CVS will close 900 stores over 3 years, add more clinic options

CVS Health Corp. said it will close 300 stores a year over the next three years and take a charge of as much as $1.2 billion, part of a plan to decrease its store density in some areas.

As part of a strategic review, the pharmacy chain will create three new store formats designed to increase interaction with customers, CVS said in a statement. Part of the goal is to balance the types of stores needed in different locations, including ones that offer primary-care services.

Executive changes will accompany the moves. Prem Shah was named to a new role as chief pharmacy officer and as of Jan. 1 will become co-president with Michelle Peluso of CVS Health’s retail business. Current Executive Vice President Neela Montgomery decided to leave the company as of the end of 2021, CVS said.

CVS will take an impairment charge of $1 billion to $1.2 billion in the fourth quarter related to the writedown of leases, property and equipment.

CVS did not release a list of stores that would be targeted for closure or for remodel to include primary-care services.

Some branches of the pharmacy chain offer MinuteClinic options, which are staffed by family nurse practitioners and, in some states, physician assistants, in an in-person or virtual setting. The services offered include treatment for minor illnesses and injuries, screenings and tests, skin conditions, vaccinations, wellness and physicals as well as women’s health services.

The Michigan Health & Hospital Association says clinics like the MinuteClinic can eat into hospital profits.

“Health systems are supportive of patients being able to access care that is convenient and affordable and that’s why many have started changing their models in recent years to provide more urgent care options, specialty emergency departments for kids, seniors, and those with mental health needs, and more,” the agency told Crain’s. “The financial reality is that most hospitals operate on razor-thin margins, so for-profit retail settings offering specific procedures can impact hospitals’ financial viability.”

Hospitals must stay open 24/7/365 with very strict requirements and regulations related to equipment, services and staffing, as well as high fixed costs associated with those needs. In comparison, retail pharmacies and clinics are able to avoid some of those cost challenges.”

—Crain’s Detroit Business senior reporter Dustin Walsh contributed to this report.