CVS Health offered upbeat 2024 revenue guidance.
CVS Health on Tuesday offered upbeat 2024 revenue guidance and said it would it revamp its pharmacy reimbursement model.
The new model, called CostVantage, was unveiled at the pharmacy and health care giant’s 2023 Investor Day, at which it also detailed its 2024 financial outlook. The company forecasts total revenues of at least $366.0 billion and adjusted earnings per share of at least $8.50. (For 2023, total revenues are expected to range from $351.5 to $357.3 billion, with adjusted earnngs per share of $8.50 to $8.70.)
“By broadening our portfolio of integrated products and services, we expect to create a path to sustainable, profitable growth,” said CVS Health interim CFO Tom Cowhey. “Our powerful cash generation capabilities will support our strategic goals, prudent capital deployment, and attractive return profile – while also providing opportunities for meaningful long-term outperformance.”
Also at the Investor Day, CVS introduced a new branded name for the company’s Health Services segment, which includes Caremark, Cordavis, Oak Street Health, Signify Health and MinuteClinic. The new brand, CVS Healthspire, will begin to roll out publicly this month and advance throughout 2024.
Under its new CostVantage model, CVS will move to fixed rates for reimbursements from pharmacy benefit managers and insurers as it looks to boost transparency and bring greater simplicity to the system. It will define the drug cost and related reimbursement with contracted pharmacy benefit managers (PBMs) and payors, using a transparent formula built on the cost of the drug, a set markup, and a fee that reflects the care and value of pharmacy services.
CVS Pharmacy plans to launch CVS CostVantage with PBMs for their commercial payors in 2025.
“We are leading with an approach that will shift how our retail pharmacy is compensated by implementing a more transparent and sustainable model that fairly aligns pharmacy reimbursement to the quality services we provide,” said Prem Shah, PharmD, executive VP, chief pharmacy officer and president, pharmacy and consumer wellness, CVS Health. “It provides our PBM and payor clients a foundational step towards more pricing clarity for consumers.”
In addition, CVS said its PBM unit, Caremark, will launch a program called TrueCost to offer clients more visibility into prescription drug pricing and administrative fees.