CVS to Close 300 Stores a Year for Next Three Years; Cuts Guidance

By Michael Dabaie

CVS Health Corp. said it will close about 300 stores a year for the next three years, resulting in a cut to full year earnings forecast.

The changes will begin in the spring of 2022, CVS said.

In connection with the planned store closures, the company said it expects to record an impairment charge in the fourth quarter of 2021 of between $1 billion and $1.2 billion, or 56 cents to 67 cents a share of earnings. The charge is related to the write down of operating lease right-of-use assets and property and equipment.

Due to the planned store closures, the company cut its 2021 earnings guidance range to $5.46 to $5.67 a share, from $6.13 to $6.23. The impairment charges are excluded from the company's calculation of adjusted EPS and CVS said it expects the impact to adjusted EPS to be immaterial in 2021 and 2022, and modestly accretive in 2023 and thereafter.

CVS affirmed its full-year 2021 adjusted EPS guidance range of $7.90 to $8 and confirmed it expects full-year cash flow from operations in range of $13 billion to $13.5 billion.

The health care services company said it has been evaluating changes in population, consumer buying patterns and future health needs to "ensure it has the right kinds of stores in the right locations for consumers and for the business."

As part of the company's strategic review of its retail business, CVS Health said it will also create new store formats to drive higher engagement with consumers. Three models will include sites dedicated to offering primary care services, an enhanced version of its "HealthHUB" locations with products and services for everyday health and wellness needs, and traditional CVS Pharmacy stores that provide prescription services and health, wellness, personal care and other retail offerings.

Write to Michael Dabaie at [e-mail]

(END) Dow Jones Newswires

November 18, 2021 09:46 ET (14:46 GMT)

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