Health plans

CVS Health plans to repurchase up to $ 10 billion in shares next year

(Bloomberg) – CVS Health Corp. said this year’s earnings and sales will be at the peak of its expectations and has announced plans to repurchase $ 10 billion of shares as it prepares to continue its expansion in primary care, encouraged by the success with kidney patients.

Revenue will be at least $ 290 billion and adjusted earnings per share will reach or exceed $ 8 in the current fiscal year, the company said in a statement ahead of its Investor Day. CVS also announced its intention to increase its annual dividend by 10%.

The owner of CVS pharmacies and health insurance Aetna said he will work to make healthcare more convenient, personalized and affordable for consumers. The company announced last month that it would close 300 stores a year over the next three years and support up to $ 1.2 billion, as part of a plan to reduce the density of its stores. In certain regions.

Executives at the company plan to provide more details on its acceleration in primary care at an Investor Day Thursday, CVS senior executive Alan Lotvin said in an interview. After the first positive results in the care of patients with renal failure, the pharmacy giant continues to seek new therapeutic areas and ways to develop beyond pharmacies, which are seeing their traffic decrease.

The shares rose 3.3% in pre-market trading in the United States. They have gained 36% this year through Wednesday’s close.

Competitive pressure

Shifting to more patient care areas could help insulate CVS better from competitive pressure in retail, where companies like Inc. are increasingly attracting drugstore customers. Yet tough competitors are emerging elsewhere: rival insurer UnitedHealth Group Inc. has expanded its primary care business, and dialysis is dominated by established players like Fresenius SE and DaVita Inc.

Drawing on data from CVS, including its insurance business Aetna and its drug insurance unit Caremark, as well as other sources, the company in 2019 created dozens of algorithms that it says , can predict which patients might develop kidney disease and when. People with chronic conditions such as diabetes or high blood pressure can develop kidney problems, increasing the cost and complication of their care.

Medicare plans can enroll their members in the CVS Kidney Care Program. CVS contacts patients its algorithms identify to ask a doctor to assess their risk for kidney disease. About half of them choose to do so, said Alan Lotvin, CVS’s director of pharmacy benefits, in an interview.

Patients with CVS are about twice as likely to receive home dialysis as typical kidney patients, the official said. A small test in a market showed that enrolling people in the CVS program reduced hospital costs by $ 4,000 per person per year, according to Lotvin.

Complex disease

Even before patients are sick enough to need to go to a hospital, treating chronic kidney disease can be expensive. Patients often have to visit dialysis centers several times a week to receive blood purification treatment. Dialysis costs about $ 90,000 per person per year, according to the 2019 US Renal Data System Annual Data Report.

However, home treatment options have grown in recent years and they tend to be cheaper. Policy makers have tried to encourage home dialysis as a cost saving measure; Last year, the Trump administration took steps to expand the types of home kidney care Medicare will pay for.

CVS’s success in kidney care so far is gratifying because it is one of the most complex diseases to manage, Lotvin said. This gives the company confidence that it can help treat other less complex chronic conditions, such as high cholesterol.

“We’ve shown that we can connect all the different parts of our organization – care management, insurance, local network contract, kidney dialysis expertise – and create better outcomes,” Lotvin said.

CVS also wants to link primary care centers more closely with its HealthHubs. CVS introduced HealthHubs, which offer more medical services than its traditional CVS pharmacies, in 2019 after closing its acquisition of Aetna.

The planned share buyback will be used to at least offset the dilution in the number of shares next year, CVS said. This is the first time that it has increased its dividend or bought back shares since 2017.

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