Bruce Japsen Senior Contributor Aug. 7, 2018. Photographer: Daniel
Acker/Bloomberg Aug 7, 2019, 08:53am
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2018 BLOOMBERG FINANCE LP
CVS Health said its rollout of new
"health hub" concept stores will reach four U.S. metropolitan areas
and 50 locations by the end of this year with the company already seeing
benefits in new customers and revenues.
CVS said the HealthHub rollout will grow to
1,500 locations by the end of 2021, or about 500 HealthHubs a year, CVS chief
executive officer Larry Merlo told analysts Wednesday on the company’s second
quarter earnings call. The HealthHubs are outperforming CVS' traditional stores
on a variety of measures, Merlo added.
“We are seeing additional traffic and seeing
that translate to sales momentum” throughout the store, including the
"front end" and in the CVS MinuteClinics, Merlo told analysts during
the company’s earnings call. Buoyed by growth of pharmacy sales and the
integration of the Aetna health insurance business, which it purchased last
year, CVS reported $1.9 billion in profits or $1.89 per share.
CVS earlier this year began to pilot three “HealthHUB” locations in
Houston that dedicate more than 20% of the store to health services that
include new durable medical equipment, supplies and various new product and
service combinations. CVS is adding thousands of new personal care items as
well as additional services at its MinuteClinics in the health hub stores.
The move to add new healthcare services comes
as retailers CVS, Walgreens Boots Alliance and Walmart look to fill the emptying
space in their brick and mortar stores in the face of changing consumer
shopping habits driven by online retail giant Amazon and others.
Beyond Houston, this year's expansion will result in
HealthHub locations in Atlanta, the Philadelphia/Southern New Jersey market and
Tampa, Florida.
Given CVS' merger with Aetna, analysts are
expecting more business from customers that are ensured by the combined
company. Over time, analysts expect more of Aetna’s more than 22 million health
plan members will be guided to CVS stores and the HealthHUBs in particular.
Total company revenues in the second quarter
jumped more than 35% to $63.4 billion helped in part by increases in pharmacy
sales and new health plan members, particularly seniors signing up to Aetna's
Medicare Advantage plans.
Aetna's Medicare Advantage membership is up
more than 400,000 enrollees to 2.2 million as of the end of the second quarter
compared to the end of 2018 when the company reported 1.75 million Medicare
Advantage members.
CVS executives said the company plans to
expand the availability of Aetna's Medicare Advantage plans to 80% of U.S.
Medicare beneficiaries in 2020 from 75% this year.
Aetna’s expansion into new Medicare Advantage
regions is the latest expansion for such plans, which contract with the federal
government to provide extra benefits and services to seniors, such as disease
management and nurse help hotlines with some also offering vision, dental care
and wellness programs.
Several health plans, including Anthem,
Centene, Humana and UnitedHealth Group are looking to expand their Medicare
Advantage businesses next year and beyond as well. And now insurers are rolling
out more supplemental benefits in their Medicare Advantage plans following rule
changes implemented.
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