CVS tops earnings estimates, ramps up delivery service

CVS Health is cranking up prescription deliveries to customer homes or workplaces, as the drugstore chain tries to squeeze more of an edge from a massive store network that puts 70 percent of the U.S. population within 3 miles of one of its locations.

The nation’s secondlargest drugstore chain will start offering free, sameday deliveries in December from its Manhattan sites. It will also expand next-day deliveries nationwide early next year while also bringing the same-day service to several more cities.

Drugstores and other retailers have been pushing more customer-friendly services in recent years in part to counter competitive pressure from Amazon. The online retail giant already offers same-day deliveries of consumer goods typically sold in drugstores to its Amazon Prime members in some cities. That’s a direct threat to the networks of thousands of stores that chains like CVS built in order to get closer to the customer.

CVS Health Corp. plans to expand same-day deliveries to Miami, Boston, Philadelphia, Washington, D.C., and San Francisco by early next year.

A company spokeswoman said the delivery service would be a faster alternative and have a wider reach than its mail-order business.

CVS Health runs more than 9,700 retail locations, including pharmacies in Target stores. The company started a curbside pick-up service a couple of years ago, and it already offers deliveries from about 1,600 locations.

The company says its free, same-day service in Manhattan will be done within hours. It will hire couriers to deliver prescriptions and other products in secure, tamperproof packaging.

“We’re pushing the envelope on basically serving the patient wherever she is,” Executive Vice President Helena Foulkes told Wall Street analysts during a Monday morning conference call to discuss the company’s third-quarter performance.

CVS Health edged Wall Street earnings expectations in the quarter. But the company network exclusions, slumping sales from established stores and hurricanes all helped chop its profit more than 16 percent, the company said.

Aside from operating drugstores, CVS also processes more than a billion prescriptions annually as a pharmacy benefits manager, or PBM.

Its business has taken a hit from some key customers that have excluded the company from their pharmacy networks. Late last year, CVS was removed from the network of the government’s Tricare program, which provides coverage for military personnel and their families.

The company also saw another PBM, Prime Therapeutics, enter a retail pharmacy network agreement with Walgreens Boots Alliance Inc., which runs the biggest drugstore chain.

CVS Health said Monday those exclusions were a key reason for its thirdquarter profit drop.

MATT ROURKE/AP 2014 CVS reported earnings that were better than expected for the third quarter and it also announced it’s starting same-day delivery of prescriptions in some markets.