WOONSOCKET – CVS Health Corp. is hiking its dividend and offering a better-than-expected 2022 revenue forecast as the health care giant prepares to dive deeper into providing more care.
The drugstore chain, pharmacy benefits manager and health insurer is planning its next “major evolution” by expanding into areas like primary care, CEO Karen Lynch said in a statement Thursday ahead of the company’s annual investor meeting.
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Learn MoreThe company says it intends to add advanced primary care centers to its mix of drugstores and “HealthHUB” locations it started introducing a few years ago. Those stores can include employees like dietitians and are already trying to provide more health services to customers.
CVS Health Chief Financial Officer and Executive Vice President Shawn Guertin said the company will develop 250 to 350 primary care facilities across the country by the end of 2024.
Alan Lotvin, executive vice president for CVS Health, said the primary care services will emphasize convenience for customers, and the clinics will be flexible to meet patient needs, sometimes opening as early as 6 a.m. and staying open until 10 p.m. or on weekends.
Lotvin said the company would use a smartphone app to streamline visits to the doctor at its primary care locations, by using geolocation services for check-ins, eliminating long waits in line. And the app would also help explain services and doctor’s guidance in easy-to-understand language, and deliver digital prompts and reminders to improve healthcare outcomes when the client is away from the CVS location, Lotvin said.
“The model starts by meeting people where, when and how they want,” Lotvin said. “No check-ins. No standing behind seven people. … When you leave, you’ll know exactly what happened.”
At the same time, Lotvin and Lynch said that CVS isn’t competing with its pharmacy customers’ primary care physicians. Lynch said she looks at the primary care services that CVS is going to be offering as an “extension” of what most primary care doctors are already doing.
“We look at this as a partnership, not necessarily competing,” she said.
Each clinic would be staffed by two care teams, which consist of a doctor and two advanced practice nurses, Lotvin said. And they wouldn’t be overloaded with appointments each day, Lotvin said, potentially seeing 10 patients per day that may be dealing with complex or chronic conditions.
“You don’t need to see 35 people in a day,” Lotvin said.
Lotvin also spoke about the challenge of hiring an army of physicians to staff the clinics.
“It is going to be a competitive market for who goes where,” Lotvin said. “But if you have the right infrastructure and approach to how you manage professionals, we think we’ll be a very, very more than viable choice, an attractive choice (for physicians).”
Drugstore chains like CVS Health and rival Walgreens and other health care companies like UnitedHealth Group Inc. have been pushing deeper into providing health care. They want to be seen as regular resources to guide customers through the complicated U.S. care system.
They also want to help customers keep up with their health and control chronic conditions like diabetes or high blood pressure before they more expensive medical problems.
Walgreens, for instance, is attaching hundreds of VillageMD primary care practices to its stores over the next few years.
Lynch said in early November that while primary care makes up a small part of overall costs for CVS, “it wields significant influence on the total medical cost picture.”
“We really believe that we need to kind of push into the primary care so that we can influence the overall cost of care,” she said.
Lynch said that CVS is focusing on increasing its sustainability by now looking into making its pill packaging more environmentally friendly.
“We are exploring alternatives to create less waste with those pill bottles,” Lynch said.
On Thursday, the company also said that it will increase its annual dividend by 10% from $2 to $2.20 starting in February. The company also has approved a $10 billion share repurchase program and said it was the first time CVS Health has made either move in about four years.
CVS Health expects adjusted earnings of $8.10 to $8.30 per share next year on $304 billion to $309 billion in total revenue.
Analysts expect, on average, earnings of $8.24 per share on $301.2 billion in sales for 2022, according to FactSet.
(UPDATED throughout with comment from investor meeting.)
Marc Larocque is a PBN staff writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockPBN.