CVS (NYSE: CVS ) has been making some interesting moves lately, and the latest may be its completed acquisition of MinuteClinic. The deal was announced over the summer, and while CVS didn't disclose the price tag, rumor puts it in the neighborhood of $170 million.
The idea behind MinuteClinic is that customers can come to CVS pharmacies that feature the clinics to consult with a physician's assistant or nurse practitioner about some common ailments -- for example, strep throat or poison ivy. They can obtain advice and a prescription, not to mention wait (and maybe do some shopping) while the prescription is filled. Such clinics aren't meant to substitute for a doctor's care, but rather to supplement it, and they're intended to be convenient while quick and affordable, too. An Associated Press report over the summer said that most of the MinuteClinic stores are profitable, and it's a high-growth concept, which will operate as a wholly owned subsidiary of CVS and plans to triple its number of locations by the end of this year.
One can certainly see why the idea makes sense. It's often hard to get doctors' appointments in a timely manner for routine but uncomfortable ailments, and an expensive and time-consuming trip to the emergency room probably isn't exactly high on many people's lists. Such clinics can also offer a convenient way for people to get certain common vaccinations. Placing clinics in drugstores makes a lot of sense -- and it could drive sales.
On the other hand, in-store clinics are by no means a new idea. Target (NYSE: TGT ) , Wal-Mart (NYSE: WMT ) , and Walgreen (NYSE: WAG ) also offer such clinics. In fact, Target recently ended its own agreement with MinuteClinic and is now working to offer clinic services through Medcor. Meanwhile, Wal-Mart recently reiterated its deal to work with SmartCare (another clinic setting up shop within retail locations) in Denver, and it has deals with other clinics in other geographic regions, such as RediClinic.
There are certain things I find compelling about CVS. It's not just that its ExtraCare program drives me into its stores a little too often. (I can't resist the ExtraBucks.) I've also been very interested in that the company recently took a stake in California's innovative Elephant Pharmacy, which integrates organic and alternative-health principles with more traditional pharmacy offerings and ostensibly attracts a similar clientele to that of Whole Foods Market (Nasdaq: WFMI ) . CVS now has a seat on Elephant Pharmacy's board and has made it clear that it's interested in studying its strategy.
My Foolish colleague Ryan Fuhrmann recently wrote about the drugstore industry. He indicated Walgreen as the clear leader, given its sales growth; he pointed out that while CVS's sales growth has been close to Walgreen's, its debt has stunted its profitability in comparison to Walgreen. However, while the industry is certainly a competitive one, and obviously implementing many changes, CVS is clearly up for the fight when it comes to matching current trends and embracing new ones, too.
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