We review CVS Health’s Q1 performance and its role in relation to the coronavirus (COVID-19) pandemic.
Retail same-stores sales up 9.0%
Total net revenues increased 8.3% to $66.8bn in Q1, driven by higher volume in its Retail/LTC segment and pharmacy service along with membership growth in government products in health care benefits. Retail/LTC revenues were up 7.7%, with same-store sales up 9.0%. Growth was mainly driven by consumer health and general merchandise sales related to the pandemic and the expansion of its ‘CarePass’ programme.
Digital strategy paying-off
As one of the largest drugstore chains in the US, the retailer has been at the forefront of federal, state and local government initiatives. This has included undertaking COVID-19 testing. CVS Health also saw significant acceleration in the use of its digital platform. Utilisation of tele-medicine for virtual visits through MinuteClinic increased around 600% year-on-year while retail prescription home delivery increased more than 1,000%. The retailer also saw a four-fold increase in the number of customers adding front of store items to their prescription deliveries. This is an area which it plans to progress further as trading starts to normalise.
HealthHUB pause provides opportunity to adjust the offer
The business is prudently managing operating expenses and plans to reduce capital expenditures by around $200m. It has also paused the conversion of its drugstores to the HealthHUB format, although it expects to have 1,500 operating by the end of 2021. The pandemic, and pause in roll-out, has provided the retailer with new insights to shape its strategy in this area. Its role in COVID-19 testing has highlighted how the HealthHUB format can support wider diagnostics and monitoring initiatives.
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