taking significant strides to make themselves a major player in the health care industry. The controversial decision to stop the sale of cigarettes may have cost them revenue, but showed that they are serious about their mission of improving customer health. They have also expanded, and plan to continue to expand, their in-store clinics, while also purchasing an operator of drug-infusion centers.
Their most recent venture has led them to $12.7 billion purchase of Omnicare Inc., a nursing home pharmacy operator. The deal, which includes $2.3 billion in debt, is the biggest deal CVS has made since their acquisition of Caremark Rx, Inc. in 2007 for $21.7 billion. CVS’s pharmacy services unit is the driving force behind the company’s expansion and it has been out growing retail nine fold in the most recent quarter. That growth shows no sign of slowing down, as pharmacy demands continue to rise.
Omnicare’s main business is delivering drugs and assisting senior-living facilities in managing their resident’s medication. Acquiring Omnicare grants CVS access to another piece of the drug-supply chain and that, in turn, gives them a stronger hold on the industry as a whole. Merlo is hopeful this purchase will provide a “great platform” for the company’s future in the long-term care and senior-living sectors.
Merlo, who was trained as a pharmacist at the University of Pittsburgh, was in charge of the company’s retail division before being named CEO. His background in the health care industry is evident in the way he runs his company. He recognizes the needs of an aging population and wants to evolve CVS into more than just a pharmacy. Merlo envisions CVS as the one-stop-shop for all your health care needs. "We see ourselves at the forefront of the changing health care landscape," he said at the UBS Global Health Care Conference.
Prior to this deal with Omnicare, CVS was already the biggest U.S retailer of prescription drugs and the second-largest pharmacy benefits manager. This most recent expansion endeavor is a direct reflection of the vision of CEO Larry Merlo to make CVS a vertically integrated health care powerhouse.