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CVS Health (CVS) New Alliance to Boost Digital Transformation

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CVS Health Corporation CVS recently announced a new collaboration with Microsoft MSFT, intended to develop advanced solutions to help consumers boost their health and offer CVS Health employees tools to serve customers better.

The COVID-19 pandemic has led organizations, especially healthcare, to adapt to evolving trends. The collaboration with Microsoft will enable CVS Health to quickly transform into a consumer-centric, integrated health solutions company by choosing a digital-first technology approach. The alliance will further advance digital transformation and empower employees to deliver quality care that is more customized and affordable.

Strategic Implications

The collaboration with Microsoft will support CVS Health to boost a data-driven, personalized customer experience while adhering to the company's patient privacy and confidentiality policies. In addition to developing a more personalized and seamless experience for consumers, data science will be used to enhance access to care and health outcomes.

As part of CVS Health’s technology-driven digitalization program, the alliance will enable CVS Health to reimagine and streamline digitalization processes. Microsoft and CVS Health will also discover advanced technology solutions to help consumers, employees, and ecosystem partners.

Zacks Investment Research
Zacks Investment Research

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At present, CVS Health utilizes Azure cognitive services like Computer Vision and Text Analytics for Health that automates tasks. Microsoft Azure will play a vital role in CVS Health’s acceleration of its digital transformation by extending the company’s multi-cloud presence to more than 1,500 new and existing business applications in the Azure cloud.

Industry Prospects

Per a report by ADROIT Market Research, the global market for digital transformation in healthcare was $25.95 billion in 2018 and is expected to reach $210 billion by 2025, at a CAGR of 14.2%.

Institutional interest in cost reduction, improvement in patient engagement, payer engagement in digital tools and better connectivity in telemedicine through consolidation are factors driving the market.

Recent Developments

In November 2021, CVS Health completed the deployment of time-delay safe technology in all 851 CVS Pharmacy locations, including those in Target stores across Texas. These safes help prevent and address misuse and diversion of controlled substance medications — including opioid medications such as oxycodone and hydrocodone. These safes also claim to benefit the safety and well-being of CVS Pharmacy customers and employees.

In the same month, CVS Health announced several measures to support its ongoing strategy of making health care more affordable, accessible and convenient for consumers. With the announcement of several new measures, the company is focused on the competitive advantage provided by its presence in communities across the country. This factor complements CVS Health’s rapidly-expanding digital presence.

Price Performance

Shares of the company have gained 25.4% in a year compared with the industry’s rise of 17.6%.

Zacks Rank and Key Picks

CVS Health currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the broader medical space are Chemed Corporation CHE and Laboratory Corporation of America Holdings, or LabCorp LH.

Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings per share (EPS) estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average. Chemed currently carries a Zacks Rank #2 (Buy).

Chemed has outperformed its industry over the past year. CHE has gained 3.7% against a 35.6% industry decline.

LabCorp reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%. LabCorp currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.


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Microsoft Corporation (MSFT) : Free Stock Analysis Report

Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report

CVS Health Corporation (CVS) : Free Stock Analysis Report

Chemed Corporation (CHE) : Free Stock Analysis Report

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