CVS Health had come up with a report in their most recent regulatory filings. The company said that they would close down 46 underperforming retail pharmacy stores in the US during the second quarter of 2019. Media reports suggest that the company clearly confirmed that they had close down the 46 stores all across 16 states during the last month in April. As per the report, a location in Michigan that had got impacted by this news is the CVS store at 10301 Woodward Avenue in Detroit.
Another media agency had obtained the full list of affected retail pharmacy locations of CVS. Texas happened to be the state that got hit the hardest by the closures of CVS, where eight locations are shutting down. In the filings of US Securities and Exchange Commission, CVS Health stated that there were certain indications of impairment with respect to the impacted stores. These include the operating lease assets of the right to use. Now, accordingly, an interminable long-term asset impairment test had got performed. The results out of the impairment test clearly indicated that the fair value of each and every store asset group was a lot lower than the value, which they were carrying.
Basically, the fair value was primarily determined by making use of the discounted method of cash flow. This method was based on the estimated sublease income. In the period of three months that ended on 31st March 2019, the Company managed to record a charge for store rationalization of $135 million. This was basically related to all these asset impairment charges of the operating lease of the right-to-use. This had got recorded within the operating expenses in the Retail Segment. Reports suggest that CVS had transferred prescriptions at all the locations impacted to stores nearby.
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