Dive Brief:

• CVS Health plans to open 1,500 HealthHUB stores by the end of 2021 as part of its enterprise growth strategy. By the end of this year, the pharmacy chain will expand on its initial three-store Houston pilot program and open additional locations in Houston, Atlanta, Philadelphia, southern New Jersey and Tampa, Florida.
• HealthHUBs devote about 20% of retail space to health services, focusing on preventive care, wellness activities and education and management of chronic conditions like asthma and diabetes, according to the company.
• CVS shares were up 3% premarket Tuesday following the news, which was released in tandem with the company's 2019 Investor Day.

Dive Insight:

CVS, which boasts more than 9,800 retail locations and over 1,100 MinuteClinics, hasn't been immune to larger market forces shifting power away from brick-and-mortar stores and toward digital offerings from e-commerce mammoths like Amazon.

Following the approval of its $69 billion merger with Aetna late last year, CVS has spent the first half of 2019 working to establish itself as the "front door" to healthcare for the 80% of Americans within 10 miles of one of its retail locations, including expanding same-day prescription delivery to 6,000 CVS stores.

HealthHUB's wellness-oriented retail pharmacy locations in Houston, which launched in November, include a MinuteClinic and on-demand health kiosks measuring blood pressure, weight and BMI. They also have in-house community spaces where CVS provides wellness education and activities like yoga.

There's also an extra room where nurse practitioners can provide additional services like diabetic screenings, sleep apnea assessments and blood tests.

Because patients on the whole interact with pharmacists more than any other healthcare provider (including their primary care physician) and want more personalized health services, HealthHUBs are uniquely situated to bring the point of care back into the community, according to brand consultancy Monigle.

The company praised HealthHUBs in an April report for "creating connected, seamless interactions that enable the organization to capture much more of the overall spend."

CVS has seen increased traffic and higher margins in its HealthHUB locations across its MinuteClinic, pharmacy and main retail store, a spokesperson told sister publication Healthcare Dive — doubly promising as HealthHUBs' offerings run at higher price points and higher margins compared to regular CVS locations.

Consumers have also responded positively to the HealthHUB format, accepting care from a designated "care concierge" unique to the HUBs more than 95% of the time. About 60% of those interactions resulted in a sale or healthcare service, CVS said.

Competitor Walgreens has also identified the business potential of primary and preventive care in retail pharmacies. In April, the company announced it was partnering with provider group VillageMD to open primary care clinics next to five Walgreens stores in the Houston area. Blue Cross Blue Shield of Texas and healthcare company Sanitas USA also plan to open 10 primary care medical centers in Dallas and Houston for BCBS and self-pay patients, launching in January.

East Texas is hot for initiatives like these. The Dallas-Fort Worth area has one of the country's highest rates of healthcare spending, according to the Health Care Cost Institute, making it solid testing ground for preventive care and wellness programs.

That consideration drove CVS to choose Atlanta, Philadelphia and Tampa for the next phase rollout of its HealthHUBs, according to a spokesperson who said the three new markets were selected based on the high rates of CVS customers and Aetna members with chronic disease.

The investor day comes as the CVS-Aetna merger agreement with the U.S. Justice Department is under scrutiny.

Beginning Tuesday, Judge Richard Leon of the U.S. District Court for the District of Columbia will hear three full days of testimony on the deal from groups opposing the marriage like the American Medical Association, U.S. PIRG and Consumer Action, and those supporting the agreement.

Though Leon has yet to give the final go-ahead for the merger, citing antitrust concerns, CVS and Aetna are already operating as a combined entity. The company's growth plan reiterates how the retail pharmacy giant views joining the payer as a sure thing, noting "strong execution on Aetna integration" is projected to drive between $300 to $350 million in cost savings, or combined value and performance, in 2019 and $800 million in 2020.

"We are continuing to drive significant synergies and cost savings across the entire enterprise as we execute our integration plans," CVS CFO Eva Boratto said in a statement. "Going forward, we also have truly exciting opportunities to introduce programs and products that will change the way people think of and address their health."

CVS also reaffirmed its 2019 full year guidance. The company expects consolidated revenues between $251 billion and $254 billion, adjusted operating income of roughly $15 billion and adjusted earnings per share of $6.75 to $6.90.