Podcast Center
Video Center
Webcasts
Resource Center
Events
June 04, 2019 at 06:12 PM
Shares of CVS Health Corp. have been battered in recent months along with other health-care companies amid stepped-up scrutiny of the industry’s pricing practices and calls from lawmakers and the Trump administration to overhaul the current complicated and costly U.S. health system. CVS also has had the added task of integrating Aetna Inc., the insurer it bought for $69 billion in November as part of an ambitious plan to transform itself from a pharmacy giant into a more complete provider of health-care services.
(Related: CVS, Aetna Closed Their Deal. A Judge Is Not Happy)
It was against this backdrop, and with CVS’s shares down 31% since completing the Aetna deal, that the company held its much-anticipated investor day Tuesday. It marked the first comprehensive update of CVS post-merger, and was a chance for management to convince shareholders that the combined company was up to the challenges ahead and moving in the right direction. Based on the stock’s initial positive reaction, investors seem to have liked what they heard. That upbeat vibe isn’t misplaced.
CVS’s most promising initiative is the rapid expansion of its new “HealthHub” store model, which includes substantially more health-care services and expanded clinics. At these locations, CVS says it can offer about 80% of the services your average primary-care practice provides, as well as some things that they don’t. This includes everything from traditional urgent care to sleep-apnea screenings.
The company started the year by opening three HealthHub locations in Houston. It plans to open 1,500 locations by the end of 2021, with the rollout focused on the Philadelphia area, Atlanta and Tampa, Florida, in addition to its initial target market of Houston. It’s a lofty goal and may make hitting its financial targets that much more difficult, but it’s a worthwhile long-term investment.
Transforming standard pharmacies into something more is key to making the Aetna purchase pay off. The company’s massive physical reach differentiates it from large rivals like Cigna Inc. and UnitedHealth Group Inc., which also manage both health-insurance and prescription-drug plans.
