CVS Health Corp (NYSE:CVS) To Launch Same-Day And Next-Day Delivery Services To Ward Off Amazon.com, Inc. (NASDAQ:AMZN)

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CVS Health Corp (NYSE:CVS) has announced that it will be launching a delivery service for prescription drugs. Initially a same-day delivery service will be offered in Manhattan by the drug store chain starting next month. In 2018 a next-day delivery service will be unveiled across the United States. Same-day delivery service will also be expanded to other cities such as San Francisco, Washington, D.C., Philadelphia, Boston and Miami next year.

This comes amidst the expected entry of Amazon.com, Inc. (NASDAQ:AMZN) into the prescription-drugs market. Already Amazon offers a same-day delivery services for its Prime members in some cities for some consumer goods which are typically sold by drugstores such as CVS outlets.

Amazon effect

“The prospect of Amazon entering has motivated CVS to do something they probably should have done years ago. I think it also is a great signal that Amazon is not going to be able to walk into the pharmacy or pharmacy benefit management industry and immediately take it over,” said Pembroke Consulting’s president, Adam Fein.

Currently CVS Health operates over 9,700 retail outlets some of which are located in Target stores. Some years ago, CVS introduced a curbside pick-up service which is now offered in around 1,600 locations.

According to CVS Health Manhattan’s same-day delivery service will see customers getting their orders in a matter of hours. Couriers will be hired to deliver prescription drugs as well as other items in tamper-proof and secure packaging.

Quarterly results

In its most recent quarterly report, CVS Health managed to beat Wall Street estimates though profit fell by over 16% due to the effect of the hurricanes that pounded parts of the United States and Puerto Rico as well as network exclusions. According to CVS Health the cost of the hurricanes to the company’s bottom line was approximately $55 million in the quarter.

CVS Health’s pharmacy-benefits-manager business has suffered after getting excluded from some networks. Towards the end of 2016, the drug store chain was excluded from the government’s Tricare program. This is a program which offers coverage to military service members as well as their families.

On Tuesday shares of CVS Health Corp rose by 3.26% to close the day at $68.95.

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