CVS Health Corp. said it would offer expanded health services such as nutrition counseling and blood pressure screenings in 1,500 stores by the end of 2021, following through on plans announced during the pharmacy chain’s 2018 acquisition of health insurer Aetna.
The company plans to convert a total of 50 stores this year in Houston, Atlanta, Philadelphia, and Tampa, representing about 15% of the stores in each of the markets, it said ahead of a meeting on Tuesday with Wall Street analysts and investors in New York. The bulk of the expansion will be split between 2020 and 2021.
The company said it expects adjusted earnings of over $7 per share in 2020, while reiterating its profit and sales forecast for 2019. Analysts on average expect a profit of $7.22 per share for 2020, according to IBES data from Refinitiv.
The company also said it expects adjusted earnings per share growth in mid-single digits in 2021 and in low double digits in 2022 and beyond.
Evercore ISI analysts Ross Muken and Michael Newshel said in a research note that the outlook helped increase investor confidence by setting a floor for earnings expectations.
Shares of CVS, also one of the nation’s largest pharmacy benefit managers, gained 3.7 percent, or $1.96, to $55.34 in morning trading.
CVS first launched a handful of stores with expanded health services it is calling health hubs in Houston earlier this year.
The new format includes an employee with the title of “care concierge” who directs customers to health services such as a nutritionist or nurse practitioner. Other services include screenings for sleep apnea and opthalmology issues related to diabetes.
These CVS stores have experienced increases in foot traffic, front-of-store sales and MinuteClinic visits per day, as well as prescriptions dispensed, CVS pharmacy executive Kevin Hourican said in a phone interview. He declined to provide specific figures. MinuteClinics are walk-in health clinics located in CVS pharmacies.
When CVS bought Aetna for $69 billion, it said the companies would work to bring more health services into its stores beyond the MinuteClinic offerings to tackle chronic conditions like obesity, high blood pressure and diabetes.
Separately, CVS this week is in federal court in Washington D.C., where a judge is reviewing the Aetna deal. The U.S. Department of Justice and the companies agreed on an anti-trust settlement that included the sale of Medicare prescription drug plans to WellCare Health Plans Inc., but the court has not yet signed off on it.
(Reporting by Caroline Humer; Additional reporting by Tamara Mathias Editing by Bill Berkrot and Anil D’Silva)
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