CVS SWOT Analysis (2024)

Company: CVS
CEO: Karen S. Lynch
Founder: Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland
Year founded: 1963
Headquarter: Woonsocket, Rhode Island, United States
Employees (2021): 295,000
Type: Public
Ticker Symbol: CVS
Annual Revenue ( FY 2021): $292.10B
Profit | Net income (FY 2021): $7.9B

Did you know? CVS was the first drug store to institute a smoke-free policy, completely stopping the sale of tobacco in September 2014.

Table of Contents

CVS Strengths

1. Reliable suppliers

One of the most important strengths that drive the success of CVS is the dependability of its suppliers. The company has ample access to required raw materials because the suppliers have the ability to deliver as needed.

That helps them overcome the majority of the supply chain bottlenecks. The suppliers have sufficient resources and systems that ensure they still deliver under different circumstances.

2. Large scale and accessibility

CVS, after many years of development, has become the largest pharmacy chain in the US.

At the end of 2021, the company had 9,939 stores across all 50 states and owned 26.4% of total prescription drug revenue, ahead of competitors Walgreens and Cigna.

The easy availability for customers to find a CVS pharmacy near them guarantees a strong revenue stream for the company.

3. Reputable brand name

CVS has, over the years, invested in building a strong brand name. The company has achieved success in doing this. Their brand name is distinct, memorable, and authentic to resonate with the target audience. That is, customers can easily remember this brand when shopping for their pharmaceutical products or making health plans.

CVS was ranked

4. Wide range of employee benefits

Employees working at CVS have access to various benefits that include holiday pay, paid time off, tuition assistance, stock purchase plan, 401(k) plan, dental, prescription, and medical. In addition, employees get paid training programs, tuition reimbursement, and career advancement opportunities.

In general, the company runs a Total Rewards program characterized by health benefits, compensation programs, time away from work, and financial benefits.

There is also the My Well-being program which provides holistic and personalized support. These initiatives motivate employees to give their best for the company and have greatly helped to increase employee retention.

5. Responsive website

CVS has a user-friendly website that makes it easy to find anything that one is looking for. When you access the home page, you meet a simple platform that has key links clearly visible at the top.

In the current digital world, good websites are the cornerstone of success for most companies, and CVS seems to understand this quite too well.

6. Concern for the environment

The world is becoming more environmentally conscious. CVS taps into this to become an environmentally friendly company by developing ways to curb plastic waste and keep oceans safe.

Its current focus is on developing plans for replacing single-use plastic bags. The company’s goal is to reduce the impact of plastic bags by about 50% before 2030.

7. Personalization of healthcare

As the world gradually recovers from the pandemic, consumers are placing more demands on providers. CVS conducted a 2022 Health Care Insights research that revealed customers’ call for personalization of their goals.

The company uses this study to devise strategies for providing complex and highly personalized health care. CVS Specialty is a good example of this, which provides condition-specific support to customers through a personalized team of experts.

8. Constant communication

Consumers who rely on CVS for their health care needs are always informed, thanks to the company’s policy of ongoing communication.

The consumers are engaged in person as well as through other channels of communication. There are contact addresses for customer service, prescription help, and general corporate social responsibility.

9. Strong distribution networks

CVS operates based on a powerful distribution network that ensures its products reach the potential market. The company uses different distributors, including McKesson as a major distributor.

The renewal of the McKesson distribution deal with CVS in 2019 was a major plus considering the stability the distributor has brought over the years.

10. Acquisitions

CVS has strong cash flow generations and has been actively acquiring companies over the years, which has helped the company to enrich its portfolio and strengthen its competitiveness operationally and financially.

The firm has been gradually integrating technology companies into its operations and creating strong supply chains in the process. Some of its key acquisitions include Apothecary By Design, IlliniCare Health, Aetna, Omnicare, and Caremark.

11. Customer satisfaction

CVS operates with the overall goal of meeting customer demands and ensuring utmost satisfaction. The company’s commitment to creating a positive relationship with customers has helped it achieve a high-level customer satisfaction rating.

That helps retain existing customers even as it attracts new potential customers.

It has a customer loyalty score of 75% and is ranked #1 among its top competitors by comparably.

12. Diversified brands and portfolio

CVS has a diversified business portfolio that if one part of its business fails, it still stands a chance to continue running in other segments.

Pharmacy services is CVS’s largest segment, which accounts for around 53% of total revenue, followed by retail and long term care (34% of total revenue), and healthcare benefits and others.

The products of CVS are sold under brand names such as Goodline Grooming, beauty360, Gold Emblem, and Live Better.

13. Healthy balance sheet

CVS has a strong balance sheet and easy access to capital to support its operations. CVS had a significant amount of debt paid down of net $8.8 billion in 2021, which gives the company ample room to raise more debt.

CVS Weaknesses

1. Mismatches in anticipated demand

Sometimes, CVS significantly fails in anticipating product demand, leading to many missed chances. In other cases, the company may overestimate demand, making it have more inventory than expected. Inventory management remains a tricky problem for healthcare companies.

2. Huge staff management costs

Considering the size of this business, CVS is forced to invest more in staff management. The company often deals with high staff turnover issues. A considerable amount of time is spent on recruiting and training new staff members.

3. Stiff competition

Newcomers in the market have been giving CVS fierce competition. In some situations, it has been unable to keep up with this competition, losing out important market share.

The competition comes from local pharmacy stores as well as giants such as Amazon and Walmart. They want a piece of the lucrative healthcare market.

Amazon, for example, launched Amazon Pharmacy in 2020, which provides online pharmacy services.

4. Little success outside core business

Even though CVS does well in its sector, it has had challenges diversifying. The company has not been able to move to other product segments that would have expanded its sources of revenue.

5. Inefficient financial planning

CVS lacks a proper financial planning strategy. Its existing current ratio of 0.9 and quick ratio of 0.6 creates the impression that it would use the cash more efficiently as opposed to the present utilization.

6. Generic services and products

Despite all the efforts to differentiate itself from big competitors, CVS provides similar products and services to those of competitors and doesn’t really have distinguishable features. Customers can easily switch to another pharmacy or healthcare provider for identical services.

CVS Opportunities

1. Investment in newer technologies

CVS stands to benefit more and open up additional opportunities by adopting the latest technologies in its operations. It can count on technology as a basis for retaining current customers and attracting new ones.

In 2021, CVS partnered with Microsoft to facilitate its digital-first strategy, using cloud computing and artificial intelligence to improve customer experience.

2. Changes in taxes

A new taxation policy that introduces tax cuts can help CVS improve how it does business. Already there are talks of utilizing the tax cut to empower workers through better wages and reduced debt.

3. Online channels and digital strategy

Social media has created a strong platform for CVS to get new customers. The new sales channels through online solutions can potentially increase sales and revenue while at the same time reducing the cost of operation.

CVS’s management expressed that the company will gradually shut down 900 stores in the next 3 years and shift more sales online.

4. Government green drive

The government takes environmental matters with a lot of seriousness. CVS can also ride along these to open opportunities for itself, considering its commitment to environmental sustainability.

CVS is determined to achieve the goal of sourcing 50% renewable energy by 2040.

5. Diversification of business through acquisitions

CVS has a strong balance sheet and easy access to capital to support its acquisition activities with the aim of diversifying its existing portfolio.

CVS has done so in the past: by acquiring Aetna in 2018, the company marched into the healthcare insurance business. CVS can continue to do so in the future to further strengthen its leading position in the healthcare market.

6. International expansion

Currently CVS only serves customer in America, and the company has great opportunities to expand its services internationally through local partnerships.

CVS Threats

1. Local distributors

Local distributors are gaining more strength, giving CVS pressure to give better offers or disrupt its distribution network.

2. Regulation risks and anti-trust law

Changing laws in some markets presents the risk of facing a lawsuit regarding product standards. In 2020, CVS was fined $125k by the regulators in Oklahoma for prescription errors and poor staffing. The company’s plan to acquire Signify is also under strict scrutiny by the government.

3. Geopolitical factors

Increasing American isolation may trigger other governments to adopt such approaches, presenting a threat to CVS’ global operations.

4. Inflation and rising costs

Higher inflation has driven up medical costs. If CVS fails to pass the impact of inflation onto customers, the company’s profit and margins will be weighed down.

References & more information

Featured image by Marques Thomas

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Percy Hubner says:

October 6, 2023 at

Obviously, CVS is not in touch with their MEDICARE members. They seem to be more concerned with satisfying their investors with talks of recent acquisitions and plans that the average Advantage care members could care less about. CVS will need to restructure the chain of command and re evaluate operation management ,managers, supervisors and delegated assistants in charge . Currently they employ a team of uneducated, untrained managers and supervisors who have absolutely no idea of how to deal with the needs of the Medicare members and employees. These positions do not require experience or advanced education. The people who are put in managerial positions mostly come from island nations such as Haiti and Jamaica and have no knowledge of American culture , much less Medicare. Employment practices just caring to keeping their salary without care of ethics on the Medicare program.

It is imperative for CVS to invest in training programs for their managers and assistants so they can use the Medicare program to function properly. They currently transfer , blame and delegate real issues or alter employees stats to help their favorite employees. Also, they should increase the contract rate for physicians and hospitals or facilities to ensure that members are properly covered. Because of non payment and long wait times, medical services often make appointments for several months instead of weeks. This discourages members from using these network facilities. The billing department should process claims in a timely fashion and not continue to reject claims for errors. The pharmacy should be more proactive in researching prescriptions which are much costly copays comparing to other pharmacies. It should not be difficult for members who lose their prescriptions to have them refilled promptly, especially when their medications is essential to their well being.
Hiring process for CVS , Now seems that people are being hired with practically no pre hire evaluation or are receiving jobs based on nepotism or personal relationships. This is perhaps why the standards have gone down so drastically over the past few years to ONE START .

I believe the nurture and care as a health care program is being forgotten in the process to just supply workforce statistics for the real philosophy of the nationwide Medicare program.