CVS Health Corporation

Company information

• Date founded: May 8, 1963
• Industry: Retail
• Corporate headquarters: Issaquah, Washington
• Type: Public

Overview

CVS Health Corporation is a major health-care company that was originally founded as a chain of drug stores. As it grew, CVS stores began to include pharmacies, setting them apart from other similar stores. CVS stores rapidly spread across the United States through aggressive acquisitions.

In addition to the company’s drug stores, CVS Health Corporation has acquired the health insurance company Aetna, allowing it to sell health insurance to the average consumer. It also manages large health insurance plans and pharmacy benefit plans for employers and insurers. Coupled with its extensive network of pharmacies and drug stores, this combination has allowed CVS Health Corporation to become one of the largest employers in the United States.

CVS Health Corporation used its stores to play a substantial role in the management of the COVID-19 pandemic. As the pandemic spread across the United States, many people found themselves with limited options for testing and vaccinations. CVS Health Corporation rapidly configured its stores for use as COVID-19 testing centers. When COVID-19 vaccines became available in 2021, the corporation began accepting online appointments for vaccinations at most of its locations. Through 2023, CVS Health Corporation had distributed more than 88 million COVID-19 vaccinations and 61 million tests.

History

The entity now known as the CVS Health Corporation began as the Consumer Value Store on May 8, 1963, in Lowell, Massachusetts. Founded by brothers Stanley and Sidney Goldstein, as well as their partner Ralph Hoagland, the Consumer Value Store was created as a discount health and beauty outlet. The chain quickly proved popular with consumers, growing to seventeen stores by the end of 1964. That same year, the original logo of the corporation was put into use. This logo featured a shield containing a red banner displaying the words “Consumer Value Stores.”

When CVS stores were originally launched, they served solely as health and cosmetics stores. However, in 1967, CVS began adding dedicated pharmacies to the inside of its stores. Pharmacy departments helped distinguish CVS stores from other health outlets at the time, giving consumers another reason to come into the store and make purchases.

The history of CVS is also tied to the larger Melville Corporation, which was founded in the late eighteenth century as a chain of footwear stores. Melville used its capital to begin purchasing other retail chains, buying out CVS in 1969, just six years after the chain was founded. At the time, Melville Corporation allowed its chains to continue to operate with their own independent identities. Soon, CVS drugstores proved to be one of Melville Corporation’s most profitable investments.

By the end of 1970, CVS operated one hundred stores throughout the Northeast United States. By 1974, CVS had more than doubled that number, earning more than $100 million in annual sales. In 1978, CVS began expanding its operations to shopping malls, opening smaller versions of its stores inside larger shopping centers.

CVS continued to grow more profitable throughout the 1980s. In 1985, the corporation’s rapid expansion allowed it to reach a groundbreaking $1 billion in annual sales. By the chain’s twenty-fifth birthday in 1988, annual sales had surpassed $1.6 billion, and the company had opened nearly 750 stores across the United States.

The store chain began the 1990s by acquiring five hundred stores throughout the mid-Atlantic market from the People’s Drug. Then it purchased Prescription Health Services, putting the business to use in its pharmacies. In 1994, CVS launched the service Pharmacare, which allowed it to provide benefits services to both insurers and employers.

In 1996, Melville Corporation underwent significant restructuring. Though the business still owned multiple chains, none could approach the profit of CVS stores. Melville renamed itself CVS Corporation, becoming a standalone company and focusing solely on its chain of drug stores. The following year, the corporation acquired more than 2,500 stores from Revco, carrying out the largest acquisition in the history of the US pharmacy industry and allowing CVS stores to spread to new markets. It then continued its pattern of rapid acquisitions, purchasing two hundred additional stores from Arbor Drugs of Michigan. At this point, CVS stores could be found throughout twenty-four states.

In 1999, CVS launched online prescription refills. Building on that success, CVS launched the first successful online pharmacy in the United States. The company then acquired Stadtlander Pharmacy, adding to the substantial resources available to CVS pharmacies. In 2004, CVS acquired more than twelve hundred Eckerd Stores and Eckerd Health Services, taking control of the company’s widespread pharmacy benefit management business. Having acquired MinuteClinic in 2006, the company went on to install the accessible health-care services provider in many of its stores as well. In 2007, CVS Corporation merged with Caremark RX, Inc., creating CVS Caremark. At the time of its founding, CVS Caremark was the largest pharmacy service provider in the United States. By 2012, CVS Caremark had exceeded $100 billion in annual revenues.

In 2014, CVS Caremark announced that it would stop selling tobacco products throughout its network of stores. It then launched a program aimed at reducing smoking across the United States. That same year, CVS Caremark announced that it would be changing its name to CVS Health Corporation and shifting the focus of its business toward providing health care. In 2015, CVS Health Corporation acquired the pharmacy services provider Omnicare. That same year, it acquired more than 1,600 pharmacies and clinics that were located within Target stores across the United States.

In 2020, CVS Health Corporation committed itself to combating the global COVID-19 pandemic. Most CVS stores were converted into COVID-19 testing sites. In 2021, CVS began administering COVID-19 vaccines. CVS quickly adapted and expanded its COVID-19 response to the needs of consumers during the pandemic by creating drive-through testing sites. In November 2022, CVS pharmacists obtained approval to prescribe anti-viral treatments to fight COVID-19. Through its role in combating COVID-19, CVS Health Corporation’s profits grew substantially. As the economic impact of the pandemic eased in 2022, CVS Health Corporation was expected to continue the rapid growth it had been experiencing during the pandemic.

Impact

When CVS Pharmacy and Caremark RX, Inc. merged to create CVS Caremark and later CVS Health Corporation, they created the largest company to operate solely within the United States. During the 2020s, the company operated almost ten thousand retail stores across the country. CVS Health drug stores were the second-most profitable drug stores in the United States, with only their competitor Walgreens surpassing them in revenue generation. The company also managed more than one thousand MinuteClinic locations, twenty-six specialty pharmacies, and almost seventy thousand retail pharmacies. It was affiliated with seventy-five major health systems. These various stores and systems were managed by roughly three hundred thousand employees and provided pharmacy services to approximately 102 million people.

Since CVS has stopped selling tobacco, the pharmacy giant has donated significant sums of money to reduce the rates of tobacco use across the United States. CVS Health MinuteClinics provide ongoing support for individuals seeking to quit smoking, including coaching and consultations on effective nicotine replacements. The company also founded Be The First, a five-year initiative to create the first tobacco-free generation of Americans.

CVS Health Corporation founded the education program Pharmacists Teach, which reaches out to students to explain the dangers of prescription drug abuse. Pharmacists Teach has reached more than four hundred thousand children during its education practices. To facilitate the safe disposal of abusable narcotics, CVS Health has provided 1,650 safe disposal kiosks.

When the COVID-19 pandemic spread across America beginning in 2020, many Americans struggled to find locations for testing and vaccinations. CVS Health Corporation quickly adapted its drug stores, working to ensure a ready supply of COVID-19 tests, including home tests, as well as providing vaccinations through major national insurance plans. Using its massive network of drug stores and pharmacies, CVS distributed more than 59 million vaccinations and more than 32 million tests throughout the height of the pandemic in 2021. This played a significant role in slowing the spread of COVID-19.

Additionally, CVS Health has changed its policies to increase diversity within its industry. As one of the largest American health-care employers, CVS has made substantial efforts to diversify its hiring practices to make a more purposeful impact on underserved communities. Additionally, the company has spent more than $2.3 billion to create supplier diversity programs. These programs focus on small businesses owned by women, people from racially marginalized groups, and veterans, allowing them to work with CVS Health Corporation to the benefit of both parties. This process had an estimated economic impact of roughly $5.8 billion and helped sustain roughly 38,000 jobs across the United States.

At the same time, by the 2020s CVS Health and other major health-care companies faced challenges to both business practices and working conditions. For many years, legislators at both congressional levels had debated and introduced bills aimed at regulating pharmacy benefit managers (PBMs), or the administrators of prescription drug plans, including CVS Health's CVS Caremark. Those interested in reforming PBMs cited issues with rebate transparency as well as the practice of spread pricing, which involves PBMs keeping the difference in the higher amount they charge health plans for medication than they pay to the pharmacy. Introduction of and deliberation on such legislation had only increased by 2023, when Senate committees considered bills such as the Pharmacy Benefit Manager Reform Act. Meanwhile, that year saw large CVS Health pharmacist walkouts staged in and around Kansas City, Missouri. Shutting down several locations, the pharmacists protested, among other concerns, ongoing staff shortages that the COVID-19 pandemic had only exacerbated, leaving many feeling that they could not work as safely or efficiently. While the walkout was limited in length as CVS Health issued apologies to employees and pledged reform, commentators noted that such protests were likely to continue.

Bibliography

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