One of the main story lines to emerge around the COVID-19 crisis is how it has reshaped the healthcare delivery model.
Perhaps there's no better example of this than the changes in business experienced over the last several months across CVS Health's portfolio.
The health giant that's part-drug store chain, part-pharmacy benefit manager and health insurer has seen major jumps in virtual care and telemedicine offerings, as well as the addition of COVID-19 testing in the community and for businesses, even as it continues to ramp up its HealthHUBs across the country.
"I think all of what we're seeing is, I'll call it the acceleration of omni-channel for health," said CVS Health CEO Larry Merlo in a call with analysts on Wednesday morning. "I would describe that as speaking to care being delivered in multiple and non-traditional settings. And I think we're going to see a new value-proposition emerge that is going to be based on the elements of convenience, cost, quality and trust," he said.
The acceleration of virtual care opens the door for greater acceptance of remote monitoring through technology and care from the comfort of a consumer's home, Merlo said. CVS Health opened more than 1,800 test sites at drive-thru locations and launched "Return Ready," a business-to-business testing program. That testing play opens up greater opportunities for diagnostics and vaccine distribution, he said.
The company reported 40% of those consumers getting tested for COVID-19 and added to CVS’ digital platform were not previous CVS customers.
CVS Health is continuing to grow its HealthHUB footprint. It paused the conversions of CVS Health locations into hubs in late March but resumed them in mid-June and has 205 locations open across 22 states. They remain on track to open 1,500 of the hubs by the end of 2021.
The role of the pharmacist and the nurse practitioner have been elevated in recent months with regulation changes that have allowed them to perform at a higher level.
"So you start thinking about 'Why go backwards when it's more convenient, less costly and administered by someone that they know and trust?'" Merlo said. "It also speaks to why retail does matter and the importance of our strategy of pivoting our retail asset in offering more health services at retail."
CVS Health beat Wall Street expectations as it reported earnings of $2.98 billion—or $2.26 per share—up from $1.94 billion, or $1.49 per share, a year earlier. Wall Street analysts surveyed by Zacks Investment Research predicted earnings of $1.93 per share on $64.5 billion in revenue.Its second quarter revenues of $65.3 billion in the quarter ending June 30, up about 3% from $63.4 billion the same quarter a year earlier.
The company did report some drops in its business such as in its retail sales, as well as prescriptions, associated with stay-at-home orders from the COVID-19 pandemic. They reported "front store revenues" decreased 4.6% in tquarter compared to the same quarter a year earlier, due to reduced customer traffic. Prescriptions filled decreased 1.1%, primarily driven by reduced new therapy prescriptions due to lower provider visits and decreased long-term care prescription volume during the quarter.
Merlo said the company is having discussions with the administration about the role the company can play in administering a potential future COVID-19 vaccine even as it gears up for a significant flu vaccine season. The company expects to administer up to 18 million flu vaccines, far higher than recent years, this season.
"This is where the intersection of testing and vaccines creates a sustainable business model because I couldn't be prouder than the work of our CVS colleagues in standing up our testing business in 1800 drive-thru locations in a matter of a few weeks," he said. "We've also used our digital capabilities where customer are required to schedule an appointment to get the test. So you don't see six, eight hours of cars backed up trying to get a test in one of our drive-thru sites. We can bring that same digital and technology capability to scheduling vaccines when they become available."
CVS Health raised its full year adjusted earnings per share guidance range to between $7.14 and $7.27 from between $7.04 and $7.17. The company raised its 2020 cash flow from operations guidance range to $11 billion to $11.5 billion from $10.5 billion to $11 billion.
“The repositioning of our retail footprint with the HealthHUBS supports that healthcare services move,” said CVS Health’s Chief Operating Officer Jonathan Roberts. "We view it as evolving to higher margin healthcare services as we move forward."
"We had anticipated more commericial losses than we saw in the second quarter. We do think that related to companies doing more furloughs than eliminating jobs," Lynch said. "However, as we turn the corner for the rest of the year, we will see continued commerical losses due to unemployment as the year emerges. However, what we're seeing in July is similar to what we saw in each month of the second quarter. You can anticipate lower commericial membership in the latter part of the year."