Public health officials are seeing teen tobacco use "go the wrong way," Merlo said in an interview with CNBC's Jim Cramer on "Mad Money." "We've got to get our arms around that issue and reverse that trend."
Research shows that teens who vape are more likely than their peers to turn to cigarettes.
Nearly nine out of 10 cigarette smokers first try cigarette smoking by age 18, and 98% first try smoking by age 26, according to federal health data. The CDC says recent increases in the use of e-cigarettes are driving increases in tobacco product use among youth.
The epidemic among teens also comes as public health officials try to identify a mysterious lung illness linked to vaping. To date, the illness has taken the lives of 37 people and sickened at least 1,888 others across 49 states, Washington, D.C., and the Virgin Islands.
CVS stopped selling tobacco products in 2014.
Merlo told Cramer on Wednesday that 95 million fewer tobacco products were sold across the U.S. in the first year CVS stopped selling them.
"We were really proud of what we saw," he said.
Shares of the health-care company closed up more than 5% Wednesday to nearly $71 per share, after it reported stronger-than-expected third-quarter earnings. Wednesday's close represents a roughly 36% increase from its lows in May.
CVS also announced Wednesday that it would be shuttering 22 "underperforming" drugstores early next year. The company has about 9,900 retail locations.
CVS has for years been diversifying its business, including acquiring managed-care provider Aetna for $69 billion, in an attempt to remain an important player in a transforming health-care space.
— CNBC's and Angelica LaVito contributed to this report.
Disclosure: Cramer's charitable trust owns shares of CVS.