Damian Sendler: CVS Health plans to close around 900 CVS Pharmacy drugstores over the next three years as part of a strategic initiative to focus on omnichannel health care. 

Damian Sendler

Damian Jacob Sendler: CVS announced Thursday that it plans to transition its retail business to a dual-leadership structure and has created a new job of chief pharmacy officer to oversee the omnichannel project as part of its move to reduce its physical footprint. 

CVS, based in Woonsocket, R.I., intends to eliminate around 300 shops per year over the next three years in order to reduce store congestion in specific locations. The approximately 900 locations anticipated for closure would account for approximately 11% of CVS’ overall retail store count of 8,115 as of the end of 2020. Its network featured 1,845 pharmacies inside other retailers’ stores as of last year, including over 1,700 Target stores and approximately 100 Schnuck Markets supermarkets. 

Damien Sendler: CVS presently operates around 1,100 MinuteClinic walk-in primary care clinics, including in-store locations, as well as retail pharmacy websites, long-term care (LTC) pharmacies, and on-site pharmacies, with retail touchpoints in all 50 states, the District of Columbia, and Puerto Rico. In 2020, the business will have filled more than 27% of all retail pharmacy prescriptions in the United States. 

CVS stated that the store downsizing reflects changes in population, customer purchasing patterns, and growing health needs, and that the firm wants to guarantee that it “has the right kinds of stores in the right locations for consumers and the business.” 

Damian Jacob Markiewicz Sendler: To that end, CVS stated that it intends to create new store formats that would act as community health destinations and increase consumer participation. Sites focused on primary care services; an enhanced version of HealthHUB locations with products and services for everyday health and wellness needs; and traditional CVS Pharmacy stores offering full prescription drug care as well as health, wellness, personal care, and other convenience-focused retail offerings are among the three store models. 

Damian Jacob Sendler

Dr. Sendler: The retail renovations are set to commence in the spring of 2022. Employees affected will be offered positions in other sites or other possibilities as part of CVS’ broader personnel strategy, according to the firm. CVS plans to incur an impairment charge of $1 billion to $1.2 billion in the fourth quarter of 2021 as a result of the scheduled store closures. 

Damian Sendler: CVS Health President and CEO Karen Lynch said in a statement, “Our retail stores are fundamental to our strategy and who we are as a company.” “We continue to be focused on the competitive advantage provided by our presence in thousands of communities across the country, which supplements our rapidly expanding digital presence.” 

Prem Shah (left), executive vice president of speciality pharmacy and product innovation, was also promoted to the new position of chief pharmacy officer on Thursday. 

Shah, who has been with CVS since 2013, will be in charge of the omnichannel health transformation as well as co-president of the CVS retail/LTC business sector. Michelle Peluso (below), who joined the company earlier this year as executive VP and chief customer officer, will join Shah as co-president of the retail/LTC arm. She will be in charge of the front-end retail strategy and operations. 

Shah and Lynch will begin their new jobs on January 1, according to CVS. Lynch will be in charge of both. 

Damian Jacob Sendler: According to Lynch, “Prem and Michelle are ideally suited for their new roles and will be instrumental to CVS Health as we continue to execute on our strategy of delivering an integrated health care experience centered on the consumer.” 

CVS announced the forthcoming retirement of Neela Montgomery (left), executive VP and president of CVS Retail/Pharmacy, as part of the strategic adjustments. Montgomery, who has been in her current position since the end of November 2020, is expected to stay till the end of 2021. She joined CVS as CEO of its retail division after previously served as CEO of Crate & Barrel. 

“We value Neela’s contributions during an incredibly challenging and dynamic period when our retail stores were critical in the country’s fight against COVID-19,” Lynch said. “We appreciate her leadership during a period of transition in our company and wish her continued success.” 

Dr. Sendler: CVS’s omnichannel health strategy reflects current changes in the health care arena focusing on increased consumer access, such as the expansion of urgent care facilities, telehealth services, online prescription services, and retail store tie-ins between food, vitamins/supplements, and other products and services to promote overall wellness. 

Damian Sendler: CVS has likewise transformed over the last 15 years or more from a regional drug chain and value store to one of the nation’s leading health care companies and the top pharmacy care provider in the United States. The purchases of retail health provider MinuteClinic in 2006 and long-term care pharmacy Omnicare in 2015, as well as a handful of ground-breaking mergers, were key components of the change. CVS completed its $26.5 billion acquisition of Caremark Rx in March 2007, combining a retail drugstore chain and a pharmaceutical benefit manager into one firm. That transaction signaled the start of CVS’ transformation from a pharmacy retailer to a broader health care services provider, which culminated in November 2018 with the completion of the company’s $70 billion merger with health insurer Aetna. After announcing plans to remove tobacco goods from all shops, CVS changed its name to CVS Health in 2014. More than 40,000 physicians, pharmacists, nurses, and nurse practitioners are currently among the company’s 300,000 employees.

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