CVS Health will close hundreds of pharmacies over the next three years as the healthcare giant adapts to changing customer needs and converts to new store formats.
The company said Thursday it will close around 300 stores a year over the next three years, nearly a tenth of its roughly 10,000 retail outlets, as it reduces the density of the number of stores in some locations. .
CVS Health said it has assessed population changes, customer buying habits and future health needs to ensure it has the right types of stores in the right places. CVS has a dozen stores in the Portland metro area with about 30 statewide.
Changes in our store footprint won’t begin until the end of the first quarter of next year (2022), spokeswoman Monica Prinzing said. We will provide more details, including specific locations, when they become available.
The company has also expanded the health care services it provides to many locations.
The closures make sense as CVS Health seeks to turn many stores into a one-stop-shop for care, Edward Jones analyst Ashtyn Evans said, adding that the company’s Aetna health insurance business should steer consumers. customers to these stores.
Large drugstore chains regularly close underperforming stores or close locations for other business needs. CVS rival Walgreens, for example, has closed several stores in San Francisco since 2019 in part due to issues of organized theft in retail.
In Oregon, Bi-Mart announced earlier this year it was closing dozens of in-store pharmacies across the state.
The growth of online shopping has blunted the need for CVS and Walgreens to operate an extensive network of drugstores located within driving distance of most American homes.
CVS Health has also neglected its retail business and pushed some of its sites into a downward spiral of irrelevance, GlobalData chief executive Neil Saunders said in an email.
Too many stores are stuck in the past with poor lighting, depressing interiors, messy merchandising and a low assortment of products, Saunders said in an email. These are not destinations or places where people go out of anything other than out of necessity.
CVS Health announced Thursday that its stores will be grouped into three models.
Some will be traditional pharmacies that offer retail products as well as some health care services. Others will be dedicated to the primary care of customers, and the company will launch an enhanced version of its HealthHUB locations.
The company started to introduce these stores a few years ago. The stores aim to help customers watch for chronic diseases like diabetes and stay on top of their health. These locations can include health care workers like dietitians as well as community halls for things like yoga classes.
Pharmacies have redesigned their locations as they attempt to become more than just places to collect prescriptions and cough syrup. They have become a key source of COVID-19 vaccines as well as annual influenza vaccines.
Companies have faced staffing issues as they expand their reach. They increased the starting salary and hired thousands of additional workers for their stores.
But customers in markets like Kansas City and Indianapolis have recently complained to local newspapers about long waits or vaccination issues at some Walgreens stores due to drug store closings.
A Walgreens spokesperson said the company always reviews staffing levels and tries to minimize disruption to customers when a staff shortage affects stores.
CVS Health said Thursday that it plans to take an impairment charge of between $ 1 billion and $ 1.2 billion in the fourth quarter for the closings. The charge will not affect the company’s adjusted earnings guidance for 2021, which it noted earlier this month.
The company also said it will have a negligible impact on adjusted earnings per share next year.
In addition to operating pharmacies and selling health insurance, CVS Health also operates drug plans for large clients such as insurers and employers.
Shares of Rhode Island-based Woonsocket CVS Health Corp. rose 3% to $ 95.55 Thursday afternoon, while the broader trading indices were almost flat.
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