CVS Closing Stores

[storewanderer]

You're always making these generalizations.......I've had Caremark for along time and I'm responsible for a family member who had Caremark until very recently. There's never been "pressure" on me to use mail order from Caremark or on my family member and these were two different insurance plans. My family member has multiple recurring meds, which would seem to be a target for this "pressure".

CVS has made no secret of their plans to close a large number of stores over 2022-24, although it's not exactly a huge fraction of their store count overall and the media coverage usually neglects that or neglects the multi-year planning. If anything I'm surprised they haven't closed more stores where they have market saturation. None of the ones near me have trouble generating front end volume--maybe that happens where you are but I haven't seen it here or anyplace I've travelled. If CVS has problems with Medicaid, they seem to involve inflating reimbursement charges to Medicaid managed care programs. This is just one of a large number of articles i've come across regarding this: https://ohiocapitaljournal.com/2023/05/ ... -loophole/

This depends on the Caremark plan. You need to understand the complex convoluted system these insurers have built where there are hundreds of different Caremark plans and they function differently. Just because you have dealt with a couple that do not force mail order does not mean there are numerous other Caremark plans that do force mail order. Just like not all of the plans force people to go to CVS or pay significantly more, but some/many do.

It is well documented CVS front end is a struggling unit and is a tiny portion of the company's overall revenue and likely not profitable. This is why they keep cutting down mix, cutting down staffing, cutting ads/promotions (now only have an ad every two weeks, no more new ad every week), and scaling back private label. Their attempts to focus more on wellness (more vitamins, higher cost, and some fitness stuff like weights etc.) and increased beauty focus seem to have fallen completely on their face and at this point the CVS front end is just treading water with what it has. They claim they are cutting liquor in "Health Hub" Stores but so far in my area not one of those stores has cut liquor and if they did they'd probably walk 30-40% of their front end sales in those stores.

The only places I see CVS front ends do well are large cities and certain suburb type locations where there isn't much competition. In the more sprawling suburbs with more large grocery stores/Wal Mart/Target units around, their front ends do almost no volume. Even in California their front ends are dead compared to what Longs and Sav-On were doing. Maybe they are busy by your definition, but Longs and Sav-On used to pull in small supermarket style crowds with 2-3 cashiers working all day with lines up front. At CVS you're lucky to have one cashier working up front. The typical Longs or Sav-On had 40-50 employees; the typical CVS has under 20 employees and some have closer to 10 employees. They just do so little front end business. But I do think there is more going on in the pharmacy at CVS than there was with Longs and Sav-On. Since they use strong arm tactics to basically force so many people to fill at CVS with Caremark.

[buckguy]

You're always making these generalizations.......I've had Caremark for along time and I'm responsible for a family member who had Caremark until very recently. There's never been "pressure" on me to use mail order from Caremark or on my family member and these were two different insurance plans. My family member has multiple recurring meds, which would seem to be a target for this "pressure".

CVS has made no secret of their plans to close a large number of stores over 2022-24, although it's not exactly a huge fraction of their store count overall and the media coverage usually neglects that or neglects the multi-year planning. If anything I'm surprised they haven't closed more stores where they have market saturation. None of the ones near me have trouble generating front end volume--maybe that happens where you are but I haven't seen it here or anyplace I've travelled. If CVS has problems with Medicaid, they seem to involve inflating reimbursement charges to Medicaid managed care programs. This is just one of a large number of articles i've come across regarding this: https://ohiocapitaljournal.com/2023/05/ ... -loophole/

This depends on the Caremark plan. You need to understand the complex convoluted system these insurers have built where there are hundreds of different Caremark plans and they function differently. Just because you have dealt with a couple that do not force mail order does not mean there are numerous other Caremark plans that do force mail order. Just like not all of the plans force people to go to CVS or pay significantly more, but some/many do.

It is well documented CVS front end is a struggling unit and is a tiny portion of the company's overall revenue and likely not profitable. This is why they keep cutting down mix, cutting down staffing, cutting ads/promotions (now only have an ad every two weeks, no more new ad every week), and scaling back private label. Their attempts to focus more on wellness (more vitamins, higher cost, and some fitness stuff like weights etc.) and increased beauty focus seem to have fallen completely on their face and at this point the CVS front end is just treading water with what it has. They claim they are cutting liquor in "Health Hub" Stores but so far in my area not one of those stores has cut liquor and if they did they'd probably walk 30-40% of their front end sales in those stores.

The only places I see CVS front ends do well are large cities and certain suburb type locations where there isn't much competition. In the more sprawling suburbs with more large grocery stores/Wal Mart/Target units around, their front ends do almost no volume. Even in California their front ends are dead compared to what Longs and Sav-On were doing. Maybe they are busy by your definition, but Longs and Sav-On used to pull in small supermarket style crowds with 2-3 cashiers working all day with lines up front. At CVS you're lucky to have one cashier working up front. The typical Longs or Sav-On had 40-50 employees; the typical CVS has under 20 employees and some have closer to 10 employees. They just do so little front end business. But I do think there is more going on in the pharmacy at CVS than there was with Longs and Sav-On. Since they use strong arm tactics to basically force so many people to fill at CVS with Caremark.

I m aware that there are many different Caremark plans. I happen to have literally the most common plan in the DC area, so I'm not cherry picking and the plan didn't change when I changed employers. My family member's plan is also very common among Medicare Part D plans. The original comment talked about "pressuring" which is different from having to sift through all the variables involved in choosing a plan including the formulary, co-pays, etc. There also have been efforts to make it more difficult to require mail order that went into the last set of ACA rule changes before COVID.

Well documented, you say. Well, a quick Google search of CVS financials suggests otherwise. You make stuff up all the time and it's usually easy to catch it. The worst you can say is that their comps this year for the front end are basically tracking inflation, but they did better than that the year before and they weren't in trouble during COVID. I'm sure I could find more complete summaries but even I have better things to do than this.

https://www.homepagenews.com/retail-art ... omps-gain/
https://www.homepagenews.com/retail-art ... tum-gains/
https://storebrands.com/cvs-health-sees ... ore-growth

I've mentioned before that I have a half dozen CVS stores within a mile of me, each with a somewhat different clientele and different competition--Walgreen is a block from one, Giant is close to another, Safeway is near yet another and also compete with each other. They all have busy front ends. Many more examples come to mind--one next to a Giant in the Van Ness neighborhood, another across from a Harris Teeter (which never has pharmacy customers) in the NoMa neighborhood, one in Rockville next to a Safeway, one in what's now called North Bethesda that's near Rodman's (deep discounter) and not far from a very high volume Giant. When I was in Ohio recently, I went to one that was almost across the street from a CVS in Giant that always has front end customers---the Rite Aid down the street is closing and has given them competition of sorts for years. The CVS where I get my family member's prescriptions is a few blocks from a busy Walgreen's. None of the stores I've mentioned sell alcohol, although they probably could. Drug stores in Ohio used to often stock a small amount of lower priced beer and really cheap wine. Rodman's, which is a quirky, small local chain in the DC area just applied for a full liquor license for their northwest DC store--it already sells wine and beer..................... I think you get the point, CVS isn't doing badly, overall.

BTW, When I went to southern California regularly, I was always getting dragged to the now shrunken, but often discussed Arcadia Sav-On. Maybe that had 40-50 employees, although I doubt it, esp. in the later American Stores years.

[storewanderer]

I m aware that there are many different Caremark plans. I happen to have literally the most common plan in the DC area, so I'm not cherry picking and the plan didn't change when I changed employers. My family member's plan is also very common among Medicare Part D plans. The original comment talked about "pressuring" which is different from having to sift through all the variables involved in choosing a plan including the formulary, co-pays, etc. There also have been efforts to make it more difficult to require mail order that went into the last set of ACA rule changes before COVID.

Well documented, you say. Well, a quick Google search of CVS financials suggests otherwise. You make stuff up all the time and it's usually easy to catch it. The worst you can say is that their comps this year for the front end are basically tracking inflation, but they did better than that the year before and they weren't in trouble during COVID. I'm sure I could find more complete summaries but even I have better things to do than this.

https://www.homepagenews.com/retail-art ... omps-gain/
https://www.homepagenews.com/retail-art ... tum-gains/
https://storebrands.com/cvs-health-sees ... ore-growth

I've mentioned before that I have a half dozen CVS stores within a mile of me, each with a somewhat different clientele and different competition--Walgreen is a block from one, Giant is close to another, Safeway is near yet another and also compete with each other. They all have busy front ends. Many more examples come to mind--one next to a Giant in the Van Ness neighborhood, another across from a Harris Teeter (which never has pharmacy customers) in the NoMa neighborhood, one in Rockville next to a Safeway, one in what's now called North Bethesda that's near Rodman's (deep discounter) and not far from a very high volume Giant. When I was in Ohio recently, I went to one that was almost across the street from a CVS in Giant that always has front end customers---the Rite Aid down the street is closing and has given them competition of sorts for years. The CVS where I get my family member's prescriptions is a few blocks from a busy Walgreen's. None of the stores I've mentioned sell alcohol, although they probably could. Drug stores in Ohio used to often stock a small amount of lower priced beer and really cheap wine. Rodman's, which is a quirky, small local chain in the DC area just applied for a full liquor license for their northwest DC store--it already sells wine and beer..................... I think you get the point, CVS isn't doing badly, overall.

BTW, When I went to southern California regularly, I was always getting dragged to the now shrunken, but often discussed Arcadia Sav-On. Maybe that had 40-50 employees, although I doubt it, esp. in the later American Stores years.

It appears you are the one picking and choosing information. You are citing information from 2020, 2022, and February 2023.

For some reason you did not look at CVS current earning reports that got issued in May 2023, August 2023, or November 2023 to see their results continue to deteriorate in terms of pharmacy/front store performance.

In one of your reports in 2020, it shows CVS Pharmacy+Front Store had total profit quarterly of $2.5 billion. In that report they did a separate break out of pharmacy profit ($949 million) and front store/long term care profit (whatever that is) of $1.6 million.

There is a reason why they quit breaking out separate profit numbers for front store and pharmacy and if you look at the 2020 profits and then look at the 2023 profits I think you can figure it out... since in 2023 both segments combined make the profit that just one of the segments made back in 2020. And I am confident it isn't pharmacy profits that are falling for CVS.

I also notice in the 2023 reports they say almost nothing about front store. They talk about things like same store prescription sales and such but front store is almost not mentioned. As the old saying goes if you have nothing nice to say, just don't say anything at all. And that is what they are doing with front store. Burying its results in with the much more successful pharmacy segment so it is not highlighted how front store is so underperforming.

In later reports like 2023 they just give a combined figure for pharmacy+front store+long term care. So going ahead and starting with your January 2023 earnings release which is of Q4 2022 data:

Q4 2022 released 2/23: Pharmacy and Retail/Long Term Care "adjusted operating income" was $1.84 billion (a decrease from $2.46 billion in the prior year or Q4 2021).
Q1 2023 released 5/23: Pharmacy and Retail/Long Term Care "adjusted operating income" was $1.134 billion (a decrease from $1.573 billion in the prior year or Q1 2022).
Q2 2023 released 8/23: Pharmacy and Retail/Long Term Care "adjusted operating income" was $1.413 billion (a decrease from $1.710 billion in the prior year or Q2 2022).
Q3 2023 released 11/23: Pharmacy and Retail/Long Term Care "adjusted operating income" was $1.389 billion (a decrease from $1.410 billion in the prior year or Q1 2022).

So as you can see operating results are deteriorating in 2023 when compared to 2022. But yes, they are profitable. The way they are presenting the numbers it makes it look profitable anyway. While almost flat in Q3, so maybe things are getting better... time will tell.