As its core business lines struggle, Best Buy (NYSE: BBY) is banking on its home-based health care investments – in part – to drive better financial performance moving forward.
It has been inching its way toward home-based care for years now. But it really dove in when it acquired the at-home care tech platform Current Health in 2021.
The company also landed an impressive partnership with Atrium Health to scale hospital at home across the U.S. earlier this year.
“Our view is that hospital at home is one of the most important innovations in U.S. health care in the last several decades,” Chris McGhee, CEO and co-founder of Current Health, told Home Health Care News at the time. “We believe that by combining the strengths of Best Buy Health and Atrium Health, we can scale [hospital at home]… because it is still a tiny percentage of overall beds in this country.”
The company beat Street expectations in its Q2 FY24 period – which ended on July 30 – but CEO Corie Barry forecasted tougher times ahead.
“Our industry continues to experience lower consumer demand due to the pandemic pull-forward of tech purchases and the shift back into services spend outside the home like travel and entertainment,” Barry said Tuesday on the company’s earnings call. “In addition, of course, persistent inflation has impacted spending decisions for a substantial part of the population.”
Best Buy’s net income fell to $274 million in the quarter, an over 10% year-over-year decrease. But revenue – which came in at 9.58 billion – is one of the numbers that beat expectations.
The company experienced an improved gross profit rate from its “health initiatives,” which include home-based care initiatives.
“Both the membership and the health initiatives … we would expect those initiatives to continue to improve in terms of rate, as we look forward from here on out,” Best Buy CFO Matt Bilunas said on the earnings call. “So, into next year – and in the years after – both membership and health will continue to help drive a year-over-year improvement.”
Whereas some retailers have struggled financially because they are investing further in health care delivery, it appears Best Buy is relying on its health initiatives to help lift it out of an expected lull.
“The role of technology within health care is becoming more important than ever and our strategy is to enable care at home for everyone,” Barry said in March. “We also expect to drive a higher mix of our more profitable and unique service plans and deliver cost optimization in our active aging business.”
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