Target will soon be out of the pharmacy business and CVS is stepping in.
That’s the big news that came out of Target yesterday (June 15) when it was announced that Target has reached an agreement with CVS Health for the company to acquire its pharmacies and clinics for around $1.9 billion. This agreement will put CVS in charge of all of Target’s more than 1,660 pharmacies in 47 states, which will involve CVS rebranding the pharmacies under their own name.
Target’s nearly 80 clinic locations will also be rebranded as MinuteClinic. The company additionally plans to put 20 new CVS pharmacies within three years of finalizing the acquisition deal with Target. CVS will also plan on developing five to 10 flexible format stores over a two-year period under the name TargetExpress, but with a CVS pharmacy.
“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 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 said that by selling its pharmacy businesses, it enables the retailer to focus on growing other parts of the cmopany, such as its wellness signature category. Target also plans to expand its healthful food options, active goods, and natural and clean label products.
“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’s 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 said that the strategic relationship opens up more development opportunities for the two companies, and also helps CVS join new markets that will help generate returns for the company. It also helps CVS stay relevant in the rapidly changing times when more customers are looking for one-stop shopping outlets.
“We operate in a rapidly changing health care and regulatory environment,” Merlo said. “This requires companies like CVS Health to continually innovate, providing additional points of access, lowering costs and improving quality for both consumers and payers.”
To check out what else is HOT in the world of payments, click here.