CVS Health Inks Deals to Boost Digital Healthcare Prospects
In an attempt to bolster its footprint in the digital healthcare services space, pharmacy retail giant CVS Health Corp. CVS recently formed clinical partnerships with Bethlehem, PA-based healthcare provider – St. Luke’s University Health Network and Cincinnati, OH-based TriHealth – a unified health system. The financial terms of the deals have been kept under wraps.
Through these new clinical affiliations, these three leading health institutions aim at enhancing patients’ access to high-quality healthcare services and improved medication adherence, particularly for those suffering from chronic diseases.
Per the deals, the participating healthcare organizations will exchange important patient information that they collectively possess, through their individual electronic health record (EHR) systems. This, in turn, will allow them to monitor patients’ conditions more comprehensively, to facilitate more accurate treatment options.
Under these agreements, patients will have increased access to clinical support, medication counseling, chronic disease monitoring and wellness programs at CVS/pharmacy stores as well as MinuteClinic – the retail medical clinic under CVS Health.
Moreover, through these collaborations, the participating healthcare organizations will be able to jointly plan strategies to offer high-quality healthcare services, particularly to chronic disease patients who are more prone to medication non-adherence issues.
Management at CVS Health believes these clinical affiliations will allow the company to offer improved healthcare services at reduced costs across the states of Pennsylvania and Ohio. We expect this collaboration to raise customer traffic in CVS/pharmacy stores and MinuteClinics across these two states, which in turn will ramp up revenues from these regions.
Interestingly, a closer look at the company’s history tells us that such clinical affiliations are not new to CVS Health. The company frequently partners with leading healthcare providers across the U.S. to expand its customer base and thus capture increased market share. Currently, the total number of clinical collaborations for CVS Health and MinuteClinic with major health systems and health care providers across the country is over 60.
We are impressed to note that, even after the recent completion of the Omnicare acquisition for $12.9 billion and the takeover of the pharmacy business (in June 2015) of Target Corporation for $1.9 billion, the company has continued with its strategy of collaborating with multiple healthcare providers. This reflects the company’s strong cash balance position.
Moreover, we note that with rapid adoption of information technology by healthcare systems in the past few decades, the field of digital healthcare has introduced ample opportunities for the near future. Evidently, the global digital health market is expected to increase from $60.8 billion in 2013 to $233.3 billion by 2020.
We expect CVS Health, which has emerged as a major player in this market, to capture a considerable share of this profitable market potential going forward, based on its number of key clinical affiliations.
Currently, CVS Health carries a Zacks Rank #3 (Hold). Some of the better-ranked stocks in the broader medical space are ICU Medical, Inc. ICUI, OraSure Technologies, Inc. OSUR and NuVasive, Inc. NUVA. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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