t be in 2021.

Our next question is from George Hill of Deutsche Bank.

I have two. First for Eva. I'm wondering, if you can unpack the PBM performance a little bit, maybe talk about the benefit of the improved purchasing economics and the cost savings versus lapping Ingenio planning and the negative impact of rebate guarantees? And then I guess a follow-up for Larry, strategically. I guess, how are you thinking about home delivery versus mail, you talked a little bit about the retail attachment rate. Walmart is launching a two hour free service. I guess do you see this as an answer for CVS to challenge kind of the inclusion of online into retail?

So George, I'll start with your question around the PBM. Obviously, as you look at the first quarter growth, right, it's outsized relative to how we spoke about the full year prior to COVID. But I think as you look at that in relation, right, the Q1 operating income growth is above what we would think about as a full year, given the specialty benefits that Alan spoke about earlier, disproportionately benefiting Q1, as we have the annualization of some generics and the new sales initiatives that Alan spoke about. We also had some timing related to other accruals. At the core though, specialty is performing very well. On the rebate headwind I would say we continue to manage that and the shape of the curve that I've described numerous times that 2019 was the peak, it would come down in '20 and diminish in -- or be de minimis in 2021, that continues. So that continues to be a benefit as well as just cost management and benefit from integration synergies.

And then George on your home delivery question. George, think about the discussions we've been having probably for the last year in terms of how do we make sure we don't leave any white space for disruption. And we started home delivery in a few markets and I think it was last fall where we expanded it coast to coast. So George you think today about, you can pick up your prescription inside the store in most of our stores through the drive-through, in the mailbox, at the front door or at the office and we're experimenting with UPS in terms of maybe on the lawn through a drone. So it's -- who do you want to be in terms of what makes the most sense for you from a convenience and access point of view in any given point in time. And when you look at our integrated model, we can satisfy all avenues of access and convenience.

And George, this is Jon. The only thing I would add to that is the reason our home delivery program was so successful as this pandemic took hold is, we have 70% of our retail customers engage digitally. So it was very easy for them to make that transition. So I think that will help us as people decide how they want to get their prescriptions in the future.

We'll take our next question from John Ransom of Raymond James.

I was wondering and for Karen, what the medical loss ratio would have looked like in the first quarter without COVID?

COVID had minimal impact on the quarter. So if you look at that loss ratio it's minimal. Obviously, it will have a big impact in April as we're continuing to see state utilizations up.

My follow-up is, when we look at the commercial marketplace, you're able to combine Aetna and the PBM and single package. Do you think that we would see more, what I would call cross subsidization as you go to market, i.e., maybe using guaranteed rebates or some other such things, such that the margin in the two businesses is less and less relevant as you sell them as a single package?

Yes, when we do that today we obviously will price the whole case and we'll look at the whole case and price it to get a margin that we want to get on that total case. So we would not necessarily subsidize the month or the other. We look at the whole case and what we want write it at.

And Karen just to add to that, right, we'll look at the value that can be generated across the enterprise as we move forward.

Our next question is from Lance Wilkes of Bernstein.

And again, thanks a lot for everything that the CVS team is doing out there in the community. Just wanted to talk on HealthHUB a little bit and wanted to focus on two particular aspects. One is, if you could talk a little bit about how telehealth is integrated in or how separate it is within the MinuteClinic and now the HealthHUB structures? And what your thoughts are going forward with that? And I guess the follow-up is, given some of the instability in the physician practice and urgent care environment today, with the drop-off in volumes. Those are going to become much more significant acquisition targets going forward. Is acquisition an important part of how you're going to build-out capabilities as you look at HealthHUB and maybe the expanded care delivery at retail?

Yes, Lance, this is Jon. I'll take telehealth and MinuteClinic. So we have the capabilities to do telehealth in MinuteClinic in every state that we operate in. And Larry spoke about the significant increase, I think it was 600% in telehealth visits. So it's going to be an integral part of how we go-to-market moving forward. And we just got some recent consumer research and that compares last year consumer sentiment to this year's consumer sentiment and this is one example, where would they prefer to get their flu vaccines? And we saw a significant uptick in consumers that are interested in getting their flu vaccines in their local pharmacy as opposed to the doctor's office. So it's a good example how MinuteClinic will be able to provide services like that plus telehealth and provide the convenience and choice that consumers are looking for.

And just on the -- on how you're looking at maybe the opportunities that could present themselves with respect to the practices that are out there. And I guess a follow-up on the telehealth, are you actually having telehealth deployed using the MinuteClinic clinicians or is it in the centralized format?

Yes Lance, we actually have both where the telehealth is integrated with MinuteClinic as well as telehealth with physician is accessed through our digital applications. And we talked about the percent increase, anything about 60,000 telehealth engagements on a daily basis, which is a dramatic increase as well. And it's not just one of the things we were looking at. Is it COVID related? And the answer is no, we're seeing an increase in, I'll say PCP utilization as well as an increase in, let's call it, behavioral health concerns and other type of specialist services. So we do believe that it plays a complementary role to what we're doing with our HealthHUBs and it brings us right back to community home in hand.

We'll take -- we've got time for two more questions, please.

Certainly. We'll take a question from A.J. Rice of Credit Suisse. A.J. Rice: Glad to hear everyone's safe. I appreciate all the comments that were made about the economic impact on the Health Benefits business. I wonder if we could broaden it out. Obviously, it's been 10 years since the last economic downturn. How does-- how do you think the other businesses respond and how are they may be positioned differently today versus the last time we went into an economic downturn?

Yes, A.J., it's Larry. A.J., look, it's probably premature and a difficult comparison because to your point, a lot has changed over the last 10 to 12 years. And there are still an awful lot of uncertainties as to where we're going to be in the latter part of this year. I will say the nature of our business is to a degree recession-resistant. I wouldn't describe us as recession-proof and whether it's what you're looking at around the role of our retail asset and you think about our strategy that we've talked a lot about the triad of community home in the hand, and the fact that as you think about the provision of health care in a more challenging economic environment, cost will become a bigger issue and we believe that we have the assets and the capabilities when you think about the cost associated with care provision and the offerings that we have with our integrated model.

And Larry, if I could just add A.J as you, looking back at the past this is an unprecedented situation and so many unknowns. But as Larry highlighted, where difference is, is we have a lot of diversified assets. Karen got some questions on Medicaid. In our PBM we have a very large Medicaid. We have a very large Medicaid, you saw and you heard in Larry's prepared remarks around the health services that we're offering and expanding and accelerating some of our diagnostic testing. So there is a tremendous amount of moving pieces. And we're going to work to really drive -- to drive the business forward in these challenging times.

We'll take our final question from Steven Valiquette of Barclays.

Hopefully you can hear me okay. Just a quick follow-up question regarding the April prescription trends; I'm curious if there is any way from your analytics capabilities to determine how much of the slowdown in April is tied to the pull forward in March versus the reduction in physician visits? And you mentioned that 30% reduction in utilization of an array of healthcare services in April. Are in-person physician visits in particular down in line with that 30% or is it higher or lower from your view just separate from telehealth, obviously?

Hi Steve, it's Karen. Let me just -- I'll give you some of the pieces in April relative to utilization. We saw Pharmacy about flat. We saw in-patient down over 30%; outpatient was down about 25% and our physicians were down almost 35%. And then all other, which would be our lab and our radiology and health science and services they were down about almost 50%. So in this case you could have a broad array of the pieces that contributed to the 30% reduction in utilization.

And then, Steve, this is John. We saw a lot of 30 to 90-day conversions in March in Pharmacy, so that did take some prescriptions out of the April pipeline. And I would say when I talked about the new therapy starts being down, I think that is -- we think about it as being in line with physician visit. So as physician offices start open and patients start coming back we expect that volume to normalize.

And Steve, the one thing that I do want to emphasize, because I'm proud of the work that we've done at CVS and quite frankly I'm proud of the work that our industry has done. The continuity of the pharmaceutical supply chain is not something that you've seen a lot in the news and everyone has worked hard to make sure those with chronic disease are staying adherent to their medications and not compounding this problem that we have today with COVID with another problem that would just gridlock our health care system. So it's really been a job well done in that regard.

So with that, let me just wrap up and again, we're very pleased with our underlying business performance in the quarter. We believe, as you've heard from the dialog we've had in the Q&A that our integrated innovation-driven healthcare model is proving to benefit participants across the healthcare system in these unprecedented times and it will continue to do so, both through the crisis and well into the future. And we remain focused on growing CVS as an integrated healthcare enterprise and we'll continue to invest for sustainable long-term growth. So thanks again for joining us this morning and please stay safe and healthy and we'll talk to you soon.

This does conclude today's CVS Health first quarter 2020 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.