CVS Health is progressing in creating a more robust omnichannel offering, ending the first quarter of 2023 by completing important strategic acquisitions and streamlining its growing ecosystem to better focus on streamlined customer experience across its services.
During its first quarter 2023 earnings call on Wednesday (May 3), the Woonsocket, Rhode Island-based operator of over 9,600 U.S. locations discussed the May 2 completion of its acquisition of Oak Street Health, adding over 160 primary care centers in 21 states, following the March 29 closing of the Signify Health deal in a major expansion of its in-home value-based care offering.
CVS Health President and CEO Karen Lynch said, “Together, these businesses are positioned to more effectively address the total cost of care, implement new care models, and deliver connected solutions that build sustainable health communities,” with a combined customer base of 110 million consumers served.
Recalling strategic priorities laid out roughly 18 months ago, Lynch said, “At the center of our vision is a value-based platform that is multipayer, multichannel, and successful at driving consumer engagement, all leading to improved health outcomes.”
The addition of Signify Health and Oak Street Health “significantly advance our value-based strategy by adding primary care, home-based care, and provider enablement capabilities to our platform,” she said, adding that this brings “cutting edge technology and talent that will accelerate innovation in areas such as automation and technology-enabled, data-driven development.”
Expanding Digital and Omnichannel Offerings
In terms of digital, Lynch said, “We remain critically focused on digital engagement and achieved a significant milestone this quarter, exceeding 50 million unique digital customers. These customers are driving meaningful results with digital sales in the quarter up more than 30% versus the prior year. Engagement levels are strong as these customers spend 2.4 times more than our non-digitally engaged customers and at higher margins,” adding that CVS will continue to innovate and expand digital offerings.
With a lot of moving parts to coordinate in its expanding ecosystem, Lynch said that CVS has created a new Pharmacy and Consumer Wellness Segment that integrates all of its omnichannel pharmacy capabilities, including traditional retail pharmacy, specialty and mail order pharmacy fulfillment and infusion services, “along with our front store offerings. We are making the pharmacy experience as easy for consumers as possible while ensuring that we are creating better outcomes, lowering costs, and increasing convenience.”
Noting that pharmacy and consumer wellness segments performed well despite difficult market conditions and normalizing COVID trends as vaccinations and related COVID treatments fade from the picture, Lynch said, “growth in the retail pharmacy is notable” pointing to front store sales gains in the quarter, in “across a variety of categories, including beauty and personal care, as well as consumer health products.”
Lynch illustrated the strength of its new model, saying the 2.9 million members enrolled in its integrated medical and pharmacy are seeing rates of medication adherence up to 15%, reduced hospital admission and readmission rates, up to 19% reductions in ER visits, and 25% greater utilization of critical mental health care services.
As CVS takes stock of its retail presence, Lynch said: “We continue to successfully execute on our retail footprint optimization strategy, closing more than 100 locations year to date, while exceeding our retention goals for colleagues and scripts. We remain on track to close 300 stores in 2023 and a cumulative total of 900 stores by 2024.”
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