In moves further rebranding itself as a healthcare provider, CVS Caremark changed its name to CVS Health and pulled all tobacco products from its shelves in early September 2014, 1 month ahead of the scheduled ban. Though the act of literally yanking tobacco products from its shelves is earlier than expected, the decision to remove tobacco was announced last February as part of CVS’ vision and company strategy.
CVS Health projects revenue losses of $2 Billion per year (or 1.5+% of the Company’s total annual revenues) from the move. Nevertheless, the change is deemed lucrative by the Company. Jettisoning tobacco moves CVS Health further into the healthcare mainstream, a strategy greatly aided by the 2007 merger of CVS and Caremark, CVS/Caremark’s establishment of 800+ “MinuteClinic” locations in 28 states and the District of Columbia, CVS Health’s abandonment of tobacco products and its plans to establish more “MinuteClinic” locations. CVS Health is taking these steps to increasingly share in the multi-trillion-dollar healthcare industry.
“MinuteClinic,” which provides simple medical procedures such as some vaccinations and treatment of minor ailments, is not conceptually unique to CVS Health. Walgreens, Rite Aid, Wal-Mart and Kroger have all delved into the profitable phenomenon of basic care clinics. Furthermore, the profitability of these clinics is expected to markedly rise with the ACA’s additional 12+ million insured, higher deductibles and fewer PCPs (primary care physicians), all expected to drive consumers of basic healthcare toward readily available, faster, less expensive providers.
With a vision toward capturing much of this traffic, CVS Health is now unique among major pharmacies in its abandonment of tobacco product sales. In fact, despite encouragement from e-cigarette manufacturers to offer their products as healthier alternatives, CVS Health even refuses to sell those items: the Company officially stated that it has never sold e-cigarettes and has no intention of starting now.
Though healthcare officials are urging all major pharmacies to cease the sale of tobacco products, the other major U. S. pharmacies continue to sell tobacco products and have made no announcements that they plan to do otherwise.
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