Will CVS acquire other supermarket pharmacies?

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Will CVS acquire other supermarket pharmacies?

By Mike Troy - 03/12/2020

CVS Pharmacy's acquisition of 110 pharmacies from Schnucks could be the beginning of a trend for supermarket pharmacies challenged by the operational complexity of the pharmacy business and lacking the scale to compete effectively. 

Target recognized that reality in 2015 when it sold its pharmacy business to CVS, a much larger and more sophisticated company with deep expertise in the complexities of running a retail pharmacy operation. Now Schnucks has followed suit and there are other similarly situated regional supermarket pharmacy operators for whom a similar deal could make sense.

In Schnuck's case, CVS Pharmacy will be acquiring 110 pharmacies, rebranding and operating 99 of them as CVS Pharmacy within Schnucks stores. The remaining 11 pharmacies will see their prescription files transferred to nearby CVS Pharmacy locations. 

CVS Pharmacy and Schnucks positioned the deal as a strategic move to bring together the established Midwestern grocer and CVS Pharmacy’s pharmacy services and clinical expertise. CVS Health noted that the deal also offers the company a capital-efficient expansion into key markets. 

"We have great admiration for Schnucks and believe CVS Pharmacy can bring additional clinical services to its customers,” said Jon Roberts, executive vice president and COO of CVS Health. “One of CVS Health's strategic imperatives is to ‘Be Local.’ By opening CVS Pharmacy locations within Schnucks stores, we're increasing access to high quality care and meeting customers where they are. Schnucks is a best-in-class grocer and we're honored to partner with them to bring our best-in-class pharmacy capabilities to their customers.”

The companies also highlighted their alignment on not selling tobacco products. CVS Pharmacy stopped selling tobacco in 2014, while Schnucks stopped selling the category at the beginning of this year. 

"As Schnucks continues to expand our emphasis on health and wellness, this collaboration with CVS is an opportunity for us to align with a company that has a similar focus," said Todd Schnuck, chairman and CEO of Schnucks. "This partnership allows us to continue to provide quality pharmacy services to our customers in a manner they've come to expect, while supporting our mission to nourish people's lives. It also provides our pharmacy teammates an opportunity to further their careers with a premier retail pharmacy chain."

Once the deal is completed, Schnucks customers will have access to CVS Pharmacy’s various patient care programs, including health management opportunities, the CVS Pharmacy app and medication management via CVS Pharmacy ScriptPath Prescription Schedule. 

CVS Pharmacy said that it would post all pharmacist and pharmacy technician positions and interview all Schnucks employees who apply. Changes will roll out over the course of several months following the completion of the transaction, which is expected to close by the end of the second quarter. 

St. Louis-based Schnucks operates 112 stores in Missouri, Illinois, Indiana, Wisconsin, and Iowa, and employs 14,000 associates. The company is No. 31 on Progressive Grocer's 2019 Super 50 list of the top grocers in the United States.