CVS Health Q3: accelerating roll-out of HealthHUB format

Stewart Samuel
Program Director - Canada
@RetailAnalysis

Date : 08 November 2019

CVS Health delivered a strong third quarter performance, supported by the acquisition of Aetna and the roll-out of its new HealthHUB format.

Optimising data and analytics

Total revenues in Q3 increased 36.5% to $64.8bn, with same-store sales up 3.6%. Growth was primarily driven by the acquisition of Aetna. Front store same-store sales were up 0.6%, while pharmacy same-store sales increased 4.5%. This was driven by strong prescription volume, up 7.8%, with the business optimising its data and analytics capabilities to deliver targeted member communications . Over the period, operating income increased 13.8 % to $2.9bn.

HealthHUB format outperforming core stores

Within its retail stores business, the retailer is pleased with the performance of its HealthHUB format, which was launched in Houston earlier this year with the conversion of several existing stores. These continue to outperform the core estate, with higher prescription volumes and Minuteclinic visits, along with higher front store sales, traffic, and store margin. CVS is on-track to have 50 HealthHUB format stores operational by the end of the year and remains committed to have 1,500 trading by the end of 2021. The strong performance of the initial group of stores has provided the company with the confidence to increase the pace of the roll-out, with the goal of building a critical mass of stores rapidly. Around 500-600 stores will be converted by the end of next year.

Source: IGD Research

Cost savings on-track

This roll-out aligns with its strategic priority to grow and differentiate it business. It is also making progress with its other priorities to deliver transformational products and services, create a consumer-centric technology infrastructure and modernise enterprise functions and capabilities. As part of its modernisation efforts, it expects to generate $1.5-$2bn in run rate cost savings in 2022, in addition to the $900mrun rate of projected integration synergies in 2021.

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