CVS's efforts to transform the consumer health care experience are producing sales gains but also profit losses.
For its second quarter ended June 30, the company posted a loss of $2.56 billion, or $2.52 a share, compared with a profit of $1.1 billion, or $1.07 a share, a year earlier. Overall same store sales increased 5.9% and pharmacy same store sales increased 8.3%. Front-end comps declined 1%.
“Our solid performance both in the quarter and year-to-date demonstrates our ability to drive value. It also builds upon a strong foundation for a seamless integration of CVS and Aetna with one goal: to transform the consumer health care experience and, by doing so, deliver long-term profitable growth for shareholders," President and Chief Executive Officer Larry Merlo said. “The strong revenue, adjusted EPS, gross and operating margins, along with cash flow generated in the quarter were the direct result of our team’s ability to increase prescription growth by expanding relationships with PBMs and health plans as well as our ongoing streamlining efforts and innovation. The genuine enthusiasm and the depth of talent throughout the CVS and Aetna organizations will be key assets as we focus on realizing the potential of our combination.”
CVS also announced that MinuteClinic, the company’s retail medical clinic, is rolling out a new virtual health care offering for patients with minor illnesses and injuries, skin conditions and other wellness needs. MinuteClinic Video Visits, a telehealth offering, will provide patients with access to health care services 24 hours a day, seven days a week from their mobile device.
“We’re excited to be able to bring this innovative care option to patients,” said Troyen A. Brennan, M.D., Executive Vice President and Chief Medical Officer of CVS Health. “At CVS Health, we’re committed to delivering high-quality care when and where our patients need it and at prices they can afford. Through this new telehealth offering, patients now have an additional option for seeking care that is even more convenient for them.”
A video visit can be used to care for patients ages two years and up who are seeking treatment for a minor illness, minor injury, or a skin condition. Each patient will complete a health questionnaire, then be matched to a board-certified health care provider licensed in their state, who will review the completed questionnaire with the patient’s medical history, and proceed with the video-enabled visit.
A MinuteClinic Video Visit costs $59, which is currently payable by credit card or debit card. Insurance coverage will be added to the experience in the coming months. The service is currently available in nine states – Arizona, California, Florida, Idaho, Maine, Maryland, Mississippi, New Hampshire and Virginia – and Washington D.C. and is expected to be available nationwide, where allowed, by the end of 2018.
For the second quarter, net revenues increased 2.2%, or $1.0 billion, to approximately $46.7 billion, up from $45.7 billion in the three months ended June 30, 2017.
Revenues in the Pharmacy Services Segment increased 2.8% to approximately $33.2 billion. This increase was primarily driven by growth in pharmacy network and mail choice claim volume as well as brand inflation, partially offset by continued price compression and increased generic dispensing.
Revenues in the Retail/LTC Segment increased 5.7% to approximately $20.7 billion in the three months ended June 30, 2018. The increase was primarily due to an increase in same store prescription volume of 9.5%.
CVS reached an agreement in December to buy Aetna for $69 billion in cash and stock. CVS expects the deal to close during the third quarter or the early part of the fourth quarter, the company said Wednesday. It recorded $39 million in costs in the latest quarter in connection with the Aetna deal.
For 2018, CVS narrowed its guidance for adjusted earnings per share to $6.98 to $7.08 from $6.87 to $7.08. For the third quarter, the company guided adjusted earnings per share of $1.68 to $1.73.
CVS Health operates more than 9,800 retail locations, more than 1,100 walk-in medical clinics, and other businesses.