CVS Health Sees Multi-Billion Dollar Profit in Q3: 4 Impacts on Hospital CFOs

CVS Health is cementing itself as huge competition to hospital and health systems.

All (healthcare) eyes have been on CVS Health for a while, but with strong financial growth in 2023's third quarter, it's cementing itself as a huge disruptor for hospital and health systems.

CVS Health recently reported strong financial results for the third quarter, achieving $2.3 billion in profit. Total revenues increased to $89.8 billion for the quarter and reached $264 billion for the year, marking a 10.6% increase compared to the previous year.

On top of this, the company generated $16.1 billion in cash flow from operations.

What does this mean for hospital and health system CFOs who are looking to compete with the retail giant? Here are four major impacts this news has on healthcare CFOs:

1. Market disruption: CVS Health's continued growth and financial performance positions the company as a significant disruptor in the healthcare market. Hospital CFOs should closely monitor CVS Health's expansion into various healthcare services as the retail giant is likely to affect patient volumes and service offerings in your area.
2. Diversification and innovation: CVS Health's ability to adapt to changing consumer needs by expanding care access and lowering costs is a reminder for hospital CFOs to focus on diversification and innovation in healthcare services. Exploring ways to enhance patient care while managing costs is crucial for remaining competitive.
3. Medicare market: CVS' announcement of Aetna's 2024 Medicare products, along with a high CMS star rating accounced in October, emphasizes the competitive landscape in the Medicare market. At a time when payer/provider relationships are strained (especially with Medicare Advantage), hospital CFOs may need to assess their Medicare offerings and network strength to remain competitive in this space.
4. Financial considerations: Hospital CFOs should be attentive to CVS Health's financial strategies, such as acquisitions and debt management, as these actions can impact the broader healthcare market. Evaluating the financial health and stability of your organization is crucial, as always.

While there were several major impacts to the market, it wasn't a total win for the retail giant, though. 

CVS Health is fighting higher-than-expected healthcare utilization along with other financial setbacks, interim CFO Tom Cowhey said during its investors call. This, Cowhey said, means investors should expect its 2024 earnings to be at the low end of the company's guidance.

Nonetheless, CVS Health's third quarter earnings demonstrate its continued expansion and influence in the healthcare sector. Hospital CFOs should use this information to inform their strategic planning, assess competitive pressures, and consider innovative approaches to patient care and financial management. Adapting to the evolving healthcare landscape is essential to remain competitive in the face of disruptive market forces.