CVS reports strong second quarter with specialty pharmacy growth

CVS Health reported a strong second quarter in 2015 with overall net revenue up 7.4% to $37.2 million, compared to the same period last year. The big win this quarter was attributed to the growth in its specialty pharmacy business as well as pharmacy network claims, the company reported during its August 4 call with investors.

The pharmacy benefits management segment of the business had an increase of 11.9% in revenues to $24.4 billion in the second quarter, which ended on June 30, 2015. The operating profit for this segment climbed 7.1% during this period.

“Our specialty pharmacy suite of services continues to gain share,” noted CVS CEO Larry Merlo. “In the second quarter, we continued to grow faster than the market with specialty revenues increasing a healthy 28.4%. This growth is very robust at more than double the market growth rate, but less than recent quarters…with a flattening in the utilization trend of the new hepatitis C drugs.”

Retail business

In the second quarter, revenues in the retail pharmacy segment were up 2.2%, to $17.2 billion compared to a year ago. Pharmacy same-store prescription volumes climbed 4.8%, and pharmacy same-store sales were up 4.1%. However, front-store same-store sales did decline by 7.8% as there was “softer customer traffic,” which resulted from the elimination of tobacco sales last year.

“While we experienced a decrease in front-store traffic, but it was partially offset by an increase in the average customer basket. Once again, we gained share in our core health and beauty categories in both the drug and multi-outlet markets,” Merlo said.

Growth in bricks and mortar stores

During the second quarter, CVS opened 25 new retail drugstores, relocated 16 stores, and closed 5 stores. “We plan to add 150 net new stores for the full year,” Merlo said.

In addition, CVS opened 11 new Minute Clinics in the quarter, for a total of 997 medical clinics, located in 31 states and in the District of Columbia.

CVS also reported that it expects the Omnicare acquisition to close the end of this year. The Target acquisition may occur in 2015 or 2016.

“We have a unique opportunity with healthcare becoming more consumer-directed. We have broad capabilities today-whether you talk about retail, PBM, specialty, infusion, medical claims management, medical clinics, and soon long-term care,” Merlo noted. “We can manage the patient through the continuum of their healthcare life cycle.”