With its red bold letters, CVS Pharmacies are easy to spot anywhere in the United States. These chains of pharmacies have been serving Americans since 1963. They’re known for selling prescription drugs and other items such as beauty products and cosmetics, greeting cards, convenience food, basic groceries, and other everyday essentials.
How much does it cost to open a CVS Pharmacy? Unfortunately, you cannot franchise a CVS Pharmacy. All CVS stores are owned by CVS Health Corporation.
But don’t fret! You can still do business with CVS such as being a supplier or invest in the company by purchasing stock. There are also other pharmacies you can franchise and it pays to be prepared by knowing all about CVS Pharmacy and how much they make so you know what it takes to run a business like this. Take our 7-minute franchise quiz to be matched with an opportunity that is actively seeking franchisees.
Financial Requirements and Fees
Since you can’t run a CVS Pharmacy, there’s no way to know what the official financial requirements are and fees to open a pharmacy location. But the estimate based on my research is $2,000,000 – $3,000,000 to open a new pharmacy. Of course variable costs would be the size of the pharmacy, cost of land, and construction fees.
The bulk of these costs come from rental, staffing, and inventory expenses associated with running a pharmacy. Leasing a space to operate the pharmacy depends on the location. For example, an 800 square foot area may cost you $12,500 per month in Houston but can be more expensive in Arizona which is $16,000 per month.
For inventory expenses, expect to spend is estimated to be between $600,000 to $1.2 million annually. Of course, staffing is a major cost for this type of healthcare business. A pharmacy technician can make between $18 – $23 an hour. In addition, a pharmacist’s salary can be $124,170 per year. Expect to pay a minimum of $150,000 a year for just these two staff.
If you also decide to franchise, expect to add franchise fees and royalty fees to the overhead.
Average Sales / Revenue per Year
According to Fierce Health Care, CVS Pharmacy hit $322.5 billion in total revenue for 2022. This is a 10.4% increase from their revenue in 2021 which came in at around $292.1 billion.
CVS Pharmacy Franchise Facts
||Does Not Allow Franchising
||Pharmacy; Drug Store
||Beauty and cosmetics; general food merchandise; health care
CVS started in 1963 in Lowell, Massachusetts. It was acquired by Melville Corporation in 1969 to which they changed their name to CVS Corporation in 1996. CVS used to stand for Consumer Value Stores back in the day but according to former CEO Tom Ryan in an interview, CVS now stands for Customer, Value, and Service.
CVS Pharmacy, also stylized as CVS/Pharmacy, offers several services under one roof. As a pharmacy they sell and manage over 1.9 billion prescriptions annually. They also sell beauty and cosmetic products, health and wellness products, and even basic groceries. Other services include vaccinations, health insurance, healthcare and treatments, optical services, and photo services that prints more than 4 million passport photos annually.
CVS Pharmacy is owned by CVS Health which also has several businesses under their umbrella:
- MinuteClinic – medical clinic inside selected CVS Pharmacy
- Longs Drugs – another chain of pharmacies; mostly located in the West Coast
- CVS Caremark – a pharmacy benefit manager
- CVS Specialty Pharmacy – for specialty medications for rare and complex conditions
- Accordant – 24/7 health care program
- HealthHUB – medical equipment
- Navarro Discount Pharmacy – chain of pharmacies across South Florida
- Coram – provides infusion services at clinics and homes
- Omnicare – retail store that sells pharmaceutical products
CVS Pharmacy is a huge brand in the United States. They’re ranked in the Fortune 500 list in 2022 as one of the top 10 largest corporations. They’re also considered one of the largest pharmacies in the United States with over 9,636 locations followed by Walgreens with over 8,802.
You can still do business with CVS Pharmacy even though you cannot franchise a store. CVS has a supplier program that helps source products from the following businesses:
- Minority-and-Women-Owned Enterprises (M/WBEs)
- Veteran and Disabled Veteran Business Enterprises (V/DVBEs)
- Small Business Enterprises (SBEs)
- Disability-Owned Business Enterprises (DOBEs)
- Disadvantaged Business Enterprises (DBEs)
- Historically Underutilized Business Enterprises Zones (HUBZone)
- Lesbian, Gay, Bisexual and/or Transgender Business Enterprises (LGBTBE)
To join, you may register here. Though this doesn’t mean you are instantly considered as a supplier, your details are entered in CVS’s supplier database. CVS will then contact you when they have an opportunity to present.
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You may also choose to buy stocks since CVS is registered on the New York Stock Exchange at $80.45 as of the time of this writing. The Vanguard Group, Inc. owns 8.8% of shares with BlackRock, Inc. coming in second as the largest shareholder owning 7.1%. The other large shareholder is Capital Research and Management Company which owns 6.8% of the company stock.
The president and chief executive officer of CVS Health at present is Karen S. Lynch. Their headquarters is at Woonsocket, Rhode Island. It is unclear as of the moment whether or not CVS will be open to franchising their pharmacy in the future. In the near term, I can safely inform you there are no publicly announced plans to do so.
How Much Does CVS Pharmacy Make in Profit?
According to Macro Trends, CVS Pharmacy saw profits of $125.575 billion in 2022. This is considered a 7.97% increase from 2021 which was $116.308 billion.
You might also wonder if pharmacies are profitable. Like all businesses, there are many factors that can affect how profitable a pharmacy is. For instance, you should study the trends. As of the moment, the pharmacy market in the United States is expected to grow to $861.67 billion by 2028. That can put you in the right track but you also need to consider other factors such as the location of your pharmacy and the competition in your area.
You can also add services to your pharmacy other than just selling prescription drugs to generate revenue. You can offer legal and licensed medical consultations, immunizations, testings, and other treatments. Partnering up with hospitals can also help you operate more profitably.
Advantages of a CVS Pharmacy
If you could run a CVS, expect there to be many advantages. Here are a few of them to consider.
Big Name Brand Recognition
CVS Pharmacy is a big name in the pharmacy market in the United States. It’s difficult not to spot them when every corner can have a CVS made available and convenient for everyone. Other than that, they have a lot of locations around the United States. The size of their business is so huge and so is their reputation.
If you could franchise a CVS then do know you’re handling one of the big names in the industry.
One Stop Pharmacy
CVS Pharmacy doesn’t just sell prescription drugs. When you walk inside a CVS, it feels like you’re in a mini mart or department store with aisles of beauty and cosmetic products, some snacks, and other items. The pharmacy also offers photo services as well.
CVS is like a one stop pharmacy where you can get a lot of things done in just one location. This is an advantage compared to other pharmacies that deals with only medicines.
First aid kit supplies.
Supports Diverse Businesses
A business that supports another business makes a healthy working environment. As mentioned above, you can become a CVS supplier if you register with them. But CVS prioritizes certain businesses like women-owned enterprises, disability-owned businesses, minority-owned, and many more. Supporting these diverse businesses plays a huge role in building a better community for many and CVS is uplifting this program for them.
As mentioned above, CVS isn’t just about selling prescription drugs. The brand has been focusing on other services and it’s what makes CVS a successful brand. They are currently expanding and strengthening their health care services. This goes to show that CVS is looking ahead towards the future than just simply doing business with what they have at present.
Challenges of a CVS Pharmacy
Pharmacies, like any other business, can also pose some challenges. Here are some that CVS Pharmacy faces:
CVS Pharmacy isn’t the only pharmacy in the United States. They may be 9,000 strong but so is Walgreens with their 8,000 locations and Health Mart with over 4,000 stores. The competition is fierce in the pharmacy market. CVS also faces competition from online pharmacy stores like Amazon. There’s also telemedicine, which is delivering healthcare with the use of technology, which has gained popularity. CVS Pharmacy would need to do more and continue to offer exceptional services to be able to compete with other pharmacies so they won’t get left behind.
Lack of Global Presence
Though CVS Pharmacy is quite popular in the United States, they have no presence outside of the country. If they were to branch out internationally, their revenue would increase. Maybe this is something CVS can plan in the near future.
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Bad Employee Reviews
CVS Pharmacy may be a reputable brand and company but there have been a number of bad reviews by employees. In a compilation video, one employee commented how the work environment at CVS was toxic. The comment went on to describe that the management was “horribly unqualified” and that working conditions were also horrible. Another review said that the district managers were lazy and that management was racist and sexist.
While these are only a few comments for a chain with thousands of locations, it would benefit CVS checked in on these locations and staff to understand the working conditions.
The $3 Coupon
Apparently, CVS Pharmacy offers $3 coupons if you find an expired item in their stores. One TikTok user uploaded a video that brought a number of expired items such as cartons of milk, chips, and cookies at a CVS store counter to claim their $3 coupon. He called it the “CVS expired side hustle”.
CVS giving this coupon is apparently a result of a lawsuit they had and there’s no limit to how many coupons you can get. Though this may be helpful to customers, it just makes one wonder whether or not CVS even sorts through their inventory to replenish expired items or skips this task at all. This can lead to a bad reputation for selling expired food and beverages and maybe even expired medication.
Is the CVS Pharmacy Franchise Right For You?
With billions in revenue, CVS Pharmacy looks to be an ideal franchise if only they would allow it. Their name is broadly recognized across the United States and with so many locations they are convenient for almost anyone to visit. They also have many services to offer which makes them a one-stop pharmacy rather than just the usual one. I hope that one day they will open their doors to franchising which would have the potential to increase their revenue even further.
What is an alternative CVS Pharmacy franchise?
There are other pharmacies or drug stores you can franchise in the United States. One of them is Health Mart which has over 4,000 locations in 51 states. Aside from selling prescription drugs, Health Mart’s services also cover clinical care such as medical therapy and consultations, vaccines, diabetes management, custom compounding and flavoring, and health classes such as exercise and fitness, nutrition, smoking cessation, senior health, and more. They also offer online shopping and deliveries and accepts most insurance plans.
To franchise a Health Mart, expect the investment to be around $251,000 to $674,000. The best part about this franchise is that it does not have any franchise fee.
Franchising a pharmacy can be a good idea especially now that health is a major concern by more people and an aging population of Baby Boomers in the United States. You may not be able to franchise a CVS Pharmacy as of the moment but you might just be in the right track by evaluating another business opportunity in the pharmacy space.