CVS Health has completed the acquisition of Target’s pharmacy and clinic businesses. Target’s pharmacy business brought in about $4 billion each year, or about 6 percent of its $73 billion in annual sales. Company executives acknowledged that Target Corp.’s pharmacy and clinic businesses have not been profitable in recent years.

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 MinuteClinics, and CVS Health will open up to 20 new clinics in Target stores over the next two years. Together, Target and CVS Health will evaluate and select locations best suited for new Target stores with a CVS/pharmacy inside. Target pharmacies and clinics will transition to CVS branding within six to eight months.

Target will drop its pharmacy rewards program and replace it with a CVS loyalty program. Target guests will have access to CVS Health’s pharmacy care programs and medical clinic services. In addition, with MinuteClinics at Target locations, Target guests will have enhanced access to high-quality affordable medical care.

The deal brings together two leading retailers with complementary strengths, brands and cultures. The transaction enables CVS Health to reach more patients, adding a new retail channel for its offerings, and expanding convenient options for consumers. It also enables Target to strengthen its focus on wellness as a signature category. As part of the deal, Target hopes to take advantage of CVS’ expertise with smaller urban stores. The two companies add that the deal also opens the door to future joint development opportunities.

Operating in a rapidly changing health care and regulatory environment requires companies like CVS Health to continually innovate. The acquisition of Target’s pharmacies gives CVS a larger share of the prescription drug market, which is something they will appreciate even more if Walgreens acquires Rite Aid. CVS Health currently operates over 7,900 retail pharmacies and more than 1,000 MinuteClinic locations. According to Chain Store Guide’s database of Drug Stores & HBC Chains, CVS Health is the second largest drug retailer in the country, with Walgreens at the number one position.