CVS Health said its “digital first strategy” is driving increases in its online customer base and visits to its MinuteClinic as the nation’s largest retail pharmacy chain repositions itself as a community health destination.
The comments come as the Rhode Island-based company reported second-quarter earnings results Wednesday (Aug. 3) which showed its online user had grown to more than 45 million digital customers for the three months ending June 30.
“Our technology forward, digital first approach is reducing complexity for our customers and creating new digital health solutions that are convenient,” CVS Health CEO Karen Lynch said on the company’s conference call, noting the addition of 1.5 million new dot-com customers in Q2.
“This increase is driven by our omnichannel pharmacy strategy focused on simplifying how consumers fill and receive prescriptions,” Lynch added, pointing out that over 60% of new digital users came from its specialty mail order or retail pharmacies.
From in-Store to Dashboard
Lynch also told analysts that CVS was expanding its digital health services to deepen engagement and personalization, a shift that saw a 20% increase in users over the past 90 days in users of the “individualized health dashboard” that it launched in Q1.
“Nearly 4.8 million customers engage with us every day as CVS locations, making us a powerful community health destination,” Lynch said, noting the company’s plans to continue advancing its care delivery capabilities.
Lynch said traffic at CVS’s MinuteClinics, for example, had risen 12% and seen more than 2.8 million patient visits year to date.
Taken together, CVS’s Retail and Long Term Care segment saw revenues grow 6%, or about half the 11% pace of top line growth delivered by the full company, which included its Healthcare Benefits and Pharmacy Services units.
While retail’s “front store” sales, which include over-the-counter cough medicine and COVID test kits as well as toiletries, cosmetics and groceries, were up 9% in Q2, the “back of the house” pharmacy portion of the business — which is four times larger — rose just 6%, as the number of prescriptions filled was up less than 2%.
Store Closures
The moves come as CVS looks to transition to be a community healthcare provider which can compete with aggressive rivals and optimistic newcomers, including Walmart and Amazon, that are looking to grow their own footprints in this space.
The shift also comes at a time when the defensive nature of the medical sector looks appealing as increasing consumer stress and economic headwinds mount.
As part of this shift, CS said it was two-thirds of the way through its plan to close 300 stores this year as part of broader retrofit and realignment effort aimed at optimizing its portfolio of nearly 10,000 physical retail locations.
To that point, Lynch said CVS had been able to minimize disruption to customers, maintain store and pharmacy hours to meet consumers’ health needs, noting that it had retained over 70% of prescription volume within its network during the process.
“Our deep customer relationships, high quality patient interaction, resilient supply chain and agile operating model all contributed to the strong quarterly performance,” Lynch concluded, noting the company’s increased guidance for the full year.
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