CVS will acquire over 1,660 pharmacies in 47 states to operate as a "store within a store" format branded under the CVS name, according to a statement by the company. Target's already existing 80 clinic locations will become MinuteClinic urgent care walk-in center franchises and CVS Health will open 20 new clinics in Target stores within three years of the deal closing.
The purchase is part of CVS' effort to operate 1,500 clinics by 2017. CVS expects that, in combination with its previously announced acquisition of Omnicare (OCR), the company's debt to Ebitda ratio will be 3.2 times. CVS Health also reduced its share repurchase guidance for 2105 by $1 billion to $5 billion. The CVS Health-Target deal is expected to close around the end of this year and is expected to be 6 cents dilutive to CVS's adjusted earnings per share in 2016.
According to its most recent filing with the Securities and Exchange Commission, CVS currently has 986 MinuteClinics with 978 of them located within CVS/pharmacy stores. The walk-in urgent care clinics treat minor health conditions, perform health screenings, monitor chronic conditions and deliver vaccinations. MinuteClinic reports as part of CVS' retail pharmacy segment, which had revenues of $16.9 billion in the three months ending March 31.