by Paige Minemyer | Aug 7, 2019 7:18 am
CVS Health is putting
a focus on growing and differentiating its business segments heading into 2020.
One area where it sees substantial opportunity: its government health plans,
executives said Wednesday.
CEO Larry Merlo said
on the company's second-quarter earnings call that expanding the reach of its
Medicare products in the next plan year will allow it to reach about 80% of
Medicare lives. Aetna, the company's health benefits arm, will also be working
to convert members from its prescription drug plans to its Medicare Advantage
plans, he said.
"We continue to
see opportunities to further grow our Medicare products," Merlo said.
"We see an opportunity to accelerate PDP to MA conversions to provide our
members with incremental value from an integrated medical pharmacy benefit."
The healthcare giant
beat Wall Street's second-quarter expectations for both earnings and revenue by
a wide margin, a boost it attributes largely to its acquisition of Aetna late
last year and continuing strong performance in its retail segment.
CVS reported $63.4 billion in revenue for
the quarter, a 35% increase year over year. It also reported adjusted earnings
per share of $1.89. Financial analysts had projected about $62.6 billion in
revenue and $1.69 EPS.
Merlo touted
CVS' growth of its HealthHUB stores as a key factor and
noted that it intends to expand these concept locations to three additional
metropolitan areas by the end of the year. He also noted that CVS and Anthem's
partnership on IngenioRx, the newly-launched pharmacy benefit manager, has been
running smoothly.
Migrating Anthem's members to the new PBM has
"gone flawlessly," Merlo said.
In addition, he said
that CVS is putting a spotlight on its chronic kidney care program. That
platform is aligned with the Trump administration's plans to shake up kidney
care, Merlo said.
Adjusted operating
income for the quarter was $4 billion, up 55% from about $2.6 billion in the
second quarter of 2018. Net income increased 175% year over year to $1.9
billion after CVS posted a net income loss in the second quarter of 2018.
"These results
demonstrate our ability to execute on our strategic priorities to accelerate
enterprise growth as we seek to fundamentally transform the consumer health
experience," Merlo said in a statement.
“We made meaningful
advancements on each of the priorities we outlined at our Investor Day in early
June to differentiate, transform and modernize the delivery of care,"
Merlo said. "While still early, we remain confident that we will be able
to realize the potential of our innovative and powerful new business model to
deliver enhanced value to our clients and the consumers we serve.”
As a result of the
company's second-quarter performance, CVS raised its 2019 outlook to between
$6.89 and $7 in adjusted earnings per share from between $6.75 and $6.90. It
also slightly raised its operating income guidance to between $15.2 billion and
$15.4 billion from between $15 billion and $15.2 billion.
No comments:
Post a Comment