SHELBY LIVINGSTON May 01, 2019 08:09 AM
Swallowing up health insurer Aetna helped boost
CVS Health's revenue and profit in the first quarter of 2019.
The pharmacy giant, which closed the Aetna acquisition in November, is starting
to realize some financial benefits of the deal in its first full quarter as a
combined company. Its revenue increased 34.8% to $61.6 billion over the same
period a year ago, driven by the Aetna deal.
CVS also filled more prescriptions at drugstores
and handled more pharmacy claims in its pharmacy benefit management segment.
The inflation of brand-name drug prices also helped, it said.
"Following the close of our Aetna
acquisition in late November, our first full quarter of combined operations was
a success in many ways. In the quarter we continued to advance our integration
efforts while beginning to launch new innovations such as our HealthHUB concept
stores," CVS CEO Larry Merlo said in the earnings release.
During a conference call with investment
analysts on Wednesday morning, Merlo said the company is on track to gain $300
million to $350 million in synergies from the merger this year. It is also
starting to roll out new products and services as a result of the combination.
CVS piloted three "HealthHUB" stores
in Houston earlier this year and now plans to expand them to the rest of the
Houston market. The stores are meant to help manage patients' care in between
physician visits by offering a range of healthcare services, digital tools,
on-demand health kiosks, and chronic care management services. The Houston
stores also include an in-house dietitian who offers personal and group
nutrition counseling.
"These new store formats illustrate how CVS
Health is evolving and differentiating to address the changing healthcare
landscape," Merlo said. "And while it is early we are very encouraged
by the initial results in our Houston stores. The various product and service
offerings are performing at or above our expectations."
CVS' PBM segment grew revenue 3.1% to $33.6
billion because of brand-name drug price inflation and an increase in pharmacy
claims thanks to new business and the adoption of CVS' Maintenance Choice
program, which steers customers with long-term prescriptions to use CVS
pharmacies or mail order delivery.
The company's retail segment, which fills
prescriptions at drugstores and provides services at walk-in clinics and
long-term care facilities, grew revenue 3.3% to $21.1 billion, again because of
higher prescription volume and the inflation of brand name drug prices.
CVS' new health insurance segment, which
includes its Aetna business, brought in revenue of $17.9 billion in the quarter
and served 22.8 million members. Over the fourth quarter of 2018, Medicare
Advantage membership grew the fastest at 26.9% to 2.2 million members. The
company reported a medical benefits ratio of 84%.
In total, CVS said the Aetna deal helped boost
its net income by 43% to $1.4 billion over the same period a year ago.
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