CVS Health continues to grow through diversification and acquisitions. (A Brief History)
CVS health (NYSE: CVS), one of the most outstanding success stories in US healthcare, has seen rapid growth since its foundation. In these 50 years since its foundation, CVS health has achieved enormous presence and reach in US with its 7800 retail stores. Founded in 1964 by Stanley and Sidney Goldstein and Ralph Hoagland, the store was bought by Melville Corporation 5 years later. The company grew by acquiring other drug store chains and is there in nearly every state. In these 5 decades, CVS has grown at a very fast pace. It has opened its health stores in almost every state.
Particularly, its retail stores have proved to be the drivers of its growth. Today, CVS has become the nation’s biggest operator of health clinics and the largest dispenser of prescription drugs. It is also the second largest pharmacy benefits manager and drug store chain. CVS employs 199,000 employees. Its CEO is Larry J Merlo. Its 2015 revenue was $153,290 million and profits $5,237 million. By revenue, it is among the top ten brands in the Fortune 500 list at the seventh position.
Growth through acquisition and diversification:
Headquartered at Woonsocket, Rhode Island, USA, the company has continued to build and grow its business through diversification. CVS is outstanding in terms of its breadth of products and services. Its minute clinics diagnose and treat patients while its pharmacies dispense medicines for more than 23 million prescriptions every day. Mail order services as well as in-store services are also a part of the services offered by CVS. Its shift towards healthcare had begun only in 2004 with the acquisition of the Eckerd Stores and Eckerd Health Services. This acquisition gave CVS a foothold in the administration of drug benefits to employees of larger corporations and government agencies. With this acquisition, CVS became an important name in healthcare.
In 2006, CVS acquired Minute Clinic. Minute clinic was a pioneering in-store health-clinic chain that offered treatment for the common illnesses and the basic screenings and vaccinations. This acquisition helped expand the brand further. Simultaneously, it focused on expanding its specialty pharmacy business. The specialty pharmacy business of CVS focuses upon expensive drugs for the treatment of complex or rare diseases including cancer and HIV. The year 2007 proved a turning point in the health brand’s history when its merger with Caremark was realized. With the $21 billion merger, one of nation’s leading pharmacy benefits manager was born. Some years ago, CVS also made a deal with Cardinal Health to form nation’s largest generic drug sourcing operation.
These developments were followed by the acquisition of Coram in the year 2014. Coram, the enteral nutrition business unit of Apria Healthcare provides specialty infusion services. Among the nation’s largest providers of comprehensive infusion services, Coram cares for around 165,000 patients annually. The acquisition of Coram allowed CVS to expand its competitive offerings in specialty services and added to its extraordinary capabilities. This acquisition was also consistent with CVS’ strategy of investing in core businesses driving business growth. These deals and acquisitions, it seems are not going to stop. The freshest one in line is the CVS-Target deal. CVS has completed its acquisition of Target’s pharmacy and healthcare businesses. Under this acquisition, it will operate 1672 of Target’s pharmacies spread across 47 states. These pharmacies and clinic businesses will be rebranded as CVS pharmacy and the 79 Target Clinic locations as minute clinics. This is another major deal for CVS aimed at creating a win-win situation for both the CVS and Target customers.
Organizational culture at CVS
The purpose of CVS Health is to help people on their path to better health. It strategy is to reinvent pharmacy. At the basis of its innovative delivery system is customer convenience. Over time, CVS health has established itself as a convenient health care services provider for its customers. Innovation, collaboration, caring, integrity and accountability are its five core values upon which its business is based. CVS also established a culture of customer service within the organization. It treats its customers with compassion, care and respect. Valuing its customers is not just a strategy but a part of the CVS culture. Their interests and convenience are a priority for every CVS employee. The brand also operates around 1000 walk-in clinics.
As an employer, CVS encourages diversity at the workplace. The purpose is to hire diverse talents to cater to the needs of a diverse customer base. The brand’s commitment to inclusion and equality of opportunity is well known. It strives to provide employee growth as well as a sound working environment. Across the 49 states, more than 243,000 employees work for CVS. CVS-Caremark is also the largest employer of pharmacists and nurse practitioners. It is on the 7th rank on the Fortune 500 list.
This year CVS is rolling out order pickup in collaboration with Curbside which will expand its ambit of customer services. In order to boost its image as a health brand, the company dropped tobacco from its products list. The cigarette packs that once used to line up its racks will not be visible any more inside stores. However, the new anti- tobacco stance has helped it make its image as a health brand stronger and forge new alliances with the local health systems. In this way, CVS continues to grow on its path to become the nation’s favorite health brand. It is focused on forming new partnerships to improve its quality of services and brand image. In terms of capabilities, CVS is matchless and it also keeps trying new approaches to lower the costs for its customers.
Sources: https://www.seattletimes.com/business/how-cvs-became-nations-biggest-health-care-company/ https://cvshealth.com/newsroom/press-releases/cvs-caremark-completes-acquisition-coram-infusion-business-apria-healthcare https://cvshealth.com/about/purpose-statement