PHARMACY

Target sells pharmacy business to CVS Health

BY Mike Troy

WOONSOCKET, R.I., and MINNEAPOLIS — Target plans to sell its pharmacy business to CVS Health for $1.9 billion and rebrand its nearly 1,700 prescription departments as CVS/pharmacy in a blockbuster deal that stunned the healthcare world.

In addition to the pharmacies, CVS Health also will acquire Target’s 80 clinic locations and rebrand them as MinuteClinic, moving the company closer to its goal of operating 1,500 clinics by 2017. The companies also announced plans to develop five to 10 small, flexible format stores during the next two years that will be branded as Target Express and contain a CVS Health pharmacy.

The transaction enables CVS Health to reach more patients, adding a new retail channel for its offerings, and expanding convenient options for consumers, according to a statement by the companies. Given CVS Health's success in growing its business, the relationship is expected to benefit Target's long-term traffic and sales growth.

It also enables Target to strengthen its focus on wellness as a signature category. Moving forward, enhanced efforts by Target will center on continuing to deliver products and experiences to help guests eat well, be active and find natural and clean label products, according to the companies.

"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," said Larry Merlo, CVS Health president and CEO. "When we introduced the new name for our company, CVS Health, we began a new era of growth with a broader healthcare focus and an appreciation of the rise of healthcare consumerism with consumer choice and accountability growing. This relationship with Target will provide consumers with expanded options and access to our unique healthcare services that lead to better health outcomes and lower overall healthcare costs.”

"At Target, we've talked a lot about the evolving preferences of our guests and this partnership demonstrates that we're committed to putting them at the forefront of everything we do," said Brian Cornell, Target chairman and CEO. "By partnering with CVS Health, we will offer our guests industry leading healthcare services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests."

The deal is consistent with each company's stated goals of investing in core businesses that help drive growth, according to the companies. CVS Health expects the transaction to generate significant sales and prescription volumes upon closing, and to generate significant operating profit over the long term.

The transaction will allow Target to continue offering a traffic-driving business in its stores and deliver a differentiated experience in support of its wellness efforts. Target expects to realized after-tax proceeds from the deal of approximately $1.2 billion, which it expects to deploy in support of its long-standing capital priorities, including share repurchase. Upon closing, the companies said in-store changes at Target locations will be rolled out over a period of several months thereafter, as CVS Health and Target work to ensure the smoothest possible transition for all pharmacy and clinic patients.

CVS Health said it is committed to offering the approximately 14,000 in-store Target healthcare professionals comparable positions with CVS Health as part of the transition, while Target said it would evaluate the business impact and related support needs at its headquarters locations.

Target will continue to manage its OTC and other front-end businesses, though CVS Health will certainly influence that business going forward.

“[This CVS Health deal] is very complementary to our vision of wellness,” Cornell told analysts Monday morning. “We now have a strategic partner that brings scale, expertise, unique capabilities and certainly experience in this space to make sure it complements the things we're going to focus on from a wellness standpoint as we think about bringing better assortment, improved brands to the Target guests. Our commitment to wellness will only accelerate as part of this and we'll continue to make sure that we have the right products.”

And the sky's the limit, Cornell added, there are no limitations or restrictions on how OTC and wellness will be merchandised in the vacinity of the newly branded CVS Health pharmacies.
 
"We'll be focusing on our core strengths," Cornell said, "making great choices fronm an assortment standpoint, making sure that we have an outstanding in-store presentation and continuing to make sure that we localize and personalize how we interact with our guests."

keyboard_arrow_downCOMMENTS

Leave a Reply

D.BIERNBAUM says:
Jun-15-2015 02:30 pm

This is a very smart strategy for both Target and CVS, for so many reasons, on so many levels. Maybe the smartest partnership in the consumer goods retail industry to happen in the past five years or so.

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?
PHARMACY

PAPCC ads highlight pharmacists’ role as senior healthcare providers

BY Antoinette Alexander

WASHINGTON — The Patient Access to Pharmacists’ Care Coalition, a group of more than 25 organizations representing patients, has released newspaper and radio advertisements calling for passage of the Pharmacy and Medically Underserved Areas Enhancement Act.

In late January, the Pharmacy and Medically Underserved Areas Enhancement Act was introduced in both the U.S. House (H.R. 592) and Senate (S. 314), a critical first step in achieving provider status at the federal level.

If passed, the Pharmacy and Medically Underserved Areas Enhancement Act would enable Medicare patients living in Medically Underserved communities to access important services that pharmacists can provide, including medication management, chronic disease management and preventative screenings.

PAPCC announced the initiative earlier this year, stating that it would run print and digital advertising in beltway media outlets over the course of the Congressional calendar.

“While the Pharmacy and Medically Underserved Areas Enhancement Act (S. 314/H.R. 592) enjoys strong and growing bipartisan and bicameral support, we are expanding our efforts to promote the role that pharmacists can play in providing healthcare services to seniors,” stated Vince Ventimiglia, president of Leavitt Partners Collaborative Advocates and advisor to PAPCC, in announcing the initiative earlier this year. “Members of Congress and their staff know the benefit of having pharmacists as part of the healthcare team. Through this initiative, we intend to raise awareness about how pharmacists can help seniors in areas of the country where access to care can be challenging.”

 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?
PHARMACY

National health spending up 6.2%

BY Michael Johnsen

ANN ARBOR, Mich. — National health spending in April 2015 was 6.2% higher than in April 2014. At $3.2 trillion, health spending now represents 18.2% of gross domestic product, a new all-time high, according to data come from the monthly Health Sector Economic Indicators briefs released by Altarum Institute’s Center for Sustainable Health Spending. 
 
“The 6.2% health spending growth rate for April is about the same as that for the fourth quarter of 2014 but is well below what we expect to show for the first quarter of 2015 in our next Trend Report due out later this month,” stated Charles Roehrig, director of the Center. “This report will reflect results from the just-released Quarterly Services Survey, which shows 7.3% growth in spending on health care services in the first quarter of 2015 compared to the first quarter of 2014. We expect the first quarter growth rate to represent a peak, and that spending growth will moderate as 2015 continues to unfold.”
 
Prescription drug spending grew the fastest, by 10.5%, but is showing signs of moderation. Hospital spending grew at a rapid 8.5%, presumably driven by increased utilization and less uncompensated care, as prices have been stagnant.
 
Health care prices in April 2015 were 1.2% higher than in April 2014, only two-tenths higher than the decade-plus low of 1% growth registered in August 2013. Hospital prices rose by a low 0.5%, while physician and clinical services prices plunged by 1.1%, reflecting the end of enhanced Medicaid primary care payments. Prescription drug prices rose 5.6%, down from March but still near the 13-year high of 6.4% reached in December 2014.
 
keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?