Wednesday, December 16, 2015
WOONSOCKET, R.I. and MINNEAPOLIS, Dec. 16, 2015 /PRNewswire/ --CVS Health Corporation
(NYSE: CVS) and Target Corporation (NYSE: TGT) announced today that CVS Health
has completed the acquisition of Target's pharmacy and clinic businesses for
approximately $1.9 billion. With the completion of
the transaction, CVS Health acquired Target's 1,672 pharmacies across 47 states
and will operate them through a store-within-a-store format, branded as
CVS/pharmacy. In addition, a CVS/pharmacy will be included in all new Target
stores that offer pharmacy services. Seventy-nine Target clinic locations will
be rebranded as MinuteClinic, and CVS Health will open up to 20 new clinics in
Target stores within three years of the close of the transaction.
"We look forward to
helping Target guests on their path to better health through CVS Health's
leading clinical programs, such as Maintenance Choice, Pharmacy Advisor and
Specialty Connect," said Larry Merlo, CVS Health
president and CEO. "In addition, with the Target acquisition we will
leverage our unique integrated business model and our scale to drive
incremental sales volume and operating profit for the enterprise while
providing convenience and cost savings to consumers and payors."
"Today's milestone
in our relationship with CVS Health is an important step in driving Target's
strategic priorities forward while giving our guests easy access to
industry-leading health care services. With the transition now underway, Target
can further accelerate our commitment to Wellness as a signature category,
helping guests and team members in their efforts to eat better, be more active
and find natural and clean label products," said Brian Cornell, chairman and CEO of Target.
The Target pharmacies
and clinics will be transitioned to the CVS Health banners and systems within
six to eight months.
Financial Considerations
The closing of this
transaction is expected to have the following impact on Target's fourth quarter
2015 financial results:
·
The recognition of a
pre-tax gain of $575 million to $775 million, based on the final valuation of assets sold.
The gain will be excluded from Adjusted Earnings per Share.
·
A reduction of expected
fourth quarter sales of approximately $500 million, with no
change to the company's expected fourth quarter segment EBIT.
The closing of this
transaction does not change Target's expected fourth quarter comparable sales,
because the comparable sales calculation will only include pharmacy sales from
fourth quarter 2014 for the equivalent period in which Target operated its
pharmacies in fourth quarter 2015.
Target's after-tax net
proceeds from the transaction are expected to be approximately $1.2 billion, which the company expects to deploy over time
in support of its long-standing capital priorities, including share repurchase.
This transaction is expected to be accretive to Target's EBITDA and EBIT margin
rates and add half a percentage point or more to Target's return on invested
capital over time.
CVS Health will discuss
the acquisition in more detail at its Annual Analyst Day, which is being held
today in New York City and simulcast on its website, at investors.cvshealth.com.
About CVS Health
CVS Health is a pharmacy
innovation company helping people on their path to better health. Through its
more than 9,500 retail pharmacies, more than 1,100 walk-in medical clinics, a
leading pharmacy benefits manager with more than 70 million plan members, a
dedicated senior pharmacy care business serving more than one million patients
per year, and expanding specialty pharmacy services, the Company enables
people, businesses and communities to manage health in more affordable,
effective ways. This unique integrated model increases access to quality care,
delivers better health outcomes and lowers overall health care costs. Find more
information about how CVS Health is shaping the future of health at www.cvshealth.com.
About Target
Minneapolis-based Target Corporation (NYSE: TGT) serves
guests at 1,805 stores and at Target.com. Since
1946, Target has given 5 percent of its profit to communities, which today
equals more than $4 million a week. For more
information, visit Target.com/Pressroom.
For a behind-the-scenes look at Target, visit Target.com/abullseyeview or follow @TargetNews on
Twitter.
CVS Health Forward-Looking Statement
This press release
contains forward-looking statements within the meaning of the federal
securities laws. By their nature, all forward-looking statements involve risks
and uncertainties. Actual results may differ materially from those contemplated
by the forward-looking statements for a number of reasons as described in our
Securities and Exchange Commission filings, including those set forth in the
Risk Factors section and under the section entitled "Cautionary Statement
Concerning Forward-Looking Statements" in our most recently filed Annual
Report on Form10-K and Quarterly Report on Form 10-Q.
Target Forward-Looking Statements
Statements by Target in
this release regarding Target's expected after-tax proceeds from the
transaction and the expected impact of the transaction on Target's Segment
Sales, EBITDA and EBIT margins, EPS and Adjusted EPS, and ROIC are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements speak only as of the date they
are made and are subject to risks and uncertainties that could cause Target's
actual results to differ materially. The most important risks and uncertainties
include those relating to how Target's guests react to the transaction, the
effectiveness of the ongoing relationship between Target and CVS Health,
whether Target will recognize the expected benefits from the transaction and
the risks described in Item 1A of Target's Form 10-K for the fiscal year
ended January 31, 2015.
SOURCE CVS Health
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