By Brianna Ahearn, contributing writer
Drugstore retailer CVS will purchase Target's pharmacy business for a reported $1.9 billion. The companies announced the news on June 14. The deal covers both Target's pharmacies and clinics. CVS will take over all of Target's pharmacies located in 47 states. The pharmacy locations will be rebranded as CVS/Pharmacy and will still operate within their respective Target stores. Target also operates nearly 80 clinics that CVS will rebrand as MinuteClinic. At the end of the transaction, CVS plans to open 20 additional clinics in Target stores; no potential locations were available at press time.
As part of the agreement, Target and CVS will also work together to develop five to 10 TargetExpress stores with a CVS Pharmacy inside the locations. The expansion will occur at the deal's close and will be a two-year period. TargetExpress stores are small format stores located in urban areas. The first TargetExpress location opened in Minneapolis in July 2014. The stores are meant to supply urban shoppers “quick trip shopping,” with smaller baskets and lowered shelves. Target planned to open five additional TargetExpress locations in 2015, however, it looks like the pending CVS agreement will increase that number.
“This strategic relationship with Target supports the highly complementary customer base, brand and culture we share,” says 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 health care focus and an appreciation of the rise of health care consumerism with consumer choice and accountability growing. This relationship with Target will provide consumers with expanded options and access to our unique health care services that lead to better health outcomes and lower overall health care costs.”
Target stressed that there would be no immediate change to Target guests' health experience until the deal was approved, regulations were met, and everything was finalized. After making the announcement, Target explained the process and offered answers to potential questions in a blog post. For now, “it's business as usual for both companies,” Target says. Target guests can still use their REDcard and Target Pharmacy Rewards at their Target store, and when the deal closes, CVS' loyalty program ExtraCare will be available at all of the CVS pharmacies located within Target stores.
“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,” says Brian Cornell, Target Chairman and CEO. “By partnering with CVS Health, we will offer our guests industry leading health care services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests.”
CVS has been aggressive in attempts to dominate the healthcare industry in all facets. CVS recently purchased Omnicare, a provider of pharmaceutical services for nursing homes. Omnicare operates 160 locations in 47 stares across the country, and CVS will acquire the business for $10.4 billion. The Omnicare purchase and the acquisition of Target's pharmacy business will help CVS increase their healthcare empire significantly.