CVS Caremark - Acquisitions and Growth

Acquisitions and Growth

• The first CVS store, selling health and beauty products, was founded in Lowell, Mass. by brothers Stanley and Sidney Goldstein and partner Ralph Hoagland in 1963.
• In 1964, CVS had 17 stores that sold primarily health and beauty products.
• In 1967, CVS began operation of its first stores with pharmacy departments, opening locations in Warwick and Cumberland, R.I.
• In 1969, CVS was sold to Melville Corporation.
• By 1970, CVS operated 100 stores in New England and the Northeast.
• In 1972, CVS nearly doubled in size with its acquisition of 84 Clinton Drug and Discount Stores. The purchase introduced CVS to the Midwest with stores in Indiana.
• In 1977, CVS acquired the 36-store New Jersey–based Mack Drug chain.
• In 1980, CVS became the 15th largest pharmacy chain in the U.S. with 408 stores and $414 million in sales.
• In 1988, CVS celebrated its 25th anniversary, finishing the year with nearly 750 stores and sales of about $1.6 billion.
• Since 1990, CVS has been rapidly growing in order to become a national drug store chain.
• In 1990, CVS acquired 500-store Peoples Drug, which established the company in new mid-Atlantic markets including Washington, D.C., Pennsylvania, Maryland and Virginia. Peoples Drug stores were converted into CVS stores in May 1994.
• In 1994, CVS launched PharmaCare, a pharmacy benefit management (PBM) company providing a wide range of services to employers, managed care organizations, insurance companies, unions and government agencies.
• At the beginning of 1996, CVS was a division of Melville Corporation. During that year, Melville Corporation divested their other retail companies such as Linens 'N Things, KB Toys, Foot Action, and Marshalls. Following the divestment, Melville changed their name to CVS Corporation and traded on the New York Stock Exchange with the symbol "CVS".
• During 1997, when it had about 1,400 stores, CVS doubled its size by purchasing the much larger Revco drug stores, which had over 2,500 stores. Revco brought CVS into the Ohio Valley and Southeastern U.S.; previously CVS' footprint had not been south of Virginia CVS could afford such a large purchase because of its recent Melville divesture.
• Also in 1997, CVS ProCare was established as a specialty pharmacy subsidiary of CVS.
• In 1998, CVS acquired 207 stores from Arbor Drugs, bringing its store total to 4,100 across 24 states. The transaction gave CVS its first stores in Michigan and the instant lead in the highly competitive Detroit market.
• In 1999, CVS acquired Soma.com, the first online pharmacy, and renamed it CVS.com to become the first fully integrated online and brick-and-mortar pharmacy offering to consumers.
• In 2000 CVS acquired Stadtlander pharmacy from Bergen Brunswig Corporation for an undisclosed cash price. This made CVS ProCare the largest specialty pharmacy in the U.S. at the time. The transaction also included a distribution agreement that called for Bergen Brunswig to provide ProCare with $2.5 billion of pharmaceuticals over the next five years.
• CVS has also been expanding its store base through new store openings. CVS entered the Chicago market in 2001, which at the time was dominated by Walgreens. In 2004, it has entered the California market, which was dominated by Longs Drugs, Rite Aid, and Walgreens. It opened stores in Las Vegas, Nevada, Houston, Texas, and Dallas, Texas, right before its purchase of Eckerd. CVS has also begun to open stores in Arizona.
• In 2004, CVS purchased 1,268 Eckerd drug stores and Eckerd Health Services, Eckerd’s PBM/Mail-order pharmacy business, from JCPenney. Most of the former Eckerd stores that CVS purchased (and converted into CVS stores) were in Florida and Texas. Since JCPenney credit cards were accepted at Eckerd drugs stores, they have been continued to be used at CVS.
• Also in 2004, CVS ProCare became part of PharmaCare. All ProCare stores were re-branded as PharmaCare stores.
• On January 23, 2006, CVS announced that it had agreed to acquire the freestanding drug store operations of supermarket chain Albertsons. The deal included the acquisition of 700 drug stores trading under the Osco Drug and Sav-On Drugs banners, mostly in the Midwest and Southwestern United States with primary concentration of stores in Southern California and Northern Illinois; and was formally completed on June 2, 2006. Transition of Sav-On and Osco stores to the CVS brand began shortly thereafter, and was completed by December 2006. CVS now dominates the Southern California market. Also included were Albertsons Health'n'Home (now CVS Home Health) durable medical equipment (DME) stores. Approximately 28 CVS Home Health locations are present in Arizona, California and the Kansas City area, representing CVS' first venture into the specialized DME market.

CVS had previously operated stores in southern California and completely withdrew from the market in 1993. CVS sold virtually all the locations to American Drug Stores, the drug store division of American Stores Company. American Stores operated its drug stores in southern California as Sav-on Drugs. Ironically, many of the stores in Southern California that CVS acquired were stores that CVS had formerly owned. At the time CVS bought the stores back, Sav-on operated them as Sav-on Express stores. The Express name was used by Sav-on to help customers identify those stores that did not carry all lines of merchandise as compared to the larger traditional Sav-on Drugs location, hence the name Sav-on Express. As a result of the acquisition, the chain now operates over 6,200 stores in 43 states and the District of Columbia.

• On July 13, 2006, CVS announced that it had entered into a definitive agreement to acquire Minneapolis-based MinuteClinic, the pioneer and largest provider of retail-based health clinics in the U.S. MinuteClinic operates as a wholly owned subsidiary of CVS Corporation. MinuteClinic health care centers are staffed by board-certified nurse practitioners and physician assistants who are trained to diagnose, treat and provide prescriptions (when clinically appropriate) for common family illnesses such as strep throat and ear, eye, sinus, bladder and bronchial infections. MinuteClinic also offers common vaccinations, such as flu shots, tetanus, and Hepatitis A & B. The clinics are also supported by physicians who collaborate with the nurse practitioners to assure the highest quality of care. CVS plans to have 400 MinuteClinics by the end of 2007, most of which within CVS/pharmacy locations, and are targeting a total of about 2,500.
• During Fall 2006, Caremark Rx, a pharmacy benefits management company, was facing fierce acquisition from Express Scripts, an opposing PBM. CVS/Pharmacy entered into the sale, offering a cash/stock mix, board seats, and a merge with CVS's existing Pharmacare PBM. Though touted as a merger, CVS acquired Caremark Rx on March 22, 2007 renaming the company CVS Caremark Corp. and the corporate headquarters remained in Woonsocket, RI. The pharmacy services business, including the combined pharmacy benefits management (PBM), specialty pharmacy, and disease management businesses, is headquartered in Nashville, TN. Tom Ryan, the Chairman & CEO of CVS remained president and CEO of CVS Caremark Corporation, while Caremark's Edwin Crawford became the Chairman of the Board. On November 7, 2007 Edwin Crawford quit his position, and Tom Ryan was again named Chairman of the Board.
• On August 12, 2008 CVS announced that they would acquire Longs Drugs Stores Corp., in a $2.9 billion deal. Longs operates 521 stores in the Western United States, 41 of these stores in Hawaii alone, with a heavy concentration in California. This will strengthen the 2006 acquisition by CVS of Sav-On Drugs, also primarily in California and now operating under the CVS brand. CVS will also enter the Hawaiian market which it did not previously operate, and retain the well-established Longs name there. This deal is estimated to bring over $100 million a year in cost savings to the combined company. It closed October 30, 2008.
• On November 3, 2008 CVS opens their first Beauty 360 store in Washington, DC. Beauty 360 features a wide range of prestige and niche beauty brands from the skincare, cosmetics, men's grooming and fragrance categories. Staffed with trained and licensed professionals, they offer brand-specific services including mini-manicures, express facials, hand massages and make-up application. CVS expects to open about 50 Beauty 360 stores by the end of 2009, with the majority of the stores being located adjacent to existing CVS/pharmacy locations.