CVS Caremark Corp. halted sales of tobacco products almost a month ahead of schedule, started a smoking-cessation campaign and changed its name to position itself as a health care provider as demand grows in the U.S. market.
CVS Health, as the company now calls itself, will forgo $2 billion in annual revenue as it becomes the first national pharmacy chain to end tobacco sales. None of its rivals has followed suit, with Walgreen Co. saying a retail pharmacy ban on sales would have little impact on reducing tobacco use. Shares of CVS reached their highest value Wednesday in 34 years.
CVS, the biggest U.S. seller of prescription drugs, is seeking to emphasize its health care offerings as the federal Affordable Care Act added 8 million people to insurance rolls nationwide. The effort to shift its business and position itself as a preferred partner for U.S. companies and insurers should make up for the lost tobacco sales, said David Larsen, an analyst with Leerink Partners in Boston.
“CVS is pushing aggressively ahead in terms of becoming a provider of care and having in-store pharmacists and nurse practitioners offer high-quality care in a low-cost environment,” he said. “They are expanding on the basis of in-store clinics, deeper relationships with health plan customers and integrated health systems around the country.”
CVS operates 7,700 drugstores, 900 walk-in medical clinics and a pharmacy benefits manager with almost 65 million members. Shares in the Woonsocket, R.I.-based company closed at $80.36 Wednesday, up by 63 cents. The shares have gained 37 percent in the last 12 months. CVS has put information about its new program in the coveted spot behind the checkout counters that used to include cigarettes and chewing tobacco. CVS officials say they don’t plan to cut back on other unhealthy products, such as high-fat snacks and sugar-laden soft drinks that are a staple of the stores.
The company’s tobacco initiative is intended to help reduce the annual rate of almost half a million deaths attributed to smoking nationwide.