Beloved pharmacy CVS Health is planning to “realign” its retail footprint across the U.S. by closing dozens of its pharmacies in Target stores between February and April this year.
“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,” said CVS Health in an emailed statement to TheStreet.
The pharmacy also confirmed with TheStreet that employees impacted by the closures will be offered “comparable roles within the company,” and that prescriptions will be moved to a nearby CVS Health location “to ensure patients have uninterrupted access to pharmacy care.”
CVS Health has over 9,000 locations across the U.S. In 2015, CVS Health acquired 1,672 of Target’s pharmacies across 47 states for $1.9 billion.
The move from CVS Health comes amid its vow in 2021 to close roughly 900 stores in the next three years, and will cut 300 per year, all in an effort to cut costs.
“We consider many factors when making store-closure decisions, including maintaining access to pharmacy services, local market dynamics, population shifts, a community’s store density, and ensuring there are other geographic access points to meet the needs of the community,” said a spokesperson for CVS Health in September last year.
A CVS pharmacy is seen at a Target discount department store in Miami Beach, Fla.
CVS Health has been preparing to weather a potential financial storm that’s the result of a recent hit to its insurance arm, Aetna.
Earlier last year, CVS reported a decrease in its Medicare Advantage Star ratings. Aetna’s National PPO plan, which covers more than half of the insurer’s 3.2 million Medicare Advantage members. The ratings dropped from 4.5 stars to 3.5 stars, according to a filing with the U.S. Securities and Exchange Commission.
This had a domino effect as 21% of Aetna’s Medicare Advantage members were enrolled in plans with four stars or higher for the 2023 plan year, which is much lower than the 87% of members that were enrolled in the 2022 plan year.
Due to this decrease, CVS Health first estimated in early 2023 that it would reduce its 2024 operating income for its insurance sector by between $800 million and $1 billion, but it is now shrinking its estimate.
“We now expect the impact to be closer to the low end of our previously communicated range of $800 million to $1 billion,” said Tom Cowhey, interim chief financial officer at CVS Health, in a November earnings call.
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