Sponsored By

CVS to acquire Schnucks' pharmacy business

Deal marks second time CVS Pharmacy will operate inside another retailer’s stores

Russell Redman

March 10, 2020

4 Min Read
Schnuck Markets-store exterior
Plans call for 99 of the 110 Schnuck retail pharmacies to be converted to the CVS Pharmacy banner and continue to operate inside Schnucks supermarkets.Schnuck Markets

Schnuck Markets plans to sell its retail and specialty pharmacy businesses to CVS Health, which then will operate the supermarket pharmacy locations under the CVS Pharmacy brand.

Overall, St. Louis-based Schnucks has 110 retail pharmacy locations. Under the deal, announced Tuesday, CVS is slated to buy 99 Schnucks pharmacies and convert them to the CVS banner. In addition, CVS plans to acquire prescription files from another 11 Schnucks pharmacies and transfer them to nearby CVS Pharmacy stores.

Financial terms of the agreement weren’t disclosed. Plans call for CVS Pharmacy to interview all Schnucks pharmacists and pharmacy technicians who apply for positions at the rebranded CVS locations.

“As Schnucks continues to expand our emphasis on health and wellness, this collaboration with CVS is an opportunity for us to align with a company that has a similar focus,” Schnucks Chairman and CEO Todd Schnuck said in a statement. “This partnership allows us to continue to provide quality pharmacy services to our customers in a manner they’ve come to expect, while supporting our mission to nourish people’s lives. It also provides our pharmacy teammates an opportunity to further their careers with a premier retail pharmacy chain.”

Woonsocket, R.I.-based CVS noted that the deal boosts its pharmacy presence in the Midwest, where Schnucks currently operates 112 stores in Missouri, Illinois, Indiana, Wisconsin and Iowa.

Related:Raley’s to close 27 pharmacies

Schnucks’ specialty pharmacy operation includes a regional specialty pharmacy in Maryland Heights, Mo., plus eight specialty pharmacy locations in St. Louis (three); Brentwood, Mo.; Springfield, Rockford and Moline, Ill.; and Evansville, Ind. The specialty pharmacies provide medication therapy for patients with complex diseases and chronic conditions, ranging from cancer, multiple sclerosis and HIV/AIDS to hepatitis C, sexually transmitted infections (STIs), rare genetic disorders and transplants.

CVS and Schnucks said their relationship aligns two companies with a similar focus on customer health and wellness, including going tobacco-free. CVS Pharmacy removed tobacco products from all of its stores in 2014, and Schnucks did the same this year, effective Jan. 1.

“We have great admiration for Schnucks and believe CVS Pharmacy can bring additional clinical services to its customers,” stated Jon Roberts, executive vice president and chief operating officer at CVS Health. “One of CVS Health’s strategic imperatives is to ‘Be Local.’ By opening CVS Pharmacy locations within Schnucks stores, we’re increasing access to high-quality care and meeting customers where they are. Schnucks is a best-in-class grocer, and we’re honored to partner with them to bring our best-in-class pharmacy capabilities to their customers.”

Related:Hy-Vee urges reform on pharmacy remuneration fees

For CVS, the agreement represents the second time that the company will acquire and operate pharmacies under its brand in another retailer’s stores. In December 2015, CVS completed the acquisition of 1,672 Target Corp. in-store pharmacies in 47 states and converted them to CVS Pharmacy locations. That transaction also brought CVS 79 Target Clinics, which were converted to CVS’ MinuteClinic banner.

“Target was the first. From a strategic perspective, we’re not committed to pursuing similar additional arrangements but will keep our options open,” a CVS spokesman said in an email statement on Tuesday. Overall, CVS operates more than 9,900 retail pharmacy locations.

CVS and Schnucks expect to finalize their transaction by end of the second quarter, pending customary closing conditions. The companies said in-store changes will be rolled out over several months after the deal closes to ensure a smooth transition for pharmacy patients.

In recent years, changing economics in the prescription drug industry have made it harder for small retail pharmacy operators to compete.

Escalating drug prices, the need for scale to lower drug procurement costs and booming growth in expensive specialty pharmaceuticals — which also can require added services and special handling — have fueled consolidation among drug chains, drug distributors and pharmaceutical manufacturers, putting more competitive pressure on smaller pharmacy retailers. Cuts in Medicare and Medicaid reimbursements and costs like direct and indirect remuneration (DIR) fees also have squeezed margins, especially impacting small players.

For example, in late October, Western grocer Raley’s announced it was closing 27 of its 96 pharmacies because of “challenges in the pharmacy space.” Prescription files for those locations were sold to Walgreens, CVS Pharmacy and Rite Aid. And just over a year earlier, Stater Bros. shut down its 22 SuperRx Pharmacies and sold their prescription records and inventory to CVS.

Read more about:

CVS HealthRite Aid

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like