CVS Health’s Target pharmacies ‘moving in the right direction’


WOONSOCKET, R.I. — CVS Pharmacy sites located inside Target locations are “moving in the right direction,” CVS Health President and CEO Larry Merlo stated Tuesday during the company’s 2017 fiscal first-quarter earnings conference call.

“We are continuing to see improving script performance versus prior quarters, putting aside the network changes,” he said. “Performance is being driven by strength of patient care programs and Maintenance Choice.”

Retail clinics within Target stores were another area of strength.

Merlo also noted in the call that CVS’ partnership with OptumRx is progressing nicely in anticipation of its July 1 launch. As Drug Store News reported on Nov. 29, combined, CVS Pharmacy and OptumRx, UnitedHealth Group’s free-standing pharmacy care services business, will offer employers a new pharmacy network solution that:

  • Provides eligible OptumRx members the option to fill 90-day prescriptions at prices equal to home delivery copay levels at CVS locations nationwide or through OptumRx home delivery;

  • Increases consumer engagement and improves health outcomes through the combination of OptumRx’s leading pharmacy and clinical solutions with CVS Pharmacy’s leading in-store health and wellness capabilities; and

  • Enables OptumRx and CVS Pharmacy to leverage a shared pharmacy platform to develop new pharmacy and health solutions for clients and consumers.

CVS executives addressed many other topics during the earnings call spanning the entire business. These topics included:

  • A desire for CVS to shift to being a “little more aggressive” in terms of acquiring more “buy and operate” operations, which would “serve a whole new group of customers,” said CVS Pharmacy President and EVP of CVS Health Helena Foulkes.

  • CVS continues to innovate to offer solutions that lower costs for clients and members. Among the results are members saw out-of-market costs decline by 3% last year; and an encouragement of generic utilization to drive down costs has worked, with 87% of the company’s scripts now generic.

  • Regarding branded drug scripts, CVS has employed sophisticated formulary management tools to ensure the right patient receives the right drug at the lowest possible cost, effectively managing the cost of remaining enterprise scripts.

  • CVS’ pharmacy benefits manager business had gross wins of more than $8.5 billion in 2017 with net new business of $5.4 billion, which represented “another successful season for Caremark,” said Merlo. He added the 2018 selling season has started off well. “We already had some contract wins for 2018,” Merlo said. More than $23 billion is up for renewal in 2018, with 43% of client renewals already completed.

  • Store brands remains an area of both strength and opportunity for CVS. Store brands represented 22.8% of front-store sales in CVS Q1, up 85 basis points year over year.

  • MinuteClinic’s Q1 revenues rose 15% in Q1 versus the same quarter in 2016. “We continue to introduce digital tools that deliver added convenience and access to care for our patients,” said Merlo. The company added the Transform Diabetes Care program has been very well received by clients. This program allows members to be eligible for a series of comprehensive diabetes monitoring visits at MinuteClinic without any out-of-pocket cost.

  • CVS is enthusiastic about “defining the next generation of convenience” with its new store format, to debut in 70 stores this year, focusing on enhancements specifically to beauty, healthy foods and more.

For a look at CVS Health’s 2017 fiscal first-quarter earnings results, click here.

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