- CVS Health is set to buy Target's healthcare businesses in a transaction worth $1.9 billion, increasing its already-substantial market reach. CVS is the country's largest dispenser of prescription drugs, biggest specialty pharmacy, biggest operator of healthcare clinics and second-largest pharmacy-benefits manager, according to The New York Times.
- The terms of the deal indicate that CVS would acquire from Target more than 1,600 pharmacies in 47 states and about 80 health clinics formerly branded under the MinuteClinic name.
- CVS will rebrand the acquisitions under its own name and intends to offer Target's current 14,000 store-based healthcare employees similar positions under its new ownership.
The deal, which is still subject to regulatory approval, would enable CVS to expand its presence in regions where it has formerly lacked a stronghold, possibly strengthening its other businesses (like CVS/caremark, the company's pharmacy benefits business). CVS Health is becoming a goliath—Forbes reports that other pharmacy chains, like Rite Aid, are under pressure to sell to either CVS or Walgreens.
A month ago, CVS Health purchased Omnicare, a prescription drug company that serves nursing homes and assisted-living facilities, for $12.7 billion—but it's not just that CVS is on an expansion spree. CVS rebranded last year to embody a more provider-like image and is now affiliated with over 50 hospitals as part of an overall provider strategy to keep costs lower in a changing reimbursement environment. CVS Health is positioning itself to be a key primary care partner.
"As referral networks tighten, primary care is increasingly important for winning and protecting population share," The Advisory Board's Alicia Daughtery writes. "Where a consumer receives care for her sore throat will likely influence where she receives her mammogram and knee arthroscopy."
Want to read more? You may enjoy this story about what CVS' new branding strategy means for providers.