CVS Health and Target Announce Completed Acquisition of Target's Pharmacy and Clinic Businesses

PRESS RELEASE

Woonsocket, RI and Minneapolis, MN, December 16, 2015 — CVS Health Corporation (NYSE:CVS) and Target Corporation (NYSE:TGT) announced today that CVS Health has completed the acquisition of Target’s pharmacy and clinic businesses for approximately $1.9 billion. With the completion of the transaction, CVS Health acquired Target’s 1,672 pharmacies across 47 states and will operate them through a store-within-a-store format, branded as CVS/pharmacy. In addition, a CVS/pharmacy will be included in all new Target stores that offer pharmacy services. Seventy-nine Target clinic locations will be rebranded as MinuteClinic, and CVS Health will open up to 20 new clinics in Target stores within three years of the close of the transaction.

“We look forward to helping Target guests on their path to better health through CVS Health’s leading clinical programs, such as Maintenance Choice, Pharmacy Advisor and Specialty Connect,” said Larry Merlo, CVS Health President and CEO. “In addition, with the Target acquisition we will leverage our unique integrated business model and our scale to drive incremental sales volume and operating profit for the enterprise while providing convenience and cost savings to consumers and payors.”

“Today’s milestone in our relationship with CVS Health is an important step in driving Target’s strategic priorities forward while giving our guests easy access to industry-leading health care services. With the transition now underway, Target can further accelerate our commitment to Wellness as a signature category, helping guests and team members in their efforts to eat better, be more active and find natural and clean label products,” said Brian Cornell, Chairman and CEO of Target.

The Target pharmacies and clinics will be transitioned to the CVS Health banners and systems within six to eight months.

Financial Considerations

The closing of this transaction is expected to have the following impact on Target’s fourth quarter 2015 financial results:

• The recognition of a pre-tax gain of $575 million to $775 million, based on the final valuation of assets sold. The gain will be excluded from Adjusted Earnings per Share.
• A reduction of expected fourth quarter sales of approximately $500 million, with no change to the company’s expected fourth quarter segment EBIT.

The closing of this transaction does not change Target’s expected fourth quarter comparable sales, because the comparable sales calculation will only include pharmacy sales from fourth quarter 2014 for the equivalent period in which Target operated its pharmacies in fourth quarter 2015.

Target’s after-tax net proceeds from the transaction are expected to be approximately $1.2 billion, which the company expects to deploy over time in support of its long-standing capital priorities, including share repurchase. This transaction is expected to be accretive to Target’s EBITDA and EBIT margin rates and add half a percentage point or more to Target’s return on invested capital over time.

CVS Health will discuss the acquisition in more detail at its Annual Analyst Day, which is being held today in New York City and simulcast on its website, at https://investors.cvshealth.com.