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CVS Well being plans 900 retailer closures, lowers steerage as retail technique shifts digital

EDITOR’S NOTE: This story has been up to date to incorporate analyst commentary.

CVS Well being plans to shutter roughly 900 shops over the following three years, the pharmacy and retail big introduced Thursday.

Starting subsequent spring, the chain will shut roughly 300 shops a 12 months as the corporate reevaluates its in-person retail technique with extra customers going digital.

As a result of deliberate retailer closures, the corporate projected an impairment cost between $1 billion to $1.2 billion by means of the top of the 12 months and diminished its per-share revenue steerage for 2021 to $5.46 to $5.67, down from earlier projections of $6.13 to $6.23 per share.

“Our retail shops are basic to our technique and who we’re as an organization,” mentioned Karen Lynch, president and CEO of CVS Well being, in a assertion. “We stay targeted on the aggressive benefit supplied by our presence in hundreds of communities throughout the nation, which enhances our quickly increasing digital presence.”

The corporate plans to create three new retailer codecs, devoted to main care companies, enhanced HealthHUB websites for on a regular basis well being wants and conventional CVS pharmacy and retail shops. 

The transfer comes because the chain “has been evaluating modifications in inhabitants, shopper shopping for patterns and future well being wants” to determine which forms of choices match the wants of every group, the corporate mentioned.

RELATED: Aetna launching nationwide digital main care resolution

Corporations throughout the nation are confronting the digital wave in healthcare as customers more and more flip to their telephones and computer systems over brick-and-mortar clinics and shops.

Natalie Schibell, a senior analyst at Forrester, mentioned a “do-it-yourself impulse” in customers is driving on-demand digital well being choices and forcing firms like CVS Well being to reevaluate their conventional fashions.

“This development is giving method to extra forward-thinking methods trying to displace present enterprise fashions and operations,” she mentioned in an electronic mail assertion to Fierce Healthcare. “All through our analysis we discovered that customers do not need to wait in line or go to a physician in particular person in the event that they needn’t. We have been skilled by Netflix, Doordash, grocery supply, Uber, and Amazon, and so forth., for immediate every little thing.”

Along with shifting its technique, CVS Well being can be making modifications to its management group.

Neela Montgomery, govt vice chairman and president of CVS Pharmacy, has chosen to depart her position on the finish of the 12 months, the corporate mentioned.

“We admire Neela’s contributions throughout an extremely difficult and dynamic interval when our retail shops performed a essential position within the nation’s combat towards COVID-19,” Lynch mentioned. We worth the management she has supplied throughout a time of evolution in our enterprise and want her continued success.”

The corporate created a brand new govt place to supervise its altering pharmacy technique: chief pharmacy officer.

Prem Shah, govt vice chairman of specialty and product innovation at CVS Well being, will assume the position on January 1, 2022. He’ll function co-president alongside Michelle Peluso, CVS Well being govt vice chairman and chief buyer officer.

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