CVS Trims 46 Stores, Expands New HealthHUB Format
CVS Health Corp. is closing 46 of its locations, calling them underperforming.
The closures are widespread. The company is shuttering seven stores each in Texas and Illinois, four each in Florida and California, and other locations in Arizona, Delaware, Hawaii, Indiana, New York, Michigan, Minnesota, Missouri, New Mexico, Vermont and Washington, D.C.
The move is more of a housecleaning than a reflection of hard times in retail. With a total of more than 9,600 stores nationwide, the closures represent less than 0.5% of CVS locations.
CVS is also testing more comprehensive healthcare options at some of its locations, reflecting the ongoing retailization of healthcare nationwide.
The pharmacy giant has piloted three HealthHUB stores in Houston recently and now plans to expand them to the rest of the Houston market, though the company has not offered a timetable for expansion yet.
HealthHUBs, which take up about 20% of the space of the CVS locations in which they operate, feature health-related digital tools, health kiosks and chronic care management services for drugstore customers. An in-house dietitian offers personal and group nutrition counseling.
"In our Houston HealthHUB stores, we are demonstrating our ability to bring more healthcare services into communities meeting people where they are," CVS CEO Larry Merlo said during the company's earnings call at the beginning of May.
"Our vision is for these consumer experiences to be seamlessly connected across digital and clinical interactions, resulting in elements of health becoming part of one's regular routine," Merlo said.
"While it is early, we are very encouraged by the initial results in our Houston stores. The various product and service offerings are performing at or above our expectations."
On the whole, the company is doing well. During the first quarter that ended March 31, total same-store sales for CVS were up 3.8% compared with the same quarter a year ago, with pharmacy sales leading the way, up 4.9% for the year. The chain's prescription volume for the quarter gained 6.7% compared with last year.
CVS closed on its acquisition of insurer Aetna late last year. During its first full quarter as a combined company, revenue increased 34.8% to $61.6B over the same period a year ago, driven by the Aetna deal.
Merlo said the company is on track to realize $300M to $350M in savings from the merger this year. Such savings come from elimination of duplicate corporate and operational functions, purchasing efficiencies and some medical cost savings.