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CVS Without Tobacco Is Still CVS

Over the last year, both Walgreens and CVS have been big Wall Street gainers, but Walgreens has moved further, up almost 37% over the last year against CVS' gain of almost 26%. I wrote favorably about Walgreens last June and have since bought some stock in the company for my retirement account.

In a statement, CVS Caremark CEO Larry Merlo said his company is going to expand its work in smoking cessation, starting this spring, and involve both its MinuteClinic health clinics and Caremark pharmacy benefit management system in the effort.

The CVS move underscores the growing importance of drug stores in the health care system. Both CVS and Walgreens are pushing their clinic services as an alternative in primary care, staffed by registered nurses and physicians' assistants, backed by computer technology that connects them to both best practices and practicing physicians.

So far, CVS has opened over 750 MinuteClinics while Walgreens has about 400 Healthcare Clinics in its stores. Other companies opening in-store clinics include Wal-Mart (WMT), Kroger (KR), and Target (TGT), but all are well behind the two drugstore chains.

By opening clinics in existing stores, CVS and Walgreens minimize their costs and get the chance to make additional sales from patients who are either waiting for care or who are prescribed either drugs or over-the-counter remedies.

The difference between the two chains is that while CVS is retaining its current look and feel, which is that of a convenience chain with a pharmacy counter, Walgreens is engaging in a major makeover in order to push its services.

Early reaction to CVS Caremark's move is negative. In a market that was down an average of 0.47%, CVS shares were down 0.80%, a loss of about $600 in market cap. Walgreens, by contrast, was up 1.8%, a gain of more than $950 million in market cap.

At the time of publication the author owned shares in WAG.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

 

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SYM TRADE IT LAST %CHG
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WAG $81.65 2.05%
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FB $85.76 -0.04%
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