Dive Brief:
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CVS Health’s pharmacy business saw a 22% Q4 revenue increase to $23.9 billion, thanks to growth in its Medicaid business. Medicaid is the federal-state health program that was expanded in many states through the Affordable Care Act.
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Same-store sales rose 1.6% in the quarter. A 5.5% increase at the pharmacy helped make up for a 7.2% decrease in sales at the front of the store, which included the loss of tobacco sales.
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The retailer ended the sale of tobacco products last October, and president and CEO Larry Merlo said the impact of that decision was less than the company had anticipated.
Dive Insight:
CVS Health has already moved past its decision to end tobacco sales, thanks to its strategic move of emphasizing health and wellness products and services.
But now the company faces another vulnerability. The Affordable Care Act faces uncertainty under a court challenge that will soon be decided by the Supreme Court. Any significant dismantling of the ACA could erase the Medicaid expansion that has helped CVS and other health care companies in recent quarters.