CVS Caremark Faces Tobacco Refusal Reality

By Brianna Ahearn, contributing writer

In February 2014, CVS Caremark announced it would cease selling cigarettes and tobacco products in its stores. Now, in August, the effects of their decision have come to light. The company's latest earning report shows a loss of $2 billion dollars in the wake of the tobacco removal. CVS Caremark stores are allowed to sell tobacco products until October, and some analysts report a portion of the lost revenue may be from stores who are not replenishing their sold cigarettes.

Many criticized CVS Caremark's decision after the initial announcement, as well as the company's refusal to carry electronic cigarettes unless approved by the FDA. The company took the stance after recognizing that selling tobacco products was in sharp contrast to their commitment to helping consumers work toward their best health. CVS Caremark made a statement on their website, saying, “Cigarettes and tobacco products have no place in a setting where health care is delivered. This is the right thing to do.” The announcement was accompanied by videos by noted CVS Caremark representatives, including Larry Merlo, President and Chief Executive.

CVS Caremark isn't taking the $2 billion as a loss, as the company reported an almost 11% increase in net revenue for its second quarter. The retailer has experienced a surge in specialty medications, which likely helped make up the profit increase. The company has 7,700 stores, and sales where cigarettes were available dropped only 0.4%. Business Week reports CVS Caremark is a $126 billion dollar company, and is the country's largest provider of prescription drugs. With Obamacare came more focused health initiatives, and the pharmacy has been filling more prescriptions than ever and has also experienced growth in its pharmacy services business. The new direction healthcare in the United States has likely given health care merchants, such as CVS Caremark,  a steady rise in customers.