CVS closing some pharmacies in Target stores, in the latest industry pullback
CVS Health Corp. on Thursday said it would close “select” pharmacies set up in Target Corp. stores starting next month, as it tries to shrink its store counts and become more of a health-services provider amid thinner profits for drugstores.
A representative for the chain said the closures would begin in February and run through April. She declined to provide specific numbers and locations. The Wall Street Journal, which first reported the news, said that “dozens” of those pharmacies would be closed.
Patient prescriptions would be transferred to a nearby CVS pharmacy prior to the closings. The CVS spokesperson said employees affected by the closures would offered “comparable” roles at the company.
“The closures are part of our plan to realign our national retail footprint and reduce store and pharmacy density, and are based on our evaluation of changes in population, consumer-buying patterns and future health needs to ensure we have the right pharmacy format in the right locations for patients,” the spokesperson said.
She declined to elaborate on those trends. Target
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declined to comment. CVS has nearly 1,800 pharmacies in Target stores nationwide.
Shares of CVS
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were up fractionally after hours, after finishing regular trading 0.4% lower. Target shares were unchanged after hours, after falling 1.4% during the regular session.
As the Journal has noted, profitability has been harder to come by at pharmacies, as COVID-19 vaccine demand wanes and prescription-related payments from insurers and benefit managers fall. More broadly, pharmacies, the Journal and others have also reported, have suffered from understaffing and higher risk of mistakes.
CVS has tried to expand into health services in recent years, buying health-insurance provider Aetna in 2018, setting up health clinics and introducing a new pharmacy reimbursement model. The Journal reported in July that CVS planned to cut some 5,000 jobs. In 2021, CVS said it would close some 300 stores a year for the next three years.
Elsewhere, Walgreens
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this month slashed its dividend in an effort to conserve cash. Chief Executive Tim Wentworth, during the chain’s quarterly earnings call this month, said that customers were “making deliberate choices to seek value,” and said he acknowledged the “structural headwinds in our core pharmacy business.”
“We are taking swift actions to right-size costs and increase cash flow across the company,” he said. “We remain on pace toward $1 billion in cost savings this year.”
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