Target

Target is selling its pharmacy business to CVS Health for $1.9 billion and will rebrand its nearly 1,700 prescription departments as CVS/pharmacy in a blockbuster deal that stunned the healthcare world. In addition to the pharmacies, CVS Health also will acquire Target’s 80 clinic locations and rebrand them as MinuteClinic, moving the company closer to its goal of operating 1,500 clinics by 2017. The companies also announced plans to develop five to 10 small, flexible format stores during the next two years that will be branded as Target Express and contain a CVS Health pharmacy. The transaction enables CVS Health to reach more patients, adding a new retail channel for its offerings, and expanding convenient options for consumers, according to a statement by the companies. Given CVS Health’s success in growing its business, the relationship is expected to benefit Target’s long-term traffic and sales growth. “This strategic relationship with Target supports the highly complementary customer base, brand and culture we share,” said Larry Merlo, CVS Health president and CEO. “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 healthcare consumerism with consumer choice and accountability growing. This relationship with Target will provide consumers with expanded options and access to our unique healthcare services that lead to better health outcomes and lower overall healthcare costs.” CVS Health expects the transaction to generate significant sales and prescription volumes upon closing, and to generate significant operating profit over the long term. Target expects to realized 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. CVS Health said it is committed to offering the approximately 14,000 in-store Target healthcare professionals comparable positions with CVS Health as part of the transition, while Target said it would evaluate the business impact and related support needs at its headquarters locations.