CVS Rebrands As It Declares Itself Free Of Tobacco

With CVS/Caremark quitting the tobacco habit at midnight Tuesday — a month earlier than its target date — and changing its name to CVS Health today to reflect its restated mission, president and CEO Larry Merlo has been out talking it up on the media-relations hustings.

“While there's never a right time to walk away from $2 billion in revenue, this was the right time,” Merlo tells the Wall Street Journal’s Paul Ziobro. “Eliminating this obstacle will allow our company to grow over the long term.”



That growth is expected to come from an expansion of healthcare services — including a “personalized” smoking-cessation offering — at its 7,700 retail pharmacies and more than 860 walk-in clinics nationwide. It will also build out the retail network, including partnerships. Last week, for example, the Woonsocket, R.I.-based CVS announced a clinical affiliation with MedStar Health, which has 10 hospitals in Maryland and the Washington, D.C., region.

The CVS name change “reflects our broader health care commitment and our expertise in driving the innovations needed to shape the future of health,” according to a release on the company website, which also features a video of Merlo explaining the thinking behind the moves and CVS’ expanded services.

In other videos on the page, Troy Brennan, EVP and chief medical officer, talks about the effectiveness of bans of tobacco products at pharmacies in San Francisco and Boston, and Helena Foulkes, EVP and president, CVS/pharmacy, announces the launch of a #onegoodreason social media campaign that encourages people to share their stories about quitting.

“Rebranding itself as a company focused on health could prove lucrative for the drugstore as it seeks to appeal to medical partners that can help it bridge the gap between customers and their doctors,” writes Rachel Abrams in the New York Times.

“We’re at the forefront of what we all see as a changing health care landscape,” Merlo tells Abrams.

“If they can be perceived as a place to go to receive health care, and buy health care products, as opposed to the place to go to buy a bottle of whiskey or get your film developed, then they can capture more of the retail medicine dollars,” Forrester Research analyst Skip Snow tells Abrams. He also points out that “healthcare is going to retail, especially for people without privilege.”

CVS previously said is would expand its in-store Minute Clinics to 1,500 by 2017, including new markets, reports Jason Millman in the Washington Post. “CVS also plans to expand the scope of services offered at the clinics — better management of chronic diseases, for example,” he adds. “But the company doesn't want to become a full primary care provider as Wal-Mart is now trying to do in some locations.”

CVS “has been seeking more partnerships with hospitals, health systems and physicians to manage the healthcare of groups of patients,” reports Peter Frost in the Los Angeles Times. “Such arrangements, which are being adopted by Medicare, Medicaid and private insurers, in some cases call for groups of providers to share in savings they're able to produce by keeping patients healthier and their healthcare costs low.”

Pointing to “$5.4 billion in new business wins for 2015,” Merlo tellsForbes contributor Bruce Japsen that “changing the name catches up with what we have been doing.”

When the Washington Post’s Millman asked if CVS could attribute its new business gains to its decision to drop tobacco, Merlo replied, “I don't want to imply that it’s because of the tobacco decision, but I think it becomes something more of an intangible that sends a powerful message to prospective clients that we are their best healthcare partner.”

CVS will advertise the fact that it is no longer selling tobacco in the space the product used to occupy, the WSJ’s Ziobro reports, as well as for selling products that help smokers quit. But “one product CVS doesn't plan to carry is electronic cigarettes,” he writes.

“We don't think it's consistent with everything that we've talked about,” Merlo told him.

Tobacco deaths are very personal to Merlo and pharmacy president Foulkes, Jayne O'Donnell and Laura Ungar point out in USA Today. Merlo's father died of tobacco-related cancer at 57 and Foulkes’ mother died five years ago of lung cancer from smoking.

“After its announcement in February, Foulkes says CVS was deluged with personal stories from customers who had quit smoking. Many said it was the ‘hardest thing they had ever done,’ she says,” write O'Donnell and Ungar. “The company is determined to make it easier for them, she says, because it simply makes sense.” 

And it will presumably make dollars, too.

1 comment about "CVS Rebrands As It Declares Itself Free Of Tobacco".
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  1. Donna Gordon from Investment Resources, September 3, 2014 at 10:56 a.m.

    But noticed they are still selling alcohol. And most of their grocery items are prepackaged junk. If they are really jumping on the healthy bandwagon, think they need to look at a few additional SKU's....

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