CVS 2009 Annual Report Download - page 8

most recently served as president and CEO of our strategic
partner, Generation Health, Inc. Per is widely respected
in the industry, and his expertise, along with his demon-
strated ability to execute growth strategies, makes him
the perfect person to guide our PBM in this evolving
health care environment.
OUR SAME-STORE SALES GROWTH LEADS ALL
PHARMACY RETAILERS
Despite the recession, our retail stores put up outstanding
numbers. Same-store sales rose 5.0 percent, while pharmacy
same-store sales increased 6.9 percent. These results led
our industry throughout 2009, and we gained significant
market share. Organic growth continued apace as we
opened 287 new or relocated stores. Factoring in closings,
net unit growth was 102 stores. Today, approximately
75 percent of the U.S. population lives within three miles
of a CVS store. Our stores fill nearly one in five prescrip-
tions nationwide, and we have the #1 or #2 market share
in 14 of the top 15 U.S. drugstore markets.
Our industry-leading customer service and the use of
advanced technology, combined with the increasing
adoption of Maintenance Choice by PBM clients, all
contributed to our pharmacy growth.
In the front of the store, we gained share in 82 percent
of our core categories. Moreover, sales of private-label and
CVS-exclusive brands rose faster than they have historically
to account for nearly 17 percent of our front-end total.
These lower-cost products offer excellent value, which
clearly appealed to cost-conscious consumers in the midst
of a recession. We, in turn, benefited from the higher
margins these products provide compared with national
brands. Our private-label program is ambitious, and
we added more than 900 offerings to our shelves
during the year.
The Longs Drugs® stores we acquired in October 2008
were integrated on schedule and are on track to be
accretive to earnings in 2010. Profitability is already
on the rise as we’ve begun to leverage our systems,
our focus on private label, our category mix, and the
ExtraCare® card. We have a solid track record at making
the most of our acquisitions, roughly doubling the profit-
ability of the drugstores we acquired from JCPenney in
2004 and from Albertsons in 2006.
EXTRACARE AND OTHER LONG-TERM INVESTMENTS
HAVE HELPED DRIVE PROFITABILITY
We can trace our industry-leading performance in no
small part to the many investments we have made over
the past decade in technology, in enhancing the layout
and “shopability” of our stores, and in driving customer
loyalty. The ExtraCare loyalty program, which we rolled
out in 2001, is today the most popular among all retailers.
More than 64 million active cardholders take advantage
of sales in the store and at CVS.com, and they received
$1.9 billion in ExtraCare savings and Extra Bucks rewards
throughout 2009. ExtraCare represents a significant com-
petitive advantage for us, and CVS Caremark has a huge
head start over any drug retailer contemplating its own
loyalty program.
More recent investments position CVS Caremark for
greater profitability in the coming years. For example,
our proprietary RxConnect™ computer system, whose
rollout will be completed during 2010, should improve
both efficiency and customer service in our pharmacies.
We’ve also opened call centers that allow us to redirect
much of the telephone call volume from our busiest stores.
That frees up retail pharmacists to spend more time
counseling patients face-to-face.
WE’VE EXPANDED MINUTECLINIC’S OFFERINGS AND
FORGED NEW ALLIANCES
At MinuteClinic, our retail-based health clinics, we expanded
the services offered, further integrated MinuteClinic into our
PBM offerings, and forged a number of strategic alliances
with highly regarded health care providers such as Humana,
Inc., and the Cleveland Clinic. Today we have approxi-
mately 570 clinics in 56 markets across the country.
We generated approximately $3 billion in free cash flow, deploying
part of it to complete a $2 billion share repurchase program.
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CVS Caremark
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