CVS Health Corp. and Target Corp. finalized CVS’s acquisition of Target’s pharmacy business Wednesday.
That means that CVS Health has officially acquired Target's 1,672 pharmacies in 47 states and will operate them through a store-within-a-store format, branded as CVS/pharmacy. A CVS/pharmacy will also be included in all new Target stores that offer pharmacy services.
Seventy-nine Target clinic locations will be rebranded as CVS MinuteClinics, and CVS Health will open up to 20 new clinics in Target stores within three years.
CVS may be the poster child for a new healthcare retail environment that has several drugstores rebranding themselves more broadly as medical and wellness clinics. In February 2014, the drugstore retailer shocked many when it announced the end of tobacco sales in its stores — a sacrifice of some $2 billion in sales.
Walgreens and Rite Aid are also moving assertively in this space. But notably Target, by letting go of its pharmacy and clinic operations, is opting to focus on its other merchandising and retail strengths.
There appears to be solid demand by consumers to use retailers as a way to manage their medications, vaccinations, and some chronic conditions, and the drugstore clinic model is aided in part by the Affordable Care Act.
Some 79% of respondents in a 2013 survey by Oliver Wyman, for example, said they were interested in receiving care for minor healthcare episodes in an alternative setting, with 61% saying they’d go to a walk-in clinic or urgent care center. But 36% said they’d go to a pharmacy-based clinic, 24% said they’d go to a discount retailer-based clinic, and 20% said they’d go to a grocery store-based clinic.
“We had really expected interest in retail and remote care to correlate pretty strongly with age and health status. It’s reasonable to think that older consumers would be more conservative about wanting a traditional doctor’s office, that the youngest would be more open to telehealth or virtual care, and so forth,” Oliver Wyman said in its report. “But that’s not what the survey showed. Instead interest and willingness to try cut across both clinical and demographic lines.”