) has announced that it will discontinue the sale of cigarettes
and other tobacco products at its more than 7,600 CVS/pharmacy
stores across the U.S. by Oct 1, 2014.
CVS Caremark will be the first national pharmacy chain to
undertake such a health awareness initiative. Its shares fell as
much as 1.8% in the trading session following the announcement.
On an annual basis, CVS Caremark expects to lose revenues worth
$2 billion as a result of the move, which equates to roughly 17
cents per share. The anticipated impact on 2014 earnings is
expected to be in the range of 6 to 9 cents per share.
However, the decision to remove tobacco products from its
shelves is not likely to affect the company's 2014 segment
operating profit guidance, 2014 earning per share outlook, or the
company's five-year financial projections provided at its Analyst
Day held on Dec 18.
The company is, however, optimistic of making up for this
financial loss through other lucrative means and is currently
The retail pharmacy chain believes that it has adopted this path
solely for the well being of its customers. This customer-driven
approach will also give CVS Caremark a chance to promote itself
as a company focused on achieving better health outcomes for its
CVS Caremark also plans to launch a national smoking cessation
program this spring to raise awareness regarding the benefits of
quitting smoking. This unique program will provide
information as well as treatment options on smoking cessation at
all CVS/pharmacy locations and MinuteClinic, in combination with
The extensive network of the company's MinuteClinic locations,
empowered with well-trained pharmacists and nurse practitioners,
will further extend additional comprehensive programs to CVS
Caremark pharmacy benefit management plan members to help them
refrain from smoking.
CVS CAREMARK CP (CVS): Free Stock Analysis
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This initiative by CVS Caremark complements the proposals of
various healthcare bodies like those of the American Medical
Association, American Heart Association, American Cancer Society,
American Lung Association and American Pharmacists Association,
which have jointly raised their voice against tobacco sales in
retail outlets with pharmacies.
Smoking is a leading cause of death, resulting in more than
480,000 deaths annually, in the U.S. It is also estimated that
worldwide, tobacco use causes more than 5 million deaths
annually. Eventually, tobacco use is likely to result in more
than 8 million deaths annually by 2030 as per current trends.
Smoking is also a dominant cause of cancer, heart disease, stroke
and other lung diseases. It not only deteriorates overall health
in an individual but also indirectly results in financial burdens
that come with healthcare expenditure related to adverse
after-smoking health effects.
CVS Caremark expects to influence millions of Americans to quit
smoking through its consumer awareness program which will
highlight the ill-effects of smoking. This consumer-and-community
friendly attempt is likely to help reduce the burden of chronic
diseases in the healthcare industry.
Recently, many pharmacy chains have been putting their best foot
forward in delivering better health standards for people.
Accordingly, they have come forward with attempts like counseling
by pharmacists, introduction of an array of wellness products and
CVS Caremark, among the leading players in the retail drug store
industry along with
Rite Aid Corp.
), currently carries a Zacks Rank #3 (Hold).