CVS HealthHUBs are healing non-Rx sales
CVS Health is still thought of by many as a retailer, but that is a mistake. The company derived only 7.5% of its total sales of $256.8 billion last year non-prescription merchandise in its retail division.
CVS Health today, and increasingly in the future, is a major player in the health care world and it is out to further transform the way health care is delivered. One of the keys to achieving that goal is a concept called HealthHUB found in a growing number of CVS Health’s 10,000 stores, or what the company refers to as local touchpoints.
CVS Health began piloting the concept which offers roughly 80% of the services a patient could receive at a primary care doctor’s office in January 2019. By mid-year, the concept was working well enough the company said it would expanded to 1,500 location by the end of 2021. By the end of this year, there will be between 600 and 650 Health Hubs, COO Jonathan Roberts said Feb. 11 during a conference call following the release of fourth quarter results.
The curious thing about Health Hubs, according to Roberts, is they improve the performance of non-pharmacy sales even though selling space is reduced by 20% when a store receives a Health Hub conversion. The sales boost is also the result of a reduction of general merchandise in favor of an expanded health and wellness offering.
“When we look at our 2019 HealthHUB stores, we are actually seeing positive growth in the front store sales and margin because health and wellness are actually carrying higher margin,” Roberts said. “And we are taking components of what we are learning in the HealthHUBs and we are deploying those products and categories across our fleet.”
The HealthHUBs are part of grander vision established by CEO Larry Merlo to have CVS Health be the most consumer-centric health company that transforms the way care is delivered in the U.S.
“We remain focused on making healthcare more local across the country, making healthcare simpler to help consumers better navigate their health and make informed decisions, and helping people achieve their best health outcome, particularly when it comes to managing chronic disease,” Merlo said during the company’s fourth quarter earnings call. “Our HealthHUBs are the most visible aspect of our integrated offerings and an important component of our comprehensive strategy to fundamentally transform the way we deliver care to millions of Americans locally.”