CVS to Buy and Rebrand Target Pharmacies

By Mark Schieldrop (Patch Staff)

Photo: Petroni Media Company

Rhode Island-based CVS Health is buying Target’s pharmacy business for $1.9 billion and will rebrand the company’s pharmacy counters as CVS locations.

The deal will add 1,660 locations to CVS’s roster and will create a significant new source of revenue, the comapny said in a release.

The “store-within-a-store” model will bring CVS/Pharmacy branded locations to the Target stores and the 80 Target clinics in operation around the country will don CVS’s MinuteClinic moniker.

The company also plans to open 20 new clinics in Target stores within three years of the deal’s closing.

There is a Target in Framingham on Route 30.

“This strategic relationship brings together two leading retailers with complementary strengths, brands and cultures to enhance the health care experience for Target guests while expanding CVS Health’s retail presence in new markets, such as Seattle, Denver, Portland and Salt Lake City,” CVS said in a statement. “The transaction enables CVS Health to reach more patients, adding a new retail channel for its offerings, and expanding convenient options for consumers. Given CVS Health’s proven success in growing its business, the relationship is expected to benefit Target’s long-term traffic and sales growth. It also enables Target to strengthen its focus on wellness as a signature category. Moving forward, enhanced efforts by Target will center on continuing to deliver products and experiences to help guests eat well, be active and find natural and clean label products. ”

The transaction will be financed with debt, CVS said. Along with the company’s planned purchase of Omnicare, the company’s debt leverage ration will increase from 2.7x to 3.2x. To compensate, the company is reducing its share repurchase guidance for the year by $1 billion from $6 to $5 billion, which will likely reduce earnings per share by onecent per share this year and four cents per share next year.

The closing of the deal is likely to occur towards the end of the year and needs regulatory clearance.