CVS Invests in Mental Health Services

CVS Tests Offering Mental Health Services

CVS Health (CVS) is among the big drugstore chains expanding into therapy, beginning to offer counseling services in some of its stores. CVS is joining Walmart (WMT) and Walgreens (WBA) in chasing an area that has seen a big uptick in demand recently. More people were seeking mental health help even before the pandemic, and the pressures of COVID-19 caused this trend to accelerate. According to federal data, more people are seeking help for depression, anxiety, addiction, and other mental health challenges.

With online competition rising and their profit margins from prescription drugs narrowing, these companies are looking for ways to diversify. The likes of CVS and Walmart join venture capital-backed startups including Calm and Talkspace (TALK), which are trying to disrupt the traditional mental health treatment industry.

CVS Sees Positive Results From Tests

Earlier this year CVS began staffing some of its stores in Houston, Philadelphia, and Tampa with licensed clinical therapists as part of a pilot program. The test was a success, with CVS seeing a high return rate among the customers who used the service. CVS is now rolling the program out in 34 more locations, charging $129 for a mental health assessment and $69 for a 30 minute session with a counselor. Customers can either return for additional sessions or get a referral for specialized cases.

CVS maintains patients' privacy by including the mental health services with its other wellness offerings. Other customers in the store cannot tell who is seeking mental health services and who is getting physical health treatments. Similarly, Walmart offers counseling at its Walmart Health stores, charging $60 for a 60-minute visit.

CVS and Aetna to Benefit

The mental health push on the part of CVS and other drugstore operators comes as consumers increasingly see these companies as convenient and inexpensive options for select medical services. Many of these drugstore chains recently overhauled their operations in order to administer COVID-19 vaccines. With the in-person logistics from the vaccines already set up, providing in-person mental health services is a more natural next step.

Can you Invest in a Company Before it Goes Public?Can you Invest in a Company Before it Goes Public?

Financial educator Ro$$ Mac talks about investing in companies before they go public. He explains how you can invest in pre-IPO companies, including what it means to be an accredited investor. Watch now!

Manufacturers Sit on Unfinished Products Amid Shortages

From Allegion to GM, Supply-Chain Delays Cause Challenges

Allegion (ALLE), CNH Industrial (CNHI), Honeywell International (HON), General Motors (GM), Ford (F), and Illinois Tool Works (ITW) are among the manufacturers sitting on a growing inventory of unfinished goods as they await key components and materials.

For months, shortages of everything from electronic components to semiconductors have been causing supply-chain difficulties across industries. Determined to keep production going and plants open, manufacturers are building up massive inventories of unfinished products like trucks and farm equipment. With demand surging, they are also facing huge backlogs even as they rush to make new products. Inventories of unfinished durable goods increased 3% in June year-over-year and were up close to 12% from June 2019.

A Growing Production Backlog

Manufacturer Allegion has seen its backlog increase to more than three months as the company waits for chips and electronic components for its lock systems. The company has repurposed some production lines to make products that can be completed. CNH Industrial, a maker of farm and construction equipment, is sitting on thousands of earth-moving machines, crop harvesters, and tractors that are not complete due to a lack of parts. If the company ceased production while it awaited the components, it risked falling too far behind in meeting all the customer demand.

Meanwhile Ford and GM are storing thousands of new vehicles that need semiconductors and other components in parking lots while they await shipments to complete the vehicles.

Manufacturers Finances Begin to Take a Hit

The supply-chain problems are beginning to hurt the manufacturers financially even as sales and profits are up. Honeywell said revenue would have been between $100 million and $200 million higher if not for supply-chain constraints in the second quarter. The manufacturer is contending with shortages of plastic resins, semiconductors, and other components, which is hurting its ability to make building systems, safety products, and equipment for warehouses.

Illinois Tool Works is facing a $200 million backlog due to component shortages. The backlog, coupled with supply-chain delays, hurt its organic growth in the second quarter, which would have been around 10 percentage points higher. With supply-chain constraints not expected to end anytime soon, investors should pay close attention to the impact these issues are having on manufacturers' bottom lines.

Amazon Validates BNPL Market with Affirm Deal

Amazon Will Offer Installment Payments Through Affirm

Amazon (AMZN) is getting into the buy-now, pay-later market, inking a deal with Affirm (AFRM) to let customers pay off purchases of $50 or more in installment payments. It is the first time Amazon is partnering with a buy-now, pay-later platform, although the company does already offer installment payments on some items it sells.

The ecommerce giant is entering the space at a time when demand to pay in installments is growing, particularly among younger shoppers. These customers tend to be wary of credit cards with high interest rates and prefer to make interest-free payments over a short period of time. Amazon and Affirm are testing the payment method with select customers and plan to roll it out more broadly in the coming months.

Affirm Gets a Lift

The deal was a huge win for Affirm, which has emerged as one of the leaders in the buy-now, pay-later market. The company, which went public in January and is run by PayPal co-founder Max Levchin, has seen rapid growth. Last fiscal year revenue increased 93% year-over-year and the company is forecasting 64% growth in 2021.

Affirm has 5.4 million active consumers, which is a 60% increase from last year. At the same time the size of the transactions on its platform increased 10% and the number of merchants nearly doubled. Walmart (WMT) and Peloton (PTON) are two of Affirm’s customers.

Competition Heats Up

Affirm’s partnership with Amazon sent Affirm shares up more than 40%. Despite the win, Affirm faces some formidable competition in the installment payments space. Rival Afterpay (AFTPY) was recently acquired by Square (SQ) for $29 billion, and Klarna is valued at close to $46 billion. In comparison, Affirm is now valued at around $25 billion. There is also talk that Apple (AAPL) and Goldman Sachs (GS) are partnering to create an installment payment service.

The buy-now, pay-later market is heating up as consumers embrace this interest-free way of paying off their purchases. With Amazon’s backing, Affirm stands to gain ground in a highly competitive space.