CVS CFO: Company will spend up to $350M to expand CarePass loyalty program

Dive Brief:

CVS announced on Monday customers will be able to enroll in CarePass, the company's first loyalty and membership program, at participating stores nationwide.
CVS will spend between $325 and $350 million next year on “various types of technology [required to] transform a network of about 9,700 stores into healthcare shopping and services facilities,” CVS CFO Eva Boratto said in a Digital Commerce 360 piece. “Investments are being made to further our analytics and digital capabilities, develop new programs such as chronic kidney care, and enhance Aetna’s clinical platform.
Following a pilot run in about 350 stores in Boston and other areas, the pharmacy giant is expanding the program throughout the U.S. and on CVS.com.

Dive Insight:

Becker’s Health IT & CIO Report quotes Boratto as saying that she would “put the spending into two large buckets: supporting transformation, [which] includes investment in our clinical platform to [...] engage members, and our other initiatives aimed at improving [chronic care] outcomes and lowering costs.”

Executive Vice President of CVS Health Kevin Hourican said the company is “thrilled to expand CarePass nationally, bringing simplified value to our customers while making it easier for them to care for themselves and their families.”

The program began as a response to Amazon’s acquisition of online pharmacy start-up PillPack last year, which was considered a major threat to pharmacy chains CVS and Walgreens. CarePass, which costs less than Amazon Prime, is also the only current program to allow members to bundle prescription drugs with everyday provision item delivery, the company says.

Home delivery is the key to securing the millennial and Gen-Z demographic, chains are finding. CVS, since initiating its CarePass rollout, has found that 20% of its members are millennials, thus motivating the investment. George Coleman, senior vice president of merchandising for CVS, told Forbes that it can be powerful for customers and for the business “to design and leverage our loyalty program specifically with actual preferences and pain points in mind.”

With the CarePass rollout underway, CVS hopes to pivot its brand from pharmacy and store to holistic wellness, an industry bringing in $4.2 trillion globally.