CVS-Aetna deal may expand services
Analysts: Merger could turn CVS into a one-stop shop for health care.
CVS Health wants to do much more than fill your prescription or jab your arm with an annual flu shot.
The second-largest U.S. drugstore chain is buying Aetna, the third-largest health insurer, in order to push much deeper into customer care. The evolution won’t happen overnight, but in time, shoppers may find more clinics in CVS stores and more services they can receive through the network of nearly 10,000 locations that the company has built.
“They’ll be pretty much a soupto-nuts health company ... except for the hospital part of it,” said Craig Johnson, president of Customer Growth Partners, a retail consulting and research firm.
Patients also may find the CVSAetna combination much more involved in managing their care, especially for those with expensive chronic conditions such as diabetes. The bulked-up company also may gain more negotiating leverage over prescription drug prices, but it’s far too early to say how much or whether that benefit will trickle down to customers.
The $69 billion deal announced Sunday evening will push the drugstore chain more forcefully in a direction it has been heading for years, according to Wall Street analysts. The company, which stopped selling tobacco products in 2014 to further burnish its image as a care provider, already runs about 1,100 clinics and has been steadily expanding the health care it offers.
The clinics started off as a place to treat basic health care needs such as sinus infections or strep throat. Gradually, CVS added services including blood draws or monitoring of chronic conditions such as high blood pressure and diabetes. Expect that trend to continue as the drugstore switches more from selling products in its stores to services that can’t be bought online.
“I think over time you’re going to see less of that front-store retail and more health care services in their stores,” said Jeff Jonas, a portfolio manager for Gabelli Funds who follows drugstores.
The mammoth acquisition pairs a company that runs more than 9,700 drugstores with an insurer covering around 22 million people. CVS Health Corp. is also one of the nation’s biggest pharmacy benefit managers, processing more than a billion prescriptions a year for large employers and insurers including Aetna Inc.
Analysts say the combined company could add more clinics and expand in-store services to include eye care or maybe centers for hearing aids. That could gradually turn CVS into a one-stop shop for health care, a place where patients can get a hearing aid checked, then see a nurse practitioner and pick up prescriptions.