CVS Health said a big boost in enrollment in seniors signing up for Medicare Advantage plans and new “health hub” formats in its stores are helping boost profits.
CVS Wednesday said fourth quarter 2019 net income rose to $1.7 billion, or $1.73 per share, compared to a loss in the year-ago quarter. Revenue rose 23% to nearly $66.9 billion.
CVS, which completed its acquisition of Aetna in December of 2018, is now focused on rolling out the HealthHub stores in U.S. metropolitan areas with 50 opened last year and another 600 to 650 projected to open in 2020.
CVS chief executive Larry Merlo said the new HealthHub formats are seeing increased prescription volume and usage of healthcare services compared to a control group of traditional stores.
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“As a result of the significant progress we made in 2019, and meeting or exceeding our expectations for the year, we raised our outlook for 2020,” Merlo said. “Client, patient and consumer reception to our innovative product and service offerings, including our HealthHUB locations, has been positive.”
The HealthHub locations are part of a strategy by CVS to dedicate more than 20% of its stores to health services that include new durable medical equipment, supplies and various new product and service combinations. The move to add new healthcare services comes as rival retailers in the healthcare space like 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 in part by Amazon and online retail generally.
CVS executives have said the HealthHubs will tend to be rolled out where there are a large concentration of Aetna members.
CVS said Aetna’s total medical membership ended 2019 at 22.9 million health plan members thanks to an increase in Medicare Advantage enrollment, which jumped 32% to 2.3 million from 1.75 million at the end of 2018.
Medicare Advantage plans contract with the federal government to provide health benefits to seniors plus some extras and rules have changed to allow these private insurers to offer more supplemental benefits as well. CVS’ Aetna health plan unit expanded into new markets to sell Medicare Advantage for 2020 amid a competitive battle with rival insurers including UnitedHealth Group, Anthem, Cigna and Humana as well as others expanding in the senior market.