With sales approaching $270 billion in 2021, CVS Health is the largest pharmacy chain in the United States. It was ranked #4 in the 2021 Fortune 500, placing it behind only Walmart, Amazon, and Apple for America’s biggest companies. In 2020, CVS dispensed roughly 27.1% of all retail pharmacy prescriptions in the United States.

The company operates nearly ten thousand retail stores with a presence in every U.S. state. Nearly all of these stores operate under the “CVS” banner, but select stores operate under different branding retained from acquisition, sometimes in the same markets as direct competition to CVS-branded stores. This store count does include more than 1,800 locations housed within another retailer – chiefly Target, whose pharmacies CVS acquired in 2015.

In addition to its retail pharmacies, the company operates 1,100 walk-in clinics, acquiring MinuteClinic in 2006, provides pharmacy benefits management services to about 105 million members, merging with Caremark in 2007, and insures about 34 million people, acquiring Aetna in 2018.

Officially, “CVS” is an acronym standing for Consumer Value Stores, its original name upon establishment in 1963. The company adopted the “CVS” acronym as a brand essentially from the beginning, with both names being featured in its first logo. During the early 2000s, the company marketed that CVS stood for Convenience, Value, and Service.

Establishment

Brothers Stanley and Sidney Goldstein, along with partner Ralph Hoagland, founded Consumer Value Stores in Lowell, MA in 1963, opening on May 9th. The store was the evolution of a health and beauty aid distributor called Mark Steven Service Merchandisers, also founded by the Goldstein brothers, first to service other retailers and later CVS itself. The chain grew to an impressive 17 stores within a year.

CVS began as a health and beauty store, and didn’t open its first pharmacy until 1967 when pharmacies were added to stores in Warwick and Cumberland, Rhode Island. Pharmacies didn’t become widespread for the chain until the mid-1980s, with only about one-fourth of its stores containing pharmacies in the mid-1970s. To differentiate stores containing pharmacies from those without, CVS commonly incorporated a “/” forward slash between the words “CVS” and “pharmacy” in its logo. This practice began being phased out in 2016, but still appears widely on older store signage.

Melville Corporation

The retail conglomerate Melville Corporation acquired CVS in 1969. Stanley Goldstein continued leading the CVS brand under Melville’s umbrella, eventually becoming president of Melville in 1986, then chairman and CEO one year later.  Goldstein retired in 1999.

CVS was the first non-apparel company brought into Melville’s portfolio. Melville was nearing half-billion dollars in annual sales at the time.

Other brands in its eventual portfolio included Linens ‘N Things, Marshalls, Wilson Leather, and KB Toys. Of these, Marshalls remains the strongest contender in today’s retail, with most others defunct or significantly downsized.

The backing of Melville escalated CVS’s growth from 41 stores upon acquisition to about 100 stores by the following year, concentrated in New England and the northeastern United States. CVS first exceeded $1 billion in sales in 1985, accelerated by adding pharmacies to most of its older store types.

Melville was founded as Melville Shoe Corporation in 1892. It eventually became the largest U.S. shoe retailer. As of 1974, shoes still accounted for 71% of its sales. This share dropped to 53% four years later, then 22.5% in 1989. As shoe sales took a backseat, Melville closed six of its seven shoe factories in the mid-1980s. These events foreshadowed the long-time significance of CVS to the overall company.

Melville owned the footwear brand Thom McAn, as well as Footstar/Meldisco and related subsidiaries. This division primarily operated the footwear departments of Kmart stores, in a “store within a store” format. Coincidently, the connection with Kmart continued when CVS President and COO (Chief Operating Office) Chuck Conaway became Chairman and CEO of Kmart in 2000, controversially overseeing operations through Kmart’s 2001 bankruptcy filing.

Melville grew to annual sales exceeding $11.5 billion. By the 1990s, CVS was the dominating brand in Melville’s portfolio, accounting for almost 43% of all revenue in 1995. Marshalls was second, at about 20%. Its footwear division was 16% of all sales, which still pulled in a respectful $1.8 billion, driven mostly by Meldisco, chiefly located inside Kmarts.

Responding to CVS’s overwhelming significance, Melville spun off or sold all of its remaining other companies by 1997 to focus exclusively on CVS. Through restructuring, Melville became CVS Corporation and consolidated its corporate operations into CVS’s headquarters in Woonsocket, Rhode Island.

Melville’s historic footwear division was spunoff as Footstar, which Sears Holdings acquired in 2008 after decades of Meldisco/Footstar leasing Kmart’s footwear departments. Linens ‘N Things was also spun off. The parent company of TJ Maxx acquired Marshalls, Consolidated Stores (then-parent of Big Lots!) acquired Kay-Bee Toys, and Wilsons Leather was sold to a management-led investor group.

Melville grew to annual sales exceeding $10 billion. By the 1990s, CVS was the dominating brand in Melville’s portfolio, accounting for more than 40% of all revenue. As a result, Melville sold off its other chains to focus exclusively on CVS, officially changing its name to CVS Corporation.

In the final year as Melville, CVS accounted for more than half (50.6%) of the company’s sales.

This was one of the rare situations where it proved beneficial for a retail brand to become part of a vast retail conglomerate.

Growth and Acquisitions

CVS can attribute much of its fast-paced growth to strategic acquisitions, rather than organic growth by opening stores one-by-one.

Its first significant acquisition was that of the 84-store chain Clinton Merchandising, Inc. in 1972 for about $21.5 million. It primarily operated as Clinton Drug and similar variations across five states. This almost doubled the store count for CVS. Rite Aid first attempted to acquire Clinton in February 1971, but it was quickly cancelled.

5 years later, CVS acquired the New Jersey-based 36 stores of Mack Drug, which solidified its northeast presence.

Peoples Drug in 1990 was its largest acquisition up to that point, containing 490 stores concentrated in Mid-Atlantic markets, including D.C., Pennsylvania, Maryland, and Virginia.

That same year, CVS acquired the 23-store chain Rix Dunnington.

CVS leveraged the revenue earned from Melville divesting its other retail divisions in 1996 to finance rapid growth. Mostly, it paved the way for CVS to acquire the larger retail chain Revco in 1997 for $2.8 billion, adding 2,500 stores to its existing portfolio of 1,400 stores. Revco had locations in 17 states, most of which were new markets for CVS.

Competitor Rite Aid failed to acquire Revco one year prior due to trade regulatory hurdles with much more overlapping markets potentially limited competition.

It’s reasonable to argue that the Revco acquisition was the most important in the company’s history. It instantly catapulted CVS into the second-largest drugstore chain in the United States, behind only Walgreens. The resulting acquisition more than doubled the footprint of CVS, resulting in about 4,000 stores with annual revenues exceeding $13 billion.

CVS wasn’t done, acquiring Michigan-based Arbor Drug the following year, in 1998, which included 200 stores.

It was about this time that CVS made serious effort to shift from operating stores inside shopping centers and strip malls to freestanding locations, most of which containing drive-through pharmacies. By 2003, 52% of all stores were freestanding; 2004 = 55%.

Cofounder Stanley Goldstein retired in 1999, turning over the reins to Tom Ryan, who started as a pharmacy with CVS in the mid-1970s. Ryan himself retired in 2011.

In 1999, CVS acquired Soma.com for $30 million, which was the first ecommerce-based pharmacy, having launched that January – one month ahead of Amazon-backed Drugstore.com (acquired by Walgreens in 2011). CVS operated Soma.com independently until merging it with CVS.com in 2002.

Also that year, CVS launched ProCare – a chain of specialty pharmacies for chronic conditions.

The next major acquisition by CVS was Eckerd Drug from J.C. Penney in 2 004. The deal included a pharmacy benefits manager and 1,268 stores mostly located in Florida, Louisiana, and Texas. Rite Aid acquired the remaining 1,858 Eckerd Pharmacy and Brooks Pharmacy stores two years later. The Eckerd acquisition propelled CVS ahead of Walgreens to become the nation’s largest pharmacy chain.

Since Eckerd stores accepted J.C. Penney credit cards as payment, CVS continued doing so at all CVS stores until 2014. This was not the first transaction made between CVS and J.C. Penney, who acquired Linens ‘n Things during the Melville transformation.

Diversification

Since emerging as its own independent successor to Melville Corporation, CVS had grown from 1,408 stores in 14 states with annual sales of $11.8 billion in 1996 to just shy of 5,500 stores in 34 states with sales of $37 billion in 2005.

While it continued pursuing retail acquisitions, CVS began a strategic transformation into a diversified healthcare company. Over the next 15 years, CVS grew from a $43.8 billion company with 6,200 stores in 2006 into a $292 billion company with almost 10,000 stores and a portfolio containing several major healthcare companies by 2021.

Acquired in 2006, MinuteClinic is a chain of walk-in clinics then-operated inside select Target, CVS, and Cub Food stores mostly in its home state of Minnesota and Maryland. MinuteClinic will receive its own special highlight.

Also in 2006, CVS acquired the standalone Sav-on and Osco Drug stores from Albertsons, totaling about 700 locations concentrated in the Midwest and southwestern United States. The Osco and Sav-on brands themselves were excluded from the transaction and continue as in-store pharmacies for Albertsons and Jewell stores.

The following year, in 2007, CVS completed the acquisition of Caremark, formerly called MedPartners – the largest prescription benefit manager (PBM), in an all-stock transaction worth about $26.5 billion. CVS won out against Caremark competitor Express Scripts. The newly merged company was worth more than $70 billion and became known as CVS Caremark.

Then in 2008, CVS purchased 521 Longs Drugs stores, expanding its presence in the mountain states, on the west coast, and in Hawaii. CVS opted to retain the “Longs” name in Hawaii, but eventually opened new stores under the CVS banner to more directly compete against Walgreens in the state.

CVS slowed acquisitions for the next six years until purchasing Navarro in 2014. Due to the strong brand recognition of Navarro – the market leader in southern Florida with a 17% market share, CVS retained the Navarro brand in the markets it served. Navarro was founded in Havana, Cuba in 1940 before relocating to Florida following the Cuban revolution.

In 2015, CVS acquired 1,660 Target Pharmacies and began operating them under the CVS banner in a store-within-a-store format. This was the largest store count acquisition CVS made since Revco in 1997, although these are not full-line drugstores.

Also that year, CVS purchased Omnicare – a major provider of pharmacy services to long-term care facilities.

Finally in its lengthy list of acquisitions, in 2018 CVS closed its acquisition of Aetna and its subsidiaries – a managed health care provider and insurer – for about $70 billion. The Aetna deal was the largest acquisition ever made by CVS.

Retraction

Through decades of unprecedented growth, CVS may have overextended itself, especially in today’s ecommerce-based society. In 2021, CVS announced the closure of more than 900 stores over the next 3 years; about 10% of its total stores.

MinuteClinic

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MinuteClinic is a chain of walk-in clinics owned and operated by CVS that tests, treats, and prescribes remedies for common ailments at flat-rate fees. MinuteClinic began as a private venture called QuickMedx, which was founded in May 2000 by Rick Krieger and partners Douglas Smith, Steve Pontius, and Kevin Smith.

“Path to Better Health”

In recent years, CVS has touted its corporate responsibility to consumer health, going against industry standards at a high profit risk. CVS had used phrases like “path to better health” and “better health made easy” to publicize this initiative.

It first did this by eliminating tobacco sales from its stores in 2014. This cost the company an estimated $2 billion in annual sales.

Next, it relocated candy and other junk food away from the checkouts and replaced it with healthier alternatives. Although, it could be argued that some granola bars are as unhealthy as a candy bar. This began in 2015 with 500 pilot stores before being expanded nationally. As recently as 2022, there has been a push to remove junk food entirely from its stores, but this is meeting more resistance.

Private Label

CVS has long embraced private labels. It initiated its own private label department called Consumer Value Laboratories in 1970 to internally developed and market private labels in its stores. Essence of Beauty, launched in 2000, was one of the first independent private label brands CVS launched. Others have included Gold Emblem (launched in 2004), beauty360, and Total Home. CVS has also been an inclusive partner with such brands as Life Fitness and Lumene.

Brand & Marketing

1964 debuted the company’s first logo, which was a shield containing the “CVS” lettering within. A variation also had the full Consumer Value Stores name placed alongside or beneath the shield.

CVS used the original shield logo until 1967, when it debuted an updated version that still incorporated a shield. The CVS logotype most familiar debuted in 1969 – the same year Melville Corporation acquired the chain, and has remained relatively unchanged since. The biggest change was incorporating a heart into its logo in 2016.

ExtraCare Loyalty Program (and LONG receipts)

Today, independent loyalty programs are commonplace with nearly every major retailer offering some kind of rewards program. CVS was an early innovator of this practice, first launching its ExtraCare Card in February 2001. Its loyalty program currently has about 75 million members.

In addition to activating “clip free coupons,” these rewards are returned in the form of ExtraBucks® and customized coupons printed at the bottom of CVS’s famously long receipts, which has become almost an urban legend and popular internet meme.

It seems that these long receipts are purposeful; a marketing gimmick to demonstrate the amount of savings each customer receives through the ExtraCare program. While customers can opt for digital versions of these savings, only 10% of its members have chosen to do so.

CVS claims to have introduced the ExtraCare program to market directly to its loyal customers and cut down mass marketing, including weekly circulars. Indeed, CVS hasn’t been a prolific advertiser compared to other big name retailers. CVS’s marketing budget was about $160 million in 2019 compared to more than a billion dollars each for Walmart and Target. This marketing spend doesn’t include non-retail subsidiaries like Aetna. Its advertising strategy is more targeted than broad.

Market Cap (CVS vs Walgreens)

CVS vs Walgreens: These two retail brands seem to be one of the most popular retail comparisons. Each has their fans and critics. Generally, it seems that preference between them is largely regional. In all honesty, it’s hard to judge the entirety of companies so large as CVS and Walgreens.

In terms of overall revenue, CVS is undoubtedly the largest pharmacy retailer in the United States. According to the website statista.com, CVS accounted for 24.5% of all prescriptions filled, which is slightly lower than the 27.1% reported for 2020 at another source. Walgreens accounted for 18%.

Digging deeper, CVS and Walgreens aren’t quite an apples-to-apples comparison. CVS is more diversified, with its non-retail operations encompassing a significant portion of its overall business.

Store count too isn’t a fair comparison. While CVS does have more U.S. stores, 1,800 of its locations aren’t full-line CVS stores, instead operating within another store, mainly Target. Taking this into account, Walgreens has more traditional pharmacy store locations. Walgreens also employs more pharmacists. And, it has a large presence outside of the United States, following its Alliance Boots merger.

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