A report by the Star Tribune of Minneapolis/St. Paul says CVS will purchase MinuteClinic, the largest chain of in-store medical clinics in the U.S.
The purchase, reportedly for $170 million, is significant because operators of drugstores and other retail outlets have chosen to lease space to in-store clinics up to now rather than operate them.
MinuteClinic, which has 83 in-store clinics in 10 states (66 in CVS stores), is looking to triple the number of locations it operates this year. The company said the CVS purchase will enable it to exceed its earlier projection of having 500 clinics operating in stores by the end of next year.
"Our new relationship with CVS will allow us to accelerate the growth and refinement of the MinuteClinic concept," CEO Michael Howe said.
MinuteClinic intends to continue opening clinics in stores other than CVS locations. The company presently has clinics operating in Cub Foods stores in the Minneapolis and St. Paul area as well as other locations in the state and elsewhere.
The company has yet to turn a profit and sales for the past year are estimated to be in the $20 million range. Mr. Howe said the lack of profitability is due to the recent openings of many clinics. He said that clinics operating for 18 months or more are all showing a profit.
Discussion Question: What are your thoughts on the strategic advantages/disadvantages of CVS purchasing MinuteClinic? Will CVS' ownership of MinuteClinic reduce its ability to open clinics in other retail operators' locations?