CVS buys Target pharmacies!

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BMBiology

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Too bad for those who quit CVS to work for Target. Welcome back. Who is next? Ralphs? Vons?

We all know these pharmacies are not profitable. They are loss leader. Target is now getting out of the pharmacy business.

http://finance.yahoo.com/news/cvs-health-target-sign-agreement-110000092.html?.tsrc=applewf
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Welcome aboard........
 
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These pharmacies can't possibly make a profit. They're always so slow compared to a regular CVS. I don't see how CVS will turn a profit from this. They probably convinced target that they'll have an increase in customer traffic because people with Caremark insurance can use these pharmacies (and slightly lessen the load at a regular CVS--which means more tech hour cuts for you guys!).

Goodbye to closing for lunch and lunch breaks in general. Goodbye to any tech help you had. This was some sad news.
 
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Too bad for those Target RPhs with nice jobs. They can no longer play on their iPhones all day and leave the pharmacy to go shopping in the middle of their shift.
 
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It is a sad day for the pharmacy world, and especially those that work for Target
 
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Wheresmyaricept said:
These pharmacies can't possibly make a profit....
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I was thinking the same thing. Hard to imagine CVS making such a big misstep which makes me thing they have a plan. Hard to imagine what that plan is though.

I also feel bad for those poor Target pharmacists. I assume they won't have to ring out Target store items but also will get no help whatsoever from Target store staff. And I hope they enjoyed the gravy train of getting to close the pharmacy for lunch while they could...
 
I'm guessing Target pharmacists will have to apply for the jobs they already have. This honestly might be really good for the new graduates that haven't landed a position yet. Push out the Target pharmacists making $150k a year (a true/false myth in my area) and replace with a new pharmacist at a lower salary.
 
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So CVS is buying Omnicare, now Target, have been hearing rumors about Rite Aid for a while. We're going to have single payee healthcare before single payer.
 
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Ackj said:
So CVS is buying Omnicare, now Target, have been hearing rumors about Rite Aid for a while. We're going to have single payee healthcare before single payer.
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Why acquire Target pharmacy if Rite Aid was also in their plans? Would have made more sense to get the grand prize first.

Also: still question if the FTC would allow CVS to acquire Rite Aid on anti-competitive / ultimately bad for consumer concerns.
 
My old district hired 5 former target RPH. They all quit within 1-2 months of hire.

Target RPH better pray hard....
 
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This is not the beginning of the end. It is the beginning of the beginning.

Merlo is not done yet. CVS stock is almost at an all time high. Credit is still cheap. He is going to pull the trigger again and buy another company before the fed increases interest rate.

Knowing how CVS operate, expect people working at Target pharmacy headquarter to be laid off. Is it even worth it to keep Target pharmacists? They would have to learn a new computer system and the CVS ways of doing things.

What will Walgreens do? Will they follow CVS and make some deals?

Will express scripts get into the retail business?

Is anyone going to buy a drug manufacturer?
 
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CVS is obviously not interested in keeping target pharmacists around if they have to re-apply for their jobs. That should be interesting. They clearly don't have enough floaters/new grads to put in target stores though.

Just implementing RxConnect and reducing dependence on outside vendor for everything should make those former target pharmacies profitable.
 
This is another reason why I hate this low interest environment. Companies are borrowing money for cheap. They are buying back their stocks, instead of using the money to expand.

Mergers. Buyouts. Stock buy back. American workers and consumers are the ultimate loser. They are going to get laid off.
 
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This will take a long time to roll out, but I imagine they will try and cut every corner possible at target to make a profit, and a lot of that will be cutting the higher up pharmacy managers and replacing them with current CVS managers or vice versa. If i was a staff rph I wouldnt be worried but the DMs and above should expect to be brushing up on their interview skills and vision for their district.
 
Makes me think of this, but without the fairy tale ending.
 

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The fleecing of American workers....
 
confettiflyer said:
$1.9B seems CHEAP.
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Yeah, doesn't seem expensive for 1700 pharmacies plus clinics plus free advertisement right?

My guess is that Target is losing money on their pharmacies and wants out of the business. With their old computer, competition from Walmart and their $4 generics and increasing price of generic drugs, I am not surprised Target is getting out of the business. The pharmacy will still draw people into Target and that is why they opened a pharmacy in the first place.

The big question is who else will be looking for a way out? Is Kroger (ralphs) next? If Target is losing money, then I know Kroger is losing money big time. The clinical service makes nothing for them.
 
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I must admit Merlo is a shrewd businessman. He is slowly moving from the retail business into the healthcare business. Having a CVS pharmacy in Target is going to hurt CVS retail business.

Why go to CVS when you can go to Target which has a better retail selection than CVS and still get your prescription filled? However, Merlo gets to open more minute clinics and advertise his healthcare business. He is bringing healthcare to the consumers. No more long wait. No more appointments.

I would not be surprise at all if these clinics become cosmetic clinics. Want a Botox injection then go shoe shopping? Sure!
 
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BMBiology said:
Too bad for those who quit CVS to work for Target. Welcome back. Who is next? Ralphs? Vons?

We all know these pharmacies are not profitable. They are loss leader. Target is now getting out of the pharmacy business.

http://finance.yahoo.com/news/cvs-health-target-sign-agreement-110000092.html?.tsrc=applewf
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Considering Ralph's is Kroger's, I really doubt that'll ever happen. Kroger is too big of a pharmacy player. They just have 20 different names (i.e QFC, Dillon's, Ralph's, Fred Meyers, Harris Teeter? (can't remember the place in NC and too tired to look it up), along with 15 others at least that I don't want to look up.

That and them being top 5 biggest companies in U.S employee wise.
 
dbarth101 said:
Considering Ralph's is Kroger's, I really doubt that'll ever happen. Kroger is too big of a pharmacy player. They just have 20 different names (i.e QFC, Dillon's, Ralph's, Fred Meyers, Harris Teeter? (can't remember the place in NC and too tired to look it up), along with 15 others at least that I don't want to look up.

That and them being top 5 biggest companies in U.S employee wise.
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How many pharmacies does Kroger have?

Look at it this way. If Kroger is losing money on their pharmacies, then why not bring in another company that is not in the food business to run their pharmacies? The foot traffic will be even greater for them and equally important, it will also free up their money and they can invest it in businesses that actually make them money.
 
I think in range of 4200-5200. Don't quote me on that, but pretty substantial I'd say.
 
BMBiology said:
How many pharmacies does Kroger have?

Look at it this way. If Kroger is losing money on their pharmacies, then why not bring in another company that is not in the food business to run their pharmacies? The foot traffic will be even greater for them and equally important, it will also free up their money and they can invest it in businesses that actually make them money.
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See above. Sorry.
 
dbarth101 said:
I think in range of 4200-5200. Don't quote me on that, but pretty substantial I'd say.
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Target pharmacies Muzak system will be playing "Hotel California" on repeat all day long.
 
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Here is it: "As of February 2013, Kroger operates, either directly or through its subsidiaries, 2,625 stores."

https://en.wikipedia.org/wiki/Kroger

Assuming half of their stores have a pharmacy, then that is a size of Target pharmacies.
 
BMBiology said:
Here is it: "As of February 2013, Kroger operates, either directly or through its subsidiaries, 2,625 stores."

https://en.wikipedia.org/wiki/Kroger

Assuming half of their stores have a pharmacy, then that is a size of Target pharmacies.
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https://www.kroger.com/topic/pharmacy here it is. Over 2000. And much more traffic. When I worked as intern at Kroger, I know some stores did like 9000-10000 scripts a week. Not saying most in the world, but that's still a lot I think. It was odd though, the highest traffic store was in Alaska haha.
 
dbarth101 said:
https://www.kroger.com/topic/pharmacy here it is. Over 2000. And much more traffic. When I worked as intern at Kroger, I know some stores did like 9000-10000 scripts a week. Not saying most in the world, but that's still a lot I think. It was odd though, the highest traffic store was in Alaska haha.
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Target has 1700 pharmacies so Kroger is not that much bigger.

Kroger has a new computer system right?
 
dbarth101 said:
Not much bigger in gross number of pharmacies... This is from 2013, but still gives you the idea http://www.drugchannels.net/2013/04/the-top-50-retail-pharmacies-according.html 7.8 billion vs. 3.3 billion.

Probably has gone up for Kroger with their additional acquisitions since 2012.
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The big question is Kroger making money from their pharmacies or are they using their pharmacies as loss leaders? If it is the latter, then I wouldn't be surprise if they sell their pharmacies.
 
BMBiology said:
The big question is Kroger making money from their pharmacies or are they using their pharmacies as loss leaders? If it is the latter, then I wouldn't be surprise if they sell their pharmacies.
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I know all the Krogers in my area make quite a bit of money and operate in the black, they are looking to expand, not sell atm.
 
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Corpseman said:
I know all the Krogers in my area make quite a bit of money and operate in the black, they are looking to expand, not sell atm.
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Don't you work for Krogers? When does an intern know if "all the Krogers in my area make quite a bit of money"? Have you seen their balance sheet? Cost analysis? Drug acquisition cost?

The fact that Target is selling their 1700 pharmacies for just $1.9 billion tells you Target is not doing well. It would be hard for me to believe Krogers is doing that much better considering the size and foot traffics of Target vs. Krogers.
 
BMBiology said:
Don't you work for Krogers? When does an intern know if "all the Krogers in my area make quite a bit of money"? Have you seen their balance sheet? Cost analysis? Drug acquisition cost?

The fact that Target is selling their 1700 pharmacies for just $1.9 billion tells you Target is not doing well. It would be hard for me to believe Krogers is doing that much better considering the size and foot traffics of Target vs. Krogers.
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I actually sat down with my DM not too long ago to see how the pharmacies were doing in my area, whether or not they were hiring or if I should look elsewhere, and that topic came up. So, no I do not have access to any hard data that supports my claim, I will just have to rely on the people that are privy to that info.

Which I guess includes you somehow.
 
Yep, the price is low because they are planning to close down good number of these locations. You can see from recent Walgreens press release approximate cost of that type of transaction.
 
Don't think Krogers is safe. If anything, Krogers will go before Walmart:

http://www.wsj.com/articles/BL-270B-2084

“I think it opens up the possibility of a Walgreen and Wal-Mart partnership,” he says. “Wal-Mart is four to five times large in prescription drug revenue compared to Target. But Wal-Mart can’t outsource the business to anyone but Walgreen because no one else can take on that much business.”
 
haha felt sorry for Target pharmacists. Prepare to work by yourself every day with 0 tech and 0 cashier. A lot of these not profitable stores will probably be closed... prepare to look for another job now if you know your store is not doing well. Target pharmacists flood the market in 1, 2, 3...
 
This transaction makes sense for Target but I am not sure for CVS. I recall a market report stating 2/3rds of Walgreens profit was not pharmacy (due to higher margins). So these chains basically use the foot traffic to the pharmacy to sell higher margin products to subsidize the pharmacy. Now CVS will have the Target pharmacies but zero sales from non-pharmacy products. Yes, they certainly will squeeze the pharmacy operations but is that enough to make the pharmacy profitable?
 
I didn't want to be right about Obamacare but it looks like I am. I have been telling everyone that Obamacare will not create healthcare jobs. It will cut jobs because the purpose of Obamacare is to reduce cost. Healthcare is wasteful and because of that reason, jobs are created. By limiting waste, you are also eliminating jobs. This may be a good thing for the country unless your livelihood depends on the waste:

Here are five reasons why the deal might make sense:

1. Complexity. The health care business is exceedingly complex, requiring a knowledgeable workforce to navigate a regulatory thicket that's evolving rapidly in the wake of the Affordable Care Act.
 
Monsterdaddy said:
This transaction makes sense for Target but I am not sure for CVS. I recall a market report stating 2/3rds of Walgreens profit was not pharmacy (due to higher margins). So these chains basically use the foot traffic to the pharmacy to sell higher margin products to subsidize the pharmacy. Now CVS will have the Target pharmacies but zero sales from non-pharmacy products. Yes, they certainly will squeeze the pharmacy operations but is that enough to make the pharmacy profitable?
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The key is the Minute Clinics and Target Clienteles. Young, married women with a baby. As they entered their 30s, their beauty will start to fade. These clinics will be providing cosmetic treatments like Botox, skin treatment, etc. for a reasonable price. No appointment needed.
 
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