In August 2020, we asked if CVS Health had reached the tipping point with Omnicare:
“Omnicare, which serves more than one million patients per year, has been a drag on CVS Health’s financial results since its acquisition. Omnicare operates two primary businesses through two operating segments, Long-Term Care Group and Specialty Care Group, each serving different customer populations but sharing a common objective: advancing health outcomes at the lowest possible cost.
CVS Health outlined a four-point plan in August 2018 to improve the performance of Omnicare, but the benefits have been offset by external factors such as the coronavirus and industry consolidation and divestitures that impact the skilled nursing business.”
Which brings us to CVS Health announcement of operating results for the three months ended September 30, 2021. Total revenues increased to $73.8 billion, up 10.0% compared to prior year. Total revenues increased to $215.5 billion, up 8.2% compared to prior year.”
However, CVS Health operating income decreased 5.8% primarily due to a $431 million goodwill impairment charge associated with the long-term care business in the Retail/LTC segment recorded in the three months ended September 30, 2021 and the absence of a $271 million gain on the sale of the Coventry Health Care Workers’ Compensation business recorded in the three months ended September 30, 2020.
The Health Care Benefits and Pharmacy Services segments announced strong financial growth. The Retail/LTC segment, where Omnicare resides, also announced strong sales growth.
The Retail/LTC segment also fulfills prescriptions for medications, provides patient care programs, sells a wide assortment of health and wellness products and general merchandise, provides health care services through walk-in medical clinics, provides medical diagnostic testing, and administers vaccinations.
Omnicare remains the maker leader in providing institutional pharmacy services to long-term facilities with an estimated $4 billion in sales. As CVS Health continues to grow we are left to wonder what will become of Omnicare.