- CVS plans to close 900 stores — roughly 10% of its footprint — over the next three years in an effort to evolve with changing consumer buying patterns. The revamp, part of the retail drugstore's ongoing strategy, includes new store formats with a stronger focus on healthcare — including locations for primary care delivery.
- The shutdowns will begin next spring. CVS will be remodeling an undisclosed number of stores to include more health services, including locations for primary care delivery and an "enhanced" version of its health and wellness-focused HealthHUB locations. A spokesperson sidestepped requests for more specifics on the new store formats, saying CVS will have more to share at its upcoming investor day on Dec. 9.
- The closures will cost CVS roughly $1 billion in the fourth quarter this year, the Rhode Island-based company said Thursday. CVS lowered its full-year earnings guidance as a result. However, the news boosted CVS' stock 3% as of Thursday's close. Those gains began to ease in early trading Friday.
Healthcare is a highly local industry, so closing select locations in a bid to offer different products and services by market may be a better way to target CVS' myriad offerings to its consumers by need and geography. CVS doesn't have a list yet of which stores are closing.
"We consider a number of factors when making these decisions, including local market dynamics, population shifts, and store density; other criteria include ensuring Aetna and Caremark coverage, and the needs of underserved communities," T.J. Crawford, CVS' head of external affairs, told Healthcare Dive.
As of Sept. 30, CVS had more than 9,900 retail stores as well as 1,200 walk-in medical clinics, which provide a range of urgent care services. But the drugstore chain, one of the biggest in the U.S., plans to create new store formats in a bid to drive higher consumer engagement.
That includes new sites dedicated to offering primary care services, in CVS' first explicit move into the space — something the retailer has long denied is of interest, noting its goal with its MinuteClinic and HealthHUB locations is to complement the role of the physician instead.
CVS' current clinical network uses nurse practitioners, and is able to do the majority of things a primary care physician's office can. MinuteClinics are a major referral source to primary care providers in a patient's area, ex-CVS CEO Larry Merlo told Healthcare Dive in 2019.
But the step into offering primary care implies CVS may no longer be willing to hand off those patients. Crawford declined to share whether CVS plans to have physicians on-site at its new care delivery locations, along with CVS' current network of RNs; what services would be available and whether this represents an expansion or replacement of its MinuteClinic network.
CVS also plans to further enhance its HealthHUB locations, sites devoting about a fifth of their retail space to health services, focusing on preventive care, wellness activities and education and management of chronic conditions like asthma and diabetes. The retail giant plans to have 1,500 HealthHUBs up and running by the end of this year.
From a retail perspective, the closures don't make much sense. Trimming the chain implies years of underinvestments in its stores, even as its retail peers build out their locations to nab local shoppers, GlobalData Managing Director Neil Saunders told Retail Dive.
But the pandemic minimized things that used to previously be done in person, resulting in a "seismic shift in consumerism," Forrester Senior Analyst Natalie Schibell said. Shoppers are buying more online and patients are filling prescriptions through at-home delivery and accessing medical care via telehealth options.
"This trend is giving way to more forward-thinking strategies looking to displace existing business models and operations," Schibell said. "Consumers don't want to wait in line or visit a doctor in person if they don't need to."
On an earnings call earlier this month, CEO Karen Lynch told investors CVS plans to continue pushing into primary care to lower the total cost of care by expanding access to preventative treatment and screenings. The company hopes that will result in downstream savings for its payer business Aetna.
The new health-focused store offerings fit into that strategy, as the payer has been experimenting with new plan designs weaving together its virtual and physical assets in a bid to keep patients under the CVS umbrella.
Aetna already has some benefits plans nudging Aetna members to visit its MinuteClinics or HealthHUB locations by charging a low or no copay; and in the third quarter launched a virtual-first primary care plan to self-funded employers nationwide.