CVS Health Buys Target Pharmacy Operations

New partnership will place CVS-branded pharmacies and clinics at Target stores.

June 16, 2015

MINNEAPOLIS – Yesterday, Target announced plans to sell its pharmacy business to CVS Health for $1.9 billion, and will rebrand its nearly 1,700 prescription departments as CVS/pharmacy. In addition to the pharmacies, CVS Health also will acquire Target’s 80 clinic locations and rebrand them under the company’s MinuteClinic banner. The companies also announced plans to develop five to 10 small, flexible format stores over the next two years, which will be branded as Target Express and contain a CVS Health pharmacy.

According to news reports, the deal will enable CVS Health to reach more patients by adding a new retail channel for its offerings and expanding convenient options for consumers. For Target, the relationship is expected to help the retailer’s long-term traffic and sales growth, while enabling the company to strengthen its focus on wellness as a signature category.

"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," said Larry Merlo, CVS Health president and CEO, in a media statement. "When we introduced the new name for our company, CVS Health, we began a new era of growth with a broader healthcare focus and an appreciation of the rise of health care consumerism with consumer choice and accountability growing. This relationship with Target will provide consumers with expanded options and access to our unique health care services that lead to better health outcomes and lower overall health care costs.”

The transaction will allow Target to continue offering a traffic-driving business in its stores and deliver a differentiated experience in support of its wellness efforts. Target expects after tax proceeds from the deal of approximately $1.2 billion, which it expects to deploy in support of its long-standing capital priorities, including share repurchase. Upon closing, the companies said in-store changes at Target locations will be rolled out over a period of several months thereafter, as CVS Health and Target work to ensure the smoothest possible transition for all pharmacy and clinic patients.

"At Target, we've talked a lot about the evolving preferences of our guests and this partnership demonstrates that we're committed to putting them at the forefront of everything we do,” said Target chairman and CEO Brian Cornell. “By partnering with CVS Health, we will offer our guests industry leading health care services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests."

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