On the journey to becoming more of a health care services provider, CVS Health (NYSE: CVS) is experiencing some bumps in the road.
Those bumps aren’t anything the company’s leaders are worried about long term, though, and both of the its recent acquisitions – Signify Health and Oak Street Health – continue to be touted. But the combined $18 million price tag for those acquisitions has, in part, led to cuts elsewhere.
This week, CVS Health cut 5,000 jobs. To put that in context, it is about 1.6% of the company’s workforce.
“CVS health benefits from the diversity of our operations, and this positions us well to be resilient in the face of adversity,” CVS Health Shawn Guertin said on the company’s second-quarter earnings call Wednesday. “We take our commitment seriously, as evidenced by the announcement this morning of our cost-cutting initiatives, which will meaningfully improve our positioning for 2024.”
With Oak Street Health and Signify Health now under its umbrella, CVS Health has significant at-home and primary care capabilities. Those capabilities, its leaders believe, will set it up to benefit from the shift to value-based care in the U.S.
Walgreens Boots Alliance (Nasdaq: WBA) has a similar strategy, having invested heavily in the primary care provider VillageMD and the at-home care solutions platform CareCentrix. It is facing similar headwinds.
“We are making progress integrating these multi-payer companies to create meaningful value,” CVS Health CEO Karen Lynch said on the call. “We are unlocking opportunities by connecting Signify and Oak Street to CVS Health assets, such as Aetna, MinuteClinic, and CVS Pharmacy. [We are] driving patient engagement and growth. As we scale our health care delivery assets, and realize synergy opportunities, we will accelerate our long-term growth trajectory.”
On the Signify Health front, CVS Health cited in-home evaluation numbers as a positive development.
In the quarter, Signify Health conducted 673,000 in-home evaluations. That represents a 16% year-over-year increase. It also saw revenue increase by 19% year over year, according to Guertin.
“Signify Health is core to our home health services strategy,” Lynch said. “Signify enables better health in the home, and has an unmatched ability to build trust and connect with 3 million patients in their homes annually. We capture valuable insights into a patient’s broader care needs during in-home evaluations, and are able to create engagement points across other health services for our health plan partners.”
Lynch cited survey results that showed individuals satisfied with in-home evaluations from Signify are 26 times more likely to recommend their health plan and 74% more likely to consider “additional health care services.”
On Oak Street Health’s end, it ended the quarter with 177 centers and 181,000 at-risk lives, which represented a year-over-year increase of 23% and 35%, respectively. Oak Street Health also increased revenue by 43% year over year.
“Both Signify Health and Oak Street Health had strong quarters, delivering business performance consistent with our expectations,” Lynch said.
Overall, CVS Health’s revenues increased to $88.9 billion in the quarter, a 10.3% year-over-year increase.
While the company’s leaders have mentioned in the past that more home-based care transactions could take place in the future, Lynch and Guertin did not touch on the topic on Wednesday’s call.