CVS Targets Strong Weight-Loss Drug Use as Revenues Tick Up

CVS is focusing heavily on technology-led care after posting solid Q2 earnings.

“We are building momentum as we navigate what continues to be a dynamic and evolving environment,” Chief Executive David Joyner told analysts on an earnings call Thursday (July 31), crediting the company’s “diversified business” for offsetting swings in medical costs.

CVS posted an 8.4% increase in revenue, to just shy of $99 billion, with the company’s retail pharmacy and consumer wellness unit contributing to roughly a third of its sales, helping cushion some softness in the health services division.

Momentum is coming from digital solutions to some of healthcare’s most persistent problems. Joyner said CVS has “pledged with CMS to streamline, simplify and reduce unnecessary complexities,” beginning with a bundled prior-authorization process for cancer therapies that funnels multiple approvals into a single digital transaction.

He also touched on the company’s decade-long, $20 billion technology investment designed to make the care journey “unrecognizable in ten years.” That includes things like using automation to reduce friction in Aetna claims handling.

Internally, automation is already trimming friction in Aetna claims handling and powering cost-based reimbursement models such as CVS CostVantage, which replaces nebulous pharmacy pricing with a clearer cost-plus formula.

The company’s digital efforts are happening against a backdrop of shifting consumer behavior. Same-store pharmacy sales jumped roughly 18% in the quarter, while prescription volumes climbed 6% and retail script share reached 27.8%.

CVS attributes part of that lift to technology that redistributes tasks inside its 9,000 stores as well as spill-over traffic from Rite Aid as that chain closes its stores.

The call also touched on the prominence of weight loss drugs, specifically GLP-1 medications.

“Spending in this category for our employer clients has nearly doubled over the last two years and now represent 15% of their pharmacy costs,” Joyner said.

He said the company has responded by forcing competition among manufacturers and pairing GLP-1 prescriptions with a digital coaching program that “empowers patients to achieve greater weight loss than drug therapy alone.”

Meanwhile, the quarter saw higher than expected medical ratios at CVS’s Oak Street Health clinics, which forced a $200 million reduction to full-year guidance for the Health Services segment.

Joyner maintained the value-based care unit “is best in class,” but acknowledged that CVS is “working with urgency to further strengthen this business” through tighter operations and new leadership.