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.
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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.
Date: August 08, 2019