Boston, MA 02/05/2014 (wallstreetpr) – The $79 billion market capped drug store chain CVS Caremark Corporation (NYSE:CVS) has made a bold move in its efforts to transform into a full fledged health care provider by declaring on 5th February that it would cease selling of all cigarettes and tobacco related products at its drug store chain by October this year.
Change Of Course
Signalling his firm’s resolve to emerge as a health care services provider, CVS Caremark Corporation (NYSE:CVS) President, Chief Executive Officer, Director Larry J. Merlo announced that, “Cigarettes have no place in an environment where health care is being delivered. This is the right decision at the right time as we evolve from a drugstore into a health-care company.”
Costly Decision
The move has expectedly won huge backing from the NGO and the health care sector, even as CVS Caremark Corporation (NYSE:CVS) buckles down to absorb the close to $2 billion negative impact that the cession of sale of tobacco and attendant products is going to have on its bottom line this year. The drug store has estimated that close to six to nine cents would be shaved off from its projected 2014 earnings of $4.36 per share as a direct result of this move.
Evolving As A Health Care Provider
Analysts have noted that this move while temporarily eating into the company’s bottom line, will help reposition CVS Caremark Corporation (NYSE:CVS) as an end to end health care provider. On the ground too, this change in strategy to grow organically, by the drug store major is becoming apparent. The move of stopping tobacco sales comes ahead of new campaign promoting “quitting of smoking” that the drug store is gearing up to launch in the Spring of 2014 in all its pharmacies and in store clinics.
New Market Segment To Be Tapped
Analysts believe that as U.S citizens become more health conscious and progressively try to move away from smoking, CVS Caremark Corporation (NYSE:CVS) can tap into a huge market of smoking de-addiction centres. Underlining this development is a news interview by Troyen A. Brennan, who is the chief medical officer of CVS Caremark. He has disclosed that their surveys have found that close to 70 percent of the polled smokers indicated their intention to quit the harmful habit, while 35 percent disclosed that they have attempted to stop the habit in the past year.
