Photo: CVS Health
CVS Health will close 900 stores over three years and launch new formats as part of its strategic push to create health destinations in the communities it serves.
The retailer, which operates over 9,000 locations, said in a release that it has evaluated “changes in population, consumer buying patterns and future health needs to ensure it has the right kinds of stores in the right locations.” This analysis led CVS to the decision that it was overstored in some areas. The chain plans to shutter around 300 locations a year over the next three years. It will take an impairment charge in the fourth quarter of between $1 and $1.2 billion to write down associated costs.
CVS, which acquired insurance provider Aetna in 2018, has also experimented with new modes for meeting customer healthcare needs, such as telemedicine. Further, it has piloted new services, such as in-store mental health services at locations in three states with plans for further expansion. CVS’s MinuteClinic operations utilize nurse practitioners to provide basic medical services to patients at more than 1,100 locations.
The chain plans to operate three distinct formats going forward: stores dedicated to offering primary care services; enhanced HealthHUB locations with products and services designed for everyday health and wellness; and traditional CVS Pharmacy stores. The company did not provide a breakout of the numbers of stores it will operate by format.
“Our retail stores are fundamental to our strategy and who we are as a company,” said Karen Lynch, president and CEO of CVS Health. “We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence.”
CVS’s new approach will also include changes at the top of its retail business. Neela Montgomery, current president CVS Retail/Pharmacy, has decided to leave the company at the end of the year.
Ms. Montgomery will be replaced by Prem Shah and Michelle Peluso, who will serve as co-presidents. Mr. Shah, who was also named to the newly created role of chief pharmacy officer, will oversee that portion of the business at the company’s drugstores. Ms. Peluso, who joined CVS Health this year as its chief customer officer, will be responsible for the front-of-store.