CVS Health (US)

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Known as CVS\Caremark until 2014, CVS Health was formed in 2007 from the merger of drugstore chain CVS and pharmacy benefits manager Caremark. The resulting company is now America's biggest overall pharmacy healthcare provider, with sales of $177.5bn in 2016. It operates through two main divisions. CVS is the country's #2 retail pharmacy chain by outlets behind Walgreens, selling pharmaceuticals, OTC healthcare and general beauty products, including many own-label items, through a network of around 9,710 stores as well as online. More than 1,100 outlets also have walk-in MinuteClinic health centres. The estate includes around 1,600 in-store pharmacies and clinics in stores of discount retailer Target, acquired in 2015. The group filled some 1.2bn retail prescriptions in 2016, equivalent to 24% of the total US market. In 2014, the chain scored a sizeable moral victory when it stopped selling tobacco products at a cost of around $2bn in gross sales per year. It is currently the only major chain to have doen so. Separate division Caremark is one of the biggest pharmacy benefits management services, managing mail order and internet prescriptions and healthcare benefits processing on behalf of some 90m plan members and 68,000 pharmacies nationally. This is currently the fastest-growing part of the group, and it overtook retail pharmacy as the biggest business in 2012. In 2015, the group acquired rival OmniCare for $12.7bn including debt. Larry Merlo is group CEO. CVS started in 1963 as Consumer Value Stores, before being bought by general retailer Melville Corp. Over the next 50 years, a succession of other national or regional drugstore businesses were acquired and absorbed, of which the two biggest deals were for Revco in 1997 and Eckerd in 2004. Caremark was originally a division of what is still the medical devices manufacturer Baxter International. Adbrands does not currently offer a business profile for this company but subscribers may access account assignments and contact information. The searchable account assignments database is available to full subscribers to Adbrands.net premium services. Click here to access Adbrands account assignments (subscribers only); or see here for information on how to subscribe.

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Who are the competitors of CVS Caremark? see Retail Sector

Capsule checked 24th March 2017


Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 2nd Nov 2017: US pharmacy and benefits giant CVS Health - already the dominant player in its sector - hopes to get bigger still with an offer to acquire health insurer Aetna for more than $66bn, slightly more than the latter's revenues last year. Negotiations are understood to be well under way, though neither company has so far been willing to comment. A combination - if the deal goes ahead - would created a health industry behemoth with sales of around $230bn. Though it also controls America's largest retail pharmacy network, CVS's biggest business by revenues is its benefits management division, formerly Caremark, which manages healthcare benefits on behalf of third-party insurers including Aetna, negotiating with drugmakers on pricing and other services. As with so many of the other seismic changes underway in traditional B2C relationships, this move by CVS is inspired at least in part by signs that Amazon is weighing up an expansion into drug distribution. Such a move has been rumoured for several months. This week news broke that Amazon has already quietly secured licenses in 12 US states to wholesale medical equipment to hospitals, diagnostic laboratories and other such organisations via its B2B platform. A move into consumer prescription retail is seen as almost inevitable by many analysts. At the same time, healthcare companies such as CVS and Aetna have met with a succession of regulatory roadblocks for more traditional deals merging with existing direct competitors. Walgreens was refused permission to acquire pharmacy rival Rite Aid earlier this year, while Aetna's own proposed merger with competitor Humana was also turned down.

Adbrands Weekly Update 6th Jul 2017: Walgreens cancelled plans for a full takeover of rival pharmacy Rite-Aid after a year and a half of protracted negotiations with competition regulators. The decision followed feedback from the FTC that clearance was not likely to be forthcoming. Instead, Walgreens now proposes an arm's length acquisition of just under half of Rite-Aid's outlets - or around 2,200 stores - for $5.2bn. The remaining stores will continue to operate under the Rite-Aid banner as an independent company, with a reduced footprint of just 2,340 outlets, compared to almost 9,700 for CVS and a total of 10,300 in the US for the enlarged Walgreens. However, there is no guarantee that the new offer will appease regulators either. Meanwhile, CVS Health stepped up its campaign to eliminate unhealthy products from its stores. In 2014, it was the first (and still the only) pharmacy chain to stop selling tobacco. It has now banned low-protection suncream as well as foods containing artificial trans-fats. In addition, most confectionery and other junk food is being moved away from front of store to the middle, though a small selection will remain at the checkout.

Adbrands Weekly Update 29th Oct 2015: Pharmacy giant Walgreens Boots Alliance is to acquire competitor Rite Aid for $9.4bn, or $17.2bn including the smaller company's debt. Walgreens is already the biggest pharmacy chain in the US, with 8,200 outlets. It also controls the Boots pharmacy business in the UK and other markets, as well as an extensive wholesale business. Main US rival CVS Health has 7,800 stores but is significantly bigger by revenues - almost $140bn last year - as a result of its substantial Caremark prescription management division. The acquisition of Rite Aid's 4,600 drugstores in 31 US states creates a group with around 13,000 outlets (though some overlapping stores may be closed) and combined sales of close to $130bn. Separately, Walgreens Boots reported results for the year to August. Revenues soared 35% to $103.4bn as a result of the consolidation of Alliance Boots, while net earnings more than doubled to $4.2bn.

# Adbrands Weekly Update 25th Jun 2015: Pharmacy giant CVS has agreed to acquire the entire pharmacy and clinics division of discount retailer Target in a deal worth around $1.9bn. It will take over management and branding for Target's 1,600 instore pharmacies, substantially boosting its own network. The retailer will use the proceeds from the deal to boost its groceries offer, where it currently lags far behind rival Walmart, as well as online services. Sales from Target's pharmacy outlets are around $4bn annually.

Adbrands Weekly Update 28th May 2015: US drugstore giant CVS added to its already substantial pharmacy benefits management division with the acquisition of OmniCare for $12.7bn including debt. The acquired business specialises in assisted living and senior care. Consolidation in the pharmacy benefits market is adding to the pressure on pharmaceutical companies, who are being forced to offer significant discounts on higher-priced drugs or have them excluded from sale.


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