Business

5 Reasons Why Target Sold Pharm Biz to CVS

This March 25, 2014, file photo, shows a CVS store in Philadelphia. CVS Health will buy Omnicare in a deal valued at about $12.7 billion in move to expand its pharmacy services reach into assisted living and senior care facilities. (AP Photo/Matt Rourke, File)
This March 25, 2014, file photo, shows a CVS store in Philadelphia. CVS Health will buy Omnicare in a deal valued at about $12.7 billion in move to expand its pharmacy services reach into assisted living and senior care facilities. (AP Photo/Matt Rourke, File)

Nathan Bomey, USA TODAY

 

 

(USA Today) — At first glance, Target’s (TGT) decision to offload its pharmacy and clinic business to CVS Health (CVS) may seem strange.

Why invite a retail competitor inside your stores?

But investors applauded the $1.9 billion deal.

Here are five reasons why the deal might make sense:

1. Complexity. The health care business is exceedingly complex, requiring a knowledgeable workforce to navigate a regulatory thicket that’s evolving rapidly in the wake of the Affordable Care Act.

Target’s primary business is selling consumer goods, not prescriptions. CEO Brian Cornell acknowledged that Target simply lacks the expertise to operate the pharmacy business efficiently.

 

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