Inside This Issue - Opinion
Kerr fortifies position with store sale to CVS
June 29th, 2009
by David Pinto, Editor
Lest anyone misinterpret the recent sale of 11 Kerr Drug stores in Charleston, S.C., to CVS Caremark Corp., let’s be clear: The sale has left Kerr, one of the most successful and innovative regional drug chains in the United States, in the strongest position it has enjoyed in the 12 years since a group led by Tony Civello, the retailer’s estimable CEO, acquired the company.
The store sale to CVS, announced earlier this month, removes Kerr from South Carolina, a peripheral state for the now 90-store drug chain, freeing the company to concentrate all its considerable health care efforts and energies in its home state of North Carolina.
According to Civello, the sale is “the final step in a comprehensive plan to strengthen our core business through consolidation of our store base. On average, our North Carolina stores do 50% more in sales and significantly more in profits than the South Carolina stores.”
In the aftermath of the sale, he says, “our cash flow has never been stronger, further freeing us to bring to North Carolina more of the innovative health care programs for which we have become known nationally.”
By all accounts, the sale of the Charleston stores was a sound business decision, one dictated by events, circumstances and the retailer’s increasing focus on bringing health care innovations to its home state.
“Walgreens’ entry into South Carolina and CVS’ decision to add stores there helped us conclude that the Charleston stores had no role in our future,” says Civello. “Our momentum in North Carolina, and the recognition we’ve received here for our work in medication therapy management services and other health care initiatives, only confirmed our decision to sell the stores.”
Indeed, that’s no exaggeration. Over the past few years Kerr has gained legendary status for its work in medication therapy management (MTM).
Last month, the retailer was recognized by Outcomes Pharmaceutical Health Care, a national MTM provider network, as the nation’s leading drug chain in assisting patients in managing their medication therapy — the second consecutive year Kerr has been so lauded. In honoring the retailer, Outcomes credited Kerr pharmacists for the crucial role they played in the avoidance of more than $2 million in unnecessary medication therapy costs in 2008 in the process of providing thousands of MTM services to Outcomes-covered patients.
To anyone familiar with the work Kerr has done in MTM, that’s no surprise. In North Carolina Kerr conducted over 60% of the state’s MTM interventions last year, earning the retailer recognition in the highest governmental circles. For the past two years, Kerr has been named Carolina’s leading pharmacy retailer for its work in MTM.
But Kerr’s health care impact isn’t limited to medication therapy management.
To cite just one other example of its innovative approach to health care retailing, last month the retailer converted two North Carolina drug stores into Naturally Kerr, a store-within-a-store concept designed to provide customers with a broad range of health-related products and services. Gone from the mix in those stores are such traditionally familiar chain drug general merchandise categories as automotive and hardware products. In their place, Kerr offers a 3,000-SKU selection of natural, homeopathic and organic health care products that includes such items as wheat- and gluten-free items, organic juices and healthy meals to go.
One of the two Naturally Kerr units is located in Asheville, site of the Asheville Project, a program under which Kerr pharmacists provide preventive and chronic disease treatment programs to city workers. This ongoing effort has thus far reduced the city’s health care costs by about $2,000 per employee.
It’s clear, then, that North Carolina is where Kerr needs to be, and that its presence in the adjacent state had increasingly become a distraction.
Thus, for Kerr’s chief executive, the decision to withdraw from South Carolina was a logical one — one that has enabled the drug chain to redeploy assets, pay down debt and increase its emphasis on the innovative statewide health care programs that have combined to set it apart from its competitors.
“When we bought Kerr in 1997, 43 people moved here from Pittsburgh, forming the basis of the great management team we have in place today, one that we believe is the equal of any in the chain drug industry,” Civello says. “Our commitment to those 43 people was to create a drug chain that could compete with any health care retailer anywhere. The sale of our Charleston stores further ensures that we will be able to do so.”