CVS’s Health Services Business Grows 9% in First Half of 2023

CVS Health’s health services business, which includes its PBM CVS Caremark, saw revenue of $90.8 billion for the first half of 2023, up 8.9% with the same period in 2022. For the second quarter, revenue was $46. 2 billion, an increase of 7.6% from the second quarter of last year. This increase can be attributed to drug mix, growth in specific pharmacy, brand inflation, and the addition of two recent acquisitions, company officials said. But officials pointed out in an earning call that this increase was offset by client price improvement.

Earlier this year, CVS realigned its segments, forming a new health services segment. This segment includes PBM services, as well as its medical clinics and provider enablement solutions. It also includes the company’s group purchasing organization, which negotiates pricing of prescription drugs and rebates.

The health services unit will also include revenue from the recently acquired Signify Health and Oak Street Health. CVS completed its $8 billion acquisition of Signify, which CVS executives said was core to expanding its home health business. Additionally, in May, CVS completed its acquisition of Oak Street for $10.9 billion. Oak Street Health is a network of value-based primary care centers for adults on Medicare and ended the second quarter with 177 centers. CVS plans to 50 to 60 clinics in 2024.

CVS’s financial statements, including the 10-Q filed with the Securities and Exchange Commission, do not break down and provide revenue for the Caremark PBM business. And company officials would not comment on the PBM services revenue only. The company’s recent SEC filing says its PBM business includes 110 million plan members, and that the specialty pharmacy solutions group is expanding.

Karen S. Lynch

“We consistently demonstrate value to consumers and our clients by successfully managing drug cost trend and bringing innovative clinical solutions to the market,” Karen S. Lynch, president and CEO of CVS Health, said in an investor presentation.

CVS executives pointed to its efforts to lower consumer prices with the partnership with GoodRx to connect members with GoodRx’s CVS pricing for generic drugs. Beginning in January 2024, if GoodRx shows a lower CVS price than a member’s plan price, that lower price will automatically be given. Plan members will use their benefit card at an in-network pharmacy, and the amount paid will be applied to members’ deductible and out-of-pocket thresholds. CVS Health on its website indicated that in the vast majority of cases, members will receive a lower price on non-specialty generic drugs. The company, however, would not provide an estimate of what consumers could hope to save through this collaboration.