(Reuters) -CVS Health Corp will shut about 900 stores over the next three years, it said on Thursday as the company tries to adapt to changing consumer preferences by pivoting to new store formats that offer more health services.
Best known for its chain of drugstores in more than 9,900 locations, the company has been working to expand its services since it acquired health insurer Aetna (NYSE:AET) in 2018.
CVS said that as part of its strategic review it would create an enhanced version of its health hubs that offer treatment for common ailments as well as chronic care to add more customers.
The reduction in stores will result in CVS taking an impairment charge of between $1 billion and $1.2 billion in the fourth quarter.
As part of the new strategy, the company also created a new position of chief pharmacy officer and appointed executive vice president of specialty pharmacy and product innovation Prem Shah to the role.
"We see this as consistent with our expected LT (long-term) strategy for CVS, moving to grow managed care and care delivery, while shrinking legacy bricks-and-mortar retail business," said Bernstein analyst Lance Wilkes in a note.
Rival Walgreens Boots Alliance (NASDAQ:WBA) also recently shifted focus beyond its drugstores, investing $5.2 billion in VillageMD and $330 million in post-acute and home care provider CareCentrix.
CVS cut its annual 2021 profit per share forecast to between $5.46 and $5.67 from $6.13 to $6.23, but stuck to its adjusted profit view saying there will be no impact from the store closures this year and the next.
It also said Neela Montgomery, president of CVS Pharmacy, would leave company at the end of 2021.