CVS expands retail health reach with purchase of Target's pharmacies, clinics

CVS Health Corp. will expand its reach in the retail health business by acquiring Target Corp.'s clinics and pharmacies for $1.9 billion, according to the Wall Street Journal.

The deal will give CVS access to about 1,700 more locations, according to the article. As part of the purchase, CVS will also take over operations of the Target pharmacies and clinics, which it will rebrand under the CVS name. The two companies also plan to co-develop smaller-format "Target Express" stores.

While Target has had success attracting shoppers with its pharmacies and clinics, these offerings have not been as profitable as its other services, such as baby and children's products. By joining with a much larger rival, Target hopes to better compete with Wal-Mart, which has expanded its healthcare services enough to threaten not only other retail agents, but the healthcare sector as well.

The deal will also give CVS an increased foothold in markets such as Portland, Oregon, and Seattle. Target, meanwhile, expects the acquisition will drive long-term traffic and help the company double down on wellness. Regulator approval of the deal is still pending, and neither company is sure when it will close, according to the article.

The move demonstrates the increasing prominence of retail health in the healthcare sector. Despite concerns among providers about competition, this trend actually strengthens outcomes by reducing unnecessary or inappropriate emergency department use, CVS Minute Clinic Chief Medical Officer Nancy Gagliano said this year at the American Hospital Association's annual meeting.

To learn more:
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