CVS Closing 25 Minuteclinic locations in LA market, leaving only 11

[storewanderer]

One of the biggest concerns I have about the Krogbertsons merger is that Kroger dropped Express Scripts, and I use Safeway because CVS is too much of a train wreck, and Walmart is a hot mess in Carson City, leaving Costco.

Raleys too..? Pharmacy is a major concern for this merger for me. With the hundreds of Rite Aid closures in areas with overlap that have occurred in the past year, this concern is even more relevant now. I know some tried to discount this concern, I guess if one just wants CVS to become that much more dominant/powerful than it isn't an issue...

[ClownLoach]

I'm starting to wonder about CVS though. There sure are a lot of cracks showing right now. They seem to be starting to experience the same problems as Walgreens and Rite Aid. It's catching up to them. Reading that the moribund Albertsons pharmacy operation is up 30% is very telling. And I just saw yet another major corporation, Tyson, dropped Caremark.

Their competition isn't even having to work to get new prescription transfers. You used to see Albertsons and Kroger handing out coupon books or other freebies. They don't need to now - I really think people are leaving the "terrible 3" in droves, and I would not be surprised if they're the most profitable customers.

I really question if the monolithic CVS, Caremark, and Aetna will still be a single company 5 years from now. And as mentioned elsewhere I wonder how long before the corporate divorce between CVS and Target happens.

While private employers like Tyson may get a better deal or frustrated and leave Caremark, I think at this point, CVS/Caremark/Aetna is so tied up and heavy in various US Government plans/programs that they are very safe. The government's ability to provide these services to many people as employees, retirees, or as social program beneficiaries is heavily reliant on CVS... I just think the CVS web is too tangled up to fail.

But there's the problem: the government plans are not going to be as profitable as private plans. They reimburse very little, which is why chains like CVS have absurd cash prices for these drugs as if anyone is going to pay them to offset the losses.

So as more businesses remove their profitable business from the CVS Caremark network, the more harm is done to CVS.

They have already had to state this to their investors - they said that poor reimbursements are impacting their profits and they expect this to continue at least the next couple of years. This is why they're accelerating these cut backs, closures etc.

Couple the forced loss of customers (from employers switching to different carriers) with the voluntary loss of customers (customers who can choose to leave doing so) and what do you have left to turn a profit on?

I actually think their attempt to capture all this government business is what will destroy them. They've hitched themselves to the wrong wagon. I expect to see a lot of big corporations move away from Caremark to cut their costs the next few years. In the past employers were hesitant to change health insurance and prescription providers to ensure that their employees could maintain their relationships with their doctors and pharmacists, but those days seem to be changing. I doubt that anyone is going to complain about moving their prescriptions out of the CVS quagmire.

CVS is not "too big to fail." And right now it appears that CVS is very worried about failing.

[veteran+]

This may be related or not:

United Health Care just dropped (January 1st) CVS for all OTC products benefits (vitamins, supplements, medical stuff, etc.).

[ClownLoach]

This may be related or not:

United Health Care just dropped (January 1st) CVS for all OTC products benefits (vitamins, supplements, medical stuff, etc.).

That's a problem for their expensive and inventory heavy "HealthHUB" model... They were expanding that format in the hopes of putting smaller local medical supply services out of business. I never had thought of such places until I suddenly needed to rent a wheelchair immediately after my mother was injured and I learned how wonderful these businesses are. United Healthcare is growing, I saw billboards all around Las Vegas a couple weeks ago that they had taken over some other health insurance plans. Losing them as a customer is another big loss for CVS.

We can say "well, that's 50,000 clients here and 100,000 there, really just a drop in the bucket for a company the size of CVS," but the hits keep coming. There clearly is a movement starting in major corporations to drop CVS, and most corporations do full overhauls to their plans every three to four years (more minor adjustments happen annually). So there is good evidence that such a movement is underway and there could be hundreds or thousands of additional major corporations that are going to drop Caremark and/or Aetna (or both) in the next 3 to 4 years. Hearing that the BCBS change to drop Caremark has made their plans more popular with corporations as they are offering cost reductions when everyone else is raising their prices... By getting out from under the expense of Caremark and using cheaper pharmacy benefits they're going to pick up a lot of business at the expense of CVS. And these days I think one could argue a website or app is friendlier and provides better service than the aggravated, overworked and unmotivated CVS staff.

[storewanderer]

HealthHub Stores are not typically inventory heavy. The stores that are in that format near me cut about 40% of the product mix out during the remodel and added very few new products in. One is a very large store and it has more open space than ever as a HealthHub despite having Minute Clinic added in and pharmacy expanded.

I've seen some HealthHub stores elsewhere with home Medical equipment but that is only some locations and also some non HealthHub locations feature that department as well.

[ClownLoach]

HealthHub Stores are not typically inventory heavy. The stores that are in that format near me cut about 40% of the product mix out during the remodel and added very few new products in. One is a very large store and it has more open space than ever as a HealthHub despite having Minute Clinic added in and pharmacy expanded.

I've seen some HealthHub stores elsewhere with home Medical equipment but that is only some locations and also some non HealthHub locations feature that department as well.

I should have been more specific: there are small and large hub stores, where really only the large stores should have that hub name. Many of the small hub store basically cut back general merchandise to add a larger than normal Minuteclinic. Obviously that just blew up in their face. The large hub stores, which include several former SavOn boxes, get the expanded home health and specialty care products. The larger stores appear to have added back into the assortment where they used to have an excess of empty space, that weird meandering split racetrack up the middle that leads diagonally to pharmacy, etc. and after the HealthHUB remodel they extended the aisles.

Obviously both programs are dead at this point; I cannot recall the last time a HealthHUB went up, probably was before COVID. Since HUB is rooted in the nearly dead Minuteclinic, no reason to expand the concept.

I wonder if we will see a strategic partnership to take over these Minuteclinic facilities?

Obviously Target never did execute on the contractual change to convert all in-store clinics to CVS Minuteclinic, they have only a handful of clinics that I've seen and they're all run by Kaiser Permanente but are open to all patients. Maybe Kaiser will take over these CVS locations? I wonder if their intent is to introduce their brand to potential customers who might elect to switch to a Kaiser HMO versus their traditional insurance?

[bryceleinan]

I wish I could turn back time and have had Longs Drugs take over some of the Rite Aid locations on the West Coast, instead of merging with CVS. While I've had awesome care the three times I've used a MinuteClinic (twice for COVID testing), their pharmacies leave a lot to be desired. Unfortunately, for one of my family members on TRICARE, CVS is her only option, since no other pharmacies in town take her insurance and stock one of her meds.

The HealthHUB stores aren't worth much to me. The one time I tried ordering CPAP supplies, it was an absolute nightmare, and I wound up ordering them from another online chain instead.

[storewanderer]

I wish I could turn back time and have had Longs Drugs take over some of the Rite Aid locations on the West Coast, instead of merging with CVS. While I've had awesome care the three times I've used a MinuteClinic (twice for COVID testing), their pharmacies leave a lot to be desired. Unfortunately, for one of my family members on TRICARE, CVS is her only option, since no other pharmacies in town take her insurance and stock one of her meds.

The HealthHUB stores aren't worth much to me. The one time I tried ordering CPAP supplies, it was an absolute nightmare, and I wound up ordering them from another online chain instead.

The scenarios of both Sav-On and Longs staying as their own chains would have been much better scenarios than CVS showing up.

[storewanderer]

HealthHub Stores are not typically inventory heavy. The stores that are in that format near me cut about 40% of the product mix out during the remodel and added very few new products in. One is a very large store and it has more open space than ever as a HealthHub despite having Minute Clinic added in and pharmacy expanded.

I've seen some HealthHub stores elsewhere with home Medical equipment but that is only some locations and also some non HealthHub locations feature that department as well.

I should have been more specific: there are small and large hub stores, where really only the large stores should have that hub name. Many of the small hub store basically cut back general merchandise to add a larger than normal Minuteclinic. Obviously that just blew up in their face. The large hub stores, which include several former SavOn boxes, get the expanded home health and specialty care products. The larger stores appear to have added back into the assortment where they used to have an excess of empty space, that weird meandering split racetrack up the middle that leads diagonally to pharmacy, etc. and after the HealthHUB remodel they extended the aisles.

Obviously both programs are dead at this point; I cannot recall the last time a HealthHUB went up, probably was before COVID. Since HUB is rooted in the nearly dead Minuteclinic, no reason to expand the concept.

I wonder if we will see a strategic partnership to take over these Minuteclinic facilities?

Obviously Target never did execute on the contractual change to convert all in-store clinics to CVS Minuteclinic, they have only a handful of clinics that I've seen and they're all run by Kaiser Permanente but are open to all patients. Maybe Kaiser will take over these CVS locations? I wonder if their intent is to introduce their brand to potential customers who might elect to switch to a Kaiser HMO versus their traditional insurance?

They were still opening Hubs during COVID. I'm not sure any have opened in 2023.

I am pretty sure the home medical equipment program CVS uses actually came from Albertsons; their concept was called Health & Home as I recall, at least under ASC that is what it was called. Not sure what happened to it under Albertsons but I assume it continued to CVS.

The large Hub in Sparks has actually scaled back shelving even more since converting to a Hub. I think they have theft problems. The store is 24 hours but the pharmacy is not. Some of that may have been to quit "spreading items out" so they could squeeze it into locked cases.

[ClownLoach]

CNBC Reporting today: Same-store sales for CVS grew 11.3% during the three-month period compared with the same time a year earlier, but not equally across the store. Same-store sales jumped 15.5% in the pharmacy division, but were down by 3.1% in the front of the store.

We all know these sales increases in pharmacy of 15% are driven by inflation, and despite all the price increases they still ran negative front of store.

The comparison from a few days ago had the Albertsons Cos pharmacy division up 30% or outperforming CVS 2 to 1.

I'll look around and see what other examples I can find as I'm curious about how the competition is performing against CVS... I'm guessing that all prescriptions are up universally because people are getting back into the routine of seeing their doctors after the pandemic, but some are going to be doing better than others and I think CVS is not doing as well as the competition.